New Modes of Governance in Europe: Governing in the Shadow of Hierarchy (Palgrave Studies in European Union Politics)

Palgrave Studies in European Union Politics Edited by: Michelle Egan, American University USA, Neill Nugent, Manchester Metropolitan University, UK and William Paterson OBE, University of Aston, UK. Editorial Board: Christopher Hill, Cambridge, UK, Simon Hix, London School of Economics, UK, Mark Pollack, Temple University, USA, Kalypso Nicolaïdis, Oxford UK, Morten Egeberg, University of Oslo, Norway, Amy Verdun, University of Victoria, Canada, Claudio M. Radaelli, University of Exeter, UK, Frank Schimmelfennig, Swiss Federal Institute of Technology, Switzerland Following on the sustained success of the acclaimed European Union Series, which essentially publishes research-based textbooks, Palgrave Studies in European Union Politics publishes cutting edge research-driven monographs. The remit of the series is broadly defined, both in terms of subject and academic discipline. All topics of significance concerning the nature and operation of the European Union potentially fall within the scope of the series. The series is multidisciplinary to reflect the growing importance of the EU as a political, economic and social phenomenon. Titles include: Ian Bache and Andrew Jordan (editors) THE EUROPEANIZATION OF BRITISH POLITICS Thierry Balzacq (editor) THE EXTERNAL DIMENSION OF EU JUSTICE AND HOME AFFAIRS Governance, Neighbours, Security Kenneth Dyson and Angelos Sepos (editors) WHICH EUROPE? The Politics of Differentiated Integration Michelle Egan, Neill Nugent, William E. Paterson (editors) RESEARCH AGENDAS IN EU STUDIES Stalking the Elephant Kevin Featherstone and Dimitris Papadimitriou THE LIMITS OF EUROPEANIZATION Reform Capacity and Policy Conflict in Greece Stefan Gänzle and Allen G. Sens (editors) THE CHANGING POLITICS OF EUROPEAN SECURITY Europe Alone? Eva Gross THE EUROPEANIZATION OF NATIONAL FOREIGN POLICY Continuity and Change in European Crisis Management Adrienne Héritier and Martin Rhodes (editors) NEW MODES OF GOVERNANCE IN EUROPE Governing in the Shadow of Hierarchy Wolfram Kaiser, Brigitte Leucht, Michael Gehler TRANSNATIONAL NETWORKS IN REGIONAL INTEGRATION Governing Europe, 1945–83 Hussein Kassim and Handley Stevens AIR TRANSPORT AND THE EUROPEAN UNION Europeanization and its Limits

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Robert Kissack PURSUING EFFECTIVE MULTILATERALISM The European Union, International Organizations and the Politics of Decision Making Katie Verlin Laatikainen and Karen E. Smith (editors) THE EUROPEAN UNION AND THE UNITED NATIONS Intersecting Multilateralisms Esra LaGro and Knud Erik Jørgensen (editors) TURKEY AND THE EUROPEAN UNION Prospects for a Difficult Encounter Ingo Linsenmann, Christoph O. Meyer and Wolfgang T. Wessels (editors) ECONOMIC GOVERNMENT OF THE EU A Balance Sheet of New Modes of Policy Coordination Hartmut Mayer and Henri Vogt (editors) A RESPONSIBLE EUROPE? Ethical Foundations of EU External Affairs Philomena Murray (editor) EUROPE AND ASIA Regions in Flux Daniel Naurin and Helen Wallace (editors) UNVEILING THE COUNCIL OF THE EUROPEAN UNION Games Governments Play in Brussels David Phinnemore and Alex Warleigh-Lack REFLECTIONS ON EUROPEAN INTEGRATION 50 Years of the Treaty of Rome Sebastiaan Princen AGENDA-SETTING IN THE EUROPEAN UNION Roger Scully and Richard Wyn Jones (editors) EUROPE, REGIONS AND EUROPEAN REGIONALISM Asle Toje AFTER THE POST-COLD WAR The European Union as a Small Power Richard G. Whitman and Stefan Wolff (editors) THE EUROPEAN NEIGHBOURHOOD POLICY IN PERSPECTIVE Context, Implementation and Impact

Palgrave Studies in European Union Politics Series Standing Order ISBN 978–1–4039–9511–7 (hardback) and ISBN 978–1–4039– 9512–4 (paperback) You can receive future titles in this series as they are published by placing a standing order. Please contact your bookseller or, in case of difficulty, write to us at the address below with your name and address, the title of the series and one of the ISBNs quoted above. Customer Services Department, Macmillan Distribution Ltd, Houndmills, Basingstoke, Hampshire RG21 6XS,UK

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New Modes of Governance in Europe Governing in the Shadow of Hierarchy Edited by

Adrienne Héritier Professor, Department of Political and Social Science and Robert Schuman Center for Advanced Studies, European University Institute, Italy

Martin Rhodes Professor, Josef Korbel School of International Studies, University of Denver, Colorado, USA

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Editorial matter, selection, introduction and conclusion © Adrienne Héritier and Martin Rhodes 2011 All remaining chapters © respective authors 2011 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No portion of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, Saffron House, 6-10 Kirby Street, London EC1N 8TS. Any person who does any unauthorized act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The authors have asserted their rights to be identified as the authors of this work in accordance with the Copyright, Designs and Patents Act 1988. First published 2011 by PALGRAVE MACMILLAN Palgrave Macmillan in the UK is an imprint of Macmillan Publishers Limited, registered in England, company number 785998, of Houndmills, Basingstoke, Hampshire RG21 6XS. Palgrave Macmillan in the US is a division of St Martin’s Press LLC, 175 Fifth Avenue, New York, NY 10010. Palgrave Macmillan is the global academic imprint of the above companies and has companies and representatives throughout the world. Palgrave® and Macmillan® are registered trademarks in the United States, the United Kingdom, Europe and other countries. ISBN: 978–0–230–24340–8 hardback This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. Logging, pulping and manufacturing processes are expected to conform to the environmental regulations of the country of origin. A catalogue record for this book is available from the British Library. Library of Congress Cataloging-in-Publication Data New modes of governance in Europe : governing in the shadow of hierarchy / edited by Adrienne Héritier, Martin Rhodes. p. cm. —(Palgrave studies in European Union politics) ISBN 978–0–230–24340–8 1. Public administration – European Union countries. 2. European Union countries – Politics and government – 21st century. I. Windhoff-Héritier, Adrienne, 1944– II. Rhodes, Martin, 1956 Feb. 23– JN30.N476 2010 351.4—dc22

2010027576

10 9 8 7 6 5 4 3 2 1 20 19 18 17 16 15 14 13 12 11 Printed and bound in Great Britain by CPI Antony Rowe, Chippenham and Eastbourne

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Contents List of Illustrations

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Preface

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List of Contributors

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New Modes of European Governance: An Introduction Stefano Bartolini 1 The importance of governance theory 2 Governance as a ‘frame’ concept 3 Old versus new governance 4 The content and orientation of the book Notes 1

2

New Modes of Governance: Policy Developments and the Hidden Steps of EU Integration Udo Diedrichs, Wulf Reiners and Wolfgang Wessels 1 Introduction: Two sets of competing expectations 1.1 Approaching modes of governance: What is new? 2 The emergence of new modes of governance: External shocks and spill-over as driving forces? 2.1 Emergence within the three pillars 3 The execution of new modes of governance: New instruments, new actors, a new mix? 4 The evolution of new modes of governance: Towards the community method? 4.1 Treaty change and the evolution of new modes of governance 4.2 The evolution of new modes of governance within the three pillars 5 The evaluation of new modes of governance: Effective, efficient and legitimate? 6 Conclusion: The hidden steps of EU integration Governing in the Shadow of Hierarchy: New Modes of Governance in Regulation Adrienne Héritier and Dirk Lehmkuhl

1 2 7 12 16 18 19 19 23 24 28 31 35 35 36 42 44 48

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Contents

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Introduction Emergence 2.1 A variety of new modes of regulatory governance The goals of new modes of governance 2.2 Emergence: Driving the move towards new governance The need for expertise Pre-empting legislation New modes as a default option Improving implementation Execution: A variety of instruments and actors 3.1 A variety of instruments 3.2 A mix of public and private actors 3.3 Government and new modes of governance Evolution: Old and new modes in a longitudinal perspective Evaluation: Policy effectiveness and democratic accountability 5.1 Policy effectiveness 5.2 The structural impact of new modes: New modes of governance and democratic accountability Conclusion Notes

Drawing Closer to Europe: New Modes of Governance and Accession Tanja A. Börzel 1 Introduction 2 New modes of governance: What are they? 3 Emergence: Factors fostering and hindering new modes of governance 3.1 Seek and ye shall find? 3.2 Why do they (not) emerge? 4 Execution and evolution: The resilience of government and hierarchy 5 Evaluation: Effectiveness and structural impact 5.1 Handle with care: The (effect)iveness of new modes of governance 5.2 Cui bono? The structural impact of new modes of governance 6 Conclusions: Much ado about almost nothing?

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Seeking Commitment, Effectiveness and Legitimacy: New Modes of Socio-Economic Governance in Europe Martin Rhodes and Jelle Visser 1 Introduction 2 Varieties of modes of socio-economic governance 3 The emergence of new modes of socio-economic governance 4 Execution: New commitment devices and regulatory innovation 5 Evolution and evaluation of new modes of governance 6 The structure and allocation of power Notes Evaluating Trustworthiness, Representation and Political Accountability in New Modes of Governance Richard Bellamy, Dario Castiglione, Andreas Follesdal and Albert Weale 1 ‘New’ modes of European governance 2 Legitimacy, trustworthiness and compliance 3 Representation 4 Political accountability 5 Conclusion: New modes of governance in the ‘shadow’ of democratic legitimacy Conclusion New Modes of Governance: Emergence, Execution, Evolution and Evaluation Adrienne Héritier and Martin Rhodes 1 Introduction 2 Definition 3 Variety 4 Emergence 5 Execution 6 Evolution 7 Evaluation

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References

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Index

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Illustrations Tables 3.1 4.1

The realm of new modes of governance Varieties of modes of socio-economic governance

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Figures I.1 1.1 1.2 1.3

1.4 1.5 1.6 1.7

The eight dimensions of variation in forms of governance 13 The governance cube: describing a three-dimensional space 20 The new modes of governance ‘feedback spiral’ 25 Share of types of EC/EU legal act adopted under the Treaty of Maastricht (11/1993–4/1999), the Treaty of Amsterdam (5/1999–1/2003) and the Treaty of Nice (2/2003–12/2007), percentage 32 Legal instruments in social policy 37 Legal instruments in environmental policy 38 Texts adopted in the JHA area, 1 May 1999–31 December 2006 (post-Amsterdam period): evolution per year 41 The treaty-based ladder and new modes of governance 45

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Preface The NEWGOV Project: An Overview

This book stems from an international research project – NEWGOV – that was co-funded by the European Union’s 6th Framework Programme for Research and Technological Development from 1 September 2004 to 31 August 2008. The aim of the NEWGOV integrated project was to examine the transformation of governance in Europe by mapping, evaluating and analysing the emergence, execution and evolution of ‘new modes of governance’. The NEWGOV Consortium was coordinated by the Robert Schuman Centre for Advanced Studies at the European University Institute in Florence and consisted of a total of 38 contract partners from 16 different European countries. Martin Rhodes led the project bid and acted as Scientific Director until 2006, when he was succeeded by Adrienne Héritier. An important role in the early preparation of the project was also played by Helen Wallace, then Director of the Robert Schuman Centre, who was succeeded by Stefano Bartolini in 2006. Ingo Linsenmann played an indispensable role as project manager from the beginning of NEWGOV until its end. The NEWGOV project has produced around 450 deliverables, ranging from workshops, practitioner forums and meetings, websites, technical documents such as glossaries, indicators, scientific guidelines, refinements of research approaches and interviews digests to reports on empirical research, working papers and final project research reports. More than 60 monographs and edited volumes and more than 400 articles in journals and edited volumes were, or are in the process of being, published. The project website www.eu-newgov. org disseminates these results. A policy brief series with 35 issues, covering the whole range of NEWGOV projects, has synthesized the main results of the research. NEWGOV also disseminated its research results to practitioners (via 17 practitioner forums) and trained junior researchers in its summer schools. ix

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The common analytical framework The clusters and projects of NEWGOV were given a common analytical framework of puzzles and empirical questions, organized around four key dimensions: the Emergence, Execution, Evaluation and Evolution of new modes of governance. Emergence Why did new modes of governance emerge? Are they primarily a response to complexity and related principally to the search for effectiveness and efficiency? Can they be traced to strategic planning or have they emerged via experimental learning? Are they an instrument of policy influence by transnational coalitions over stilljealously guarded national arenas of regulation? To what extent are they driven by a perceived need to enhance legitimacy? The emergence of the new modes of governance may be accounted for on different theoretical grounds. One is that in a highly complex society, with problems extending across borders, central actors are unable to muster the knowledge required to shape effective instruments of intervention. They depend on the expertise and knowledge of private and local actors. In these conditions, centralized and hierarchical steering is doomed to failure. A second line of enquiry focuses on strategic interests. Legislative decision-making incurs high decision costs given the time required to access information and to engage in negotiation. New modes may save on such costs. The emergence of new modes may also be accounted for in terms of diffusion and learning. As organizations interact, they tend to emulate successful organizations. On these issues our projects were asked (a) to document variations in new modes of governance development across policy areas, time periods, countries and territorial levels (the supranational, national and sub-national); and (b) to identify which factors and theoretical perspectives account best for this variation in patterns of emergence. Execution When new modes of governance emerge, how do they operate? How do they relate to older modes of governance and the ‘shadow of hierarchy’? Who prevails in shaping the policy instruments applied

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under new modes? Whose knowledge and expertise determine the particular features of a policy instrument? Do they give access to new actors or are they subject to capture and manipulation by traditional actors? To what extent is the application of the new instruments institutionalized? A crucial factor for the analysis of execution is the role of hierarchy and/or its shadow. Critical to an understanding of how these variations in modes of governance work is the apparent bifurcation between hard-law instruments and soft law. Of equal importance is how to navigate between rules and discretion in setting the parameters of economic governance, as, for instance, in the new Euro regime and its governing arrangements. The tools are not yet fully developed for exploring the open method of coordination as a mechanism for systems competition and whether or not it works to promote economic dynamism. On these issues, the various projects were asked to analyse the following aspects: (a) the declared policy goals pursued by the use of new modes of governance; (b) the instruments/mechanisms used to facilitate/assist in the achievement of the declared policy goals (e.g. sanctions, reputation costs, deliberation, etc.); (c) the extent of the mix between private and public actors or between different level of public actors; (d) the degree and variety of mix between new and old modes of governance. Evolution Once new modes of governance have been introduced, how do they evolve over a longer period of time? Do they increasingly converge in terms of structures, processes and instruments, or do we find increasing differentiation? Can we observe marked evidence of sectoral or territorial differentiation? Is there an incremental substitution of one mode of governance by another, or rather a form of reciprocal contamination? Are new modes gradually subject to processes of institutionalization and embedding in existing political/administrative frameworks? Are ‘light’ forms of governance captured by ‘traditional’ forces, or do they signal the emergence of new kinds of power – technocratic, elitist and exclusive – seeking new forms of

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control, or the maintenance of old forms of power on a new basis? The key empirical tasks in this area were: (a) documentation of the transformation of new governance experiences overtime; (b) the analysis of the extent to which new and old modes complement or substitute each other, and, in the latter case, whether the tendency is from old towards new modes or vice versa; (c) the search for signs of convergence or differentiation between modes of governance. Evaluation Evaluation requires that three dimensions are taken account of: effectiveness, legitimacy and institutional equilibria. Concerning effectiveness we need to know if new modes tackle a given policy problem better than traditional governmental solutions; whether they are more robust and flexible; how successful they are in dealing with ‘tough’ policy problems. Since new modes operate with soft instruments their effectiveness may vary considerably by policy field and type of issue – distributive, regulative or redistributive. As for legitimacy, it is often argued that new modes involve a shift from classical means of democratic legitimation to new ones such as deliberative democracy and that in certain areas, especially of regulatory policy, the resort to expertise is sufficient to justify policy outcomes, and that insulation from electoral-political pressures helps in the search for efficient solutions. Yet the issue of accountability needs to be faced. The hybridization of public–private and national/ supra-national governing bodies may generate legitimacy costs that weaken politico-electoral and judicial control; minorities and individuals may lose protection; law and politics become less easily separated. Regarding institutional outcomes, what is the impact of new modes on existing power relations and institutions? Do new modes strain these institutions or strengthen them? Are new modes coupled to representative institutions or are they exclusive to technocratic memberships and stakeholders? How are relations between different European and domestic institutions and actors and between levels of governance affected? Is subsidiarity enhanced? To evaluate new modes of governance, therefore, solid evidence is required concerning the following issues:

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(a) the conditions under which new modes of governance can be (in)effective/(in)efficient in achieving their declared goals; (b) the conditions and cases in which participant actors and/or the broader public manifest opposition to the operations and outcomes of the new modes of governance and tend to see them as illegitimate; (c) the extent to which and the direction in which new modes of governance affect the power structure and the allocation of competences and resources across levels and between socio-political actors; (d) the impact of new modes of governance on the overall development of the European Union. The full range of evidence accumulated and analysed can be found on the NEWGOV site. The purpose of this book is to provide a systematic survey and synthesis of the NEWGOV project’s findings.

The thematic clusters and projects The scientific objectives of NEWGOV were pursued via 26 individual and collective projects organized within four different thematic clusters. Each of our research clusters had a predominant focus and a particular emphasis on certain aspects of the governance phenomenon, which are picked up in the cluster-based chapters in this book. Delegation, hierarchy and accountability, coordinated by Adrienne Héritier, focused on new governance in regulation and standard setting and especially on forms of public–private partnership. It studied the forms of governance pertaining to self-regulation by industry in environmental policy and energy policy; regulatory networks in financial markets, telecommunications and energy markets; comitology procedures as a mode of regulation of financial markets; and arbitration in competition policy. Emergence, evolution and evaluation, coordinated by Udo Diedrichs and Wolfgang Wessels, focused on new governance in EU decision-making and in particular on innovative and experimental initiatives including the open method of coordination; new intergovernmental and joint-decision-making in justice and home affairs; the widening of decision-making procedures in common foreign and security policy and security and defence policy; agencies and

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the delegation of activities in areas where impartial and highly specialized expertise is required; and comparison between innovative negotiations techniques such as the Constitutional Convention and the traditional method through intergovernmental conferences. Effectiveness, capacity and legitimacy, coordinated by Tanya Börzel, focused on new modes of governance in enlargement to accession and neighbourhood countries, especially the role they play in fostering and facilitating (or impairing) the adoption, adaptation and implementation of EU policies and primary law; their compatibility with the political and organizational cultures of central and eastern European (CEE) countries; the role of independent regulatory agencies and networks in smoothing the adoption of EU policies; new modes of implementing regional development policies in CEE countries; and new modes in the EU’s external relations, namely the extent to which they enter into forms of cooperation with third countries. Learning, experimental governance and reform, coordinated by Martin Rhodes and Jelle Visser, focused on new modes of socioeconomic governance at sub-national, national and supranational levels, including local and national social pacts, concertation and partnerships to resolve distributive conflicts and reform social and labour market policies; forms of economic policy coordination across the multiple levels of Economic and Monetary Union (EMU) and issues of central bank governance; new hybrid forms of governance including both the traditional community method and the softer coordination processes typical of the Lisbon strategy; regulatory changes in systems of corporate governance and the consequences for firms; tax competition and regulation at national, supranational and international levels; and the options for the participation/consultation of interest groups in the social dialogue.

The European ‘Integrated Research Project’ as a new mode of governance Given its composition and goals, the NEWGOV consortium was bound to resort to an interdisciplinary and comparative perspective across policy areas, countries and levels. This was not without difficulties. Concerns and assumptions differ quite radically across the social sciences, and to strike a balance between the majority of

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political scientists and representatives from the disciplines of law, sociology and economics was not easy. Often what is the residual for one approach or project is the central explanandum for another. A further element of diversity separated experts on EU policy-making and governance from those on socio-economic governance. Finding common ground across these perspectives and arenas posed formidable challenges. Indeed, one of the lessons to be drawn from the NEWGOV consortium is that, as innovative modes of EU-funded research organization, integrated projects are themselves a ‘new mode of governance’. They generate issues not only of financial and organizational management (in which a rather strong form of hierarchy is necessary) but also of intellectual management. Regarding the latter, there is obviously not only great scope for the bottom-up diffusion of ideas but also an evident need for effort in providing top-down guidelines and impetus to help propel individual projects forward. Considerable effort was applied by the directors of NEWGOV to thinking about how to bridge the disciplinary and sub-disciplinary divisions. Cluster workshops at the consortium conferences assisted greatly in promoting the diffusion of ideas and conceptual reflection and in enhancing cross-disciplinary input and reflection. An intense process of institutional learning over the four years of the project left the directors much better placed to run such a consortium at its end than at its beginning! We would therefore like to thank all of those involved in the project, at every level, for their dedicated participation over the four years and for their exceptional contribution to making a success of this experimental mode of research governance. Adrienne Héritier, Florence Martin Rhodes, Denver

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Contributors Stefano Bartolini has taught at the European University Institute and at the universities of Bologna, Florence, Trieste and Geneva. Since September 2006 he is the Director of the Robert Schuman Centre for Advanced Studies, European University Institute, Florence. His most recent books include The Class Cleavage: The Electoral Mobilisation of the European Left, 1880–1980 (2000); Maggioritario finalmente? La transizione elettorale, 1994–2001 (co-edited with R. D’Alimonte, 2002); Restructuring Europe: Centre Formation, System Building and Political Structuring Between the Nation State and the EU (2005). Richard Bellamy is Professor of Political Science and Director of the School of Public Policy, University College London (UCL), University of London. Recent publications include Rethinking Liberalism (2005) and (as co-editor) The Cambridge History of Twentieth Century Political Thought (2003), Lineages of European Citizenship (2004), Making European Citizens (2006), Political Constitutionalism: A Republican Defence of the Constitutionality of Democracy (2007) and Citizenship: A Very Short Introduction (2008). Tanja A. Börzel is Professor of Political Science and holds the Chair for European Integration at the Otto-Suhr-Institut for Political Science, Freie Universität Berlin. She is co-coordinator of the Research College ‘The Transformative Power of Europe’ and directs the Jean Monnet Center of Excellence ‘Europe and its Citizens’. Her most recent publications include Coping with Accession to the European Union: New Modes of Environmental Governance (2010) and ‘European Governance: Negotiation and Competition in the Shadow of Hierarchy’ (Journal of Common Market Studies 48 [2]. Dario Castiglione teaches political theory at the University of Exeter. Amongst his main research interests are theories of democracy and constitutionalism, with particular application to the European integration process. His recent publications include, as co-author, Constitutional Politics in the EU (2007) and, as co-editor, The Handbook xvi

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of Social Capital (2008), The Language Question in Europe and Diverse Societies (2007) and The Making of European Citizens (2006). Udo Diedrichs is Senior Lecturer at the Department of Political Science at the University of Cologne, Germany. His research interest lies in EU institutions as well as common foreign and security policy and European Security and Defence Policy (ESDP). He regularly contributes to the Jahrbuch der Europäischen Integration and has recently published ‘Learning from Failure: The Evolution of the EU’s Foreign, Security and Defense Policy in the Course of the Yugoslav Crisis’, in Ludger Kühnhardt (ed.), Crises in European Integration: Challenges and Responses, 1945–2005 (2009, pp. 95–107) (in cooperation with Mathias Jopp). Andreas Follesdal is Director of Research and Professor of Political Philosophy at the Norwegian Centre for Human Rights, Faculty of Law, University of Oslo. He publishes in the field of political philosophy with a focus on issues of international political theory and human rights, particularly as they arise in the wake of changes in Europe. Adrienne Héritier holds a joint chair of political science in the Department of Political and Social Science and the Robert-SchumanCenter for Advanced Studies at the European University Institute in Florence. Her research and publications extend to theories of institutional change, institutional change in the European Union, comparative public policy, European policy-making, Europeanization, regulation and new modes of governance. Recent relevant publications are Explaining Institutional Change in Europe (2007); ‘Contested Competences in Europe: Incomplete Contracts and Interstitial Institutional Change’ (with H. Farrell), West European Politics (Special Issue 2007); ‘Contested Delegation: The Impact of Codecision on Comitology 2009’ (with Catherine Moury) (forthcoming in West European Politics). Dirk Lehmkuhl is Professor of European Politics at the University of St Gallen in Switzerland. His teaching and research portfolio addresses themes of European integration and international relations, including European public policies, comparative regional integration, the contribution of non-state actors to global governance and the legalization of transnational relations. He is Academic

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Director of the BA and MA Programmes International Affairs and Governance at the University of St Gallen. Wulf Reiners is Research Fellow at the Jean Monnet Chair of Prof. Wessels, University of Cologne, Germany, and Project Manager of EXACT, a Marie Curie training network on EU external action. In the framework of several research projects he has dealt with European environmental policy, EU foreign policy and multilateralism. His recent publications include The Dynamics of Change in EU Governance (forthcoming) (co-edited with Udo Diedrichs and Wolfgang Wessels). Martin Rhodes is Professor of Comparative Political Economy at the Josef Korbel School of International Studies, University of Denver, Denver, Colorado and Co-Director of the Korbel School’s Ph.D. programme. He was a professor at the European University Institute in Florence between 1999 and 2006. He has written about comparative welfare states and labour markets, social pacts and ‘competitive corporatism’, European Union social and labour market policy, political corruption in southern Europe and Italian politics. His most recent book, with Sabina Avdagic and Jelle Visser, is Social Pacts in Europe: Emergence, Evolution and Institutionalization. Jelle Visser is Professor of Sociology at the University of Amsterdam, where he has directed since 2000 the Amsterdam Institute of Advanced Labour Studies, a multidisciplinary research centre at the university. He held research and teaching positions at various universities in Europe and the USA and was, between 1996 and 2001, member of the Max Planck Institute in Cologne. He has written about labour relations and labour markets, trade unions, corporatism, employment policies and welfare-state reform. His most recent book, with Sabina Avdagic and Martin Rhodes, is Social Pacts in Europe: Emergence, Evolution and Institutionalization. Albert Weale is currently Economic and Social Research Council (ESRC) Professorial Fellow and Professor of Political Theory and Public Policy in the Department of Political Science and School of Public Policy, University College London. He has written widely on political legitimacy and the European Union. He currently chairs the Nuffield Council on Bioethics and is a vice-president of the British Academy.

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Wolfgang Wessels is Jean Monnet Professor of Political Science at the University of Cologne. His priorities in teaching and research include the political system of the EU, the role of the EU in the international system, the deepening and widening of the EU and theories about European integration. In 2007, the Jean Monnet Chair of Prof. Wessels was awarded the ‘Jean Monnet – European Studies’ Lifelong Learning Award. He is chairperson of Trans European Policy Studies Association, Brussels, and co-editor of Jahrbuch der Europäischen Integration. His most recent books include The European Council (forthcoming) and Das politische System der Europäischen Union (2008).

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New Modes of European Governance An Introduction Stefano Bartolini

The NEWGOV project has been distinctive in two respects. First, the early literature on new modes of governance tended to see new modes of governance uncritically (and normatively) as a natural and successful alternative to traditional hierarchical forms of government. This project has aimed at a more sober and balanced assessment of these instruments, holding a more critical view as to their viability, quality and effectiveness, and to the problems of governability they may generate. It is also distinctive in that it combines multiple arenas and multiple disciplinary perspectives into a single study, with a concerted effort on the part of its participants to work within a common framework to produce comparable results, albeit divided along key thematic dimensions, as set out in the Preface. The five chapters of this book present those results in synthetic form in accordance with those thematic divisions. In so doing, they seek to reveal and develop the components of a ‘theory of governance’ that can help overcome what I refer to below as the ‘promiscuous proliferation of concepts’ that has resulted from the massive number of normative and empirical studies on the subject of ‘new governance’. The purpose of this introduction is to tease out a more precise definition of ‘new governance’, both from the general literature and from the many contributions to the NEWGOV project, in order to provide a more solid basis for future empirical work and conceptual clarification.

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Stefano Bartolini

The importance of governance theory

The term ‘governance’ has spread over all sort of fields and disciplines and has filtered through the media into the general public debate. It is applied to any field where a mix of competences and functions creates complex structures of decision (e.g. health governance); whenever a mixing of private and public actors is present (e.g. private–public partnerships, socio-economic governance); where decisions depend on the complex network of different levels of government (e.g. European governance); to the set of rules that govern firms (corporate governance) as well as representative associations. We have seen it applied even to formal institutions such as the judiciary or to semi-autonomous spheres such as that of sports associations. Associated with the use of the term ‘governance’ is the proliferations of adjectives that are meant to specify it: ‘multilevel’, ‘global’, ‘network’, ‘multi-tiered’, ‘modern’, ‘good’, ‘new’, etc. Governance is clearly a property of many different arenas, running from the market to associations, community, networks and the state and extending from the local to the national and supranational. These various conceptions of governance do not share a set of constitutive features, a defining conceptual core to which additional features can be cumulatively added to identify its specific manifestations. Governance is often defined by identifying dichotomies, such as ‘governance’ versus ‘government’; ‘bottom-up’ versus ‘top-down’; ‘soft’ versus ‘hard’; ‘self-governing and networks’ versus ‘hierarchies and bureaucracies’; ‘deliberations, reason giving and voluntary acceptance’ versus ‘formal command and control’; ‘private’ versus ‘public’; ‘flexibility, learning and adaptation’ versus ‘institutional rigidity’; ‘Pareto-improving options’ versus ‘redistributive choices’ (Olsen 2009). But these dichotomies are not exhaustive and mutually exclusive, and, therefore, we cannot proceed by genus and differentiam to build precise classifications or typologies of governance. Moreover, the literature on governance – in particular that applied to the EU – is predominantly descriptive and normative, and rarely rigorously analytical (cf. Pierre and Peters 2005). The study of governance is an area in which academics have been guilty of a promiscuous proliferation of concepts and this justifies the conclusion that ‘we are still in a period of creative disorder concerning governance’

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(Kooiman 2003: 5; Rhodes and Visser, this volume). This being the case, we cannot hope to discover and restore an ‘original’ meaning or impose a standardized understanding. At the same time we cannot simply conclude that the term ‘governance’ has too many meanings to be useful and that its inbuilt ambiguity defeats any rigorous intellectual use. We cannot and we should not dispose of this term because it points to a number of crucial developments and new decisional structures and processes whose importance and novelty is unquestioned. Governance theory has great potential for analysing phenomena of interest to scholars and practitioners of the European Union, domestic–global political linkages, transnational cooperation and different forms of public–private domestic exchange. First, competing ideologies have long placed excessive confidence either in the problem-solving capacity of governments facing collective goods production or in the capacity of markets, civil society and individuals to spontaneously cooperate in the achievement of those same goods. Governance practices and theory insert themselves into the large spaces between this ideological contest, providing both a challenge to them and the analytical potential to overcome their limited descriptive and cognitive capacity. Second, governance practices and theory reflect the erosion of the role played by central governmental institutions (parliaments, executives, bureaucracies) and by central political actors (parties and unions) and the decline of public confidence in them. Popular discontent and a growing degree of cynicism about the relevance and the effectiveness of the political institutions and leaders is visible in almost all of our societies, and the evolution of the EU as a new centre of policy-making power has provoked new dimensions of such protest (Balme and Chabanet 2008). Traditional bureaucracies have been confronted with increasing public criticism and discredit for their remoteness, formalism and obtrusive way of dealing with citizens (Painter and Pierre 2005). Continuous attempts are made to ‘reform’ them, either by creating new instruments (the growing role of independent regulatory agencies, for example) or by emphasizing performance management in the public sector and the effective delivery of services by more professional and responsive administrative managers (as in the new public management philosophy). A similar decline and confidence is visible for the traditional structure

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of societal intermediation and representation, primarily political parties and trade unions. The hectic search for more participatory mechanisms and institutions has brought about a proliferation of new social movements, referenda, primaries, deliberative and electronic forms of participation, etc., without any of these appearing to be an effective and satisfactory solution – an issue which is especially acute in the EU and its emerging multi-level polity (Kohler-Koch and Rittberger 2007). While the traditional notion of ‘party government’ is largely discredited, the personalization of politics and the rise of single-issue parties have provided (frequently illusory) shortcuts to resolving complex problems (Peters 2008). Governance practices and theory point to the emergence of new actors, new forms of involvement and innovative forms of decision-making complementary to the traditional articulation of demands via direct and electoral participation, responses by legislation and implementation under bureaucratic control. Third, the discrete jurisdictions of nation-states in policy production were based on the conclusive setting of a body of rules and the accretion of aggregated sets of law. The globalization trend and the age of networking are challenging this rationale for the production and reproduction of law (Laible and Barkey 2006; Marcussen and Torfing 2007). In a growing number of (high technology) fields, important and worldwide regulatory decisions are increasingly settled outside the traditional forms of law laid down by national sovereigns. This production of rules is often incomplete and unstable and is based on more flexible and heterarchic networks, involving various public regulatory agencies, at times with the involvement of parliamentary and administrative committees from different countries, and a range of semi-state and private organizations. In these fields it is increasingly difficult to neatly separate the public and private sphere as well as the domestic and the international sphere, and there is a natural tendency to define political spaces in a functional way, as policy regimes defined by the scope and range of the problems to be solved, rather than as jurisdictions. This form of rule production obeys the logic of functional specialization, transcends the boundaries of states without acquiring the status of international law (private or public) and avoids a clear definition of legitimate, representative, licensed or recognized actors and stake-holders (Grande and Pauly 2005). Only a theory of

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An Introduction

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governance promises to be able to make some sense of this considerable complexity. Fourth, it is fair to say that the EU has been probably the most active and innovative producer of new types of decision-making arrangements. Seeking to respond to problems rapidly and in a flexible way and trying to avoid the limits of the Community Method and inter-governmental negotiations, the EU has increasingly turned to a series of innovations to encourage flexible policy-making processes, conducive to experimentation, learning, the stimulation of exchange and the emulation of best practices (Diedrichs, Reiners and Wessels, this volume; Tömmel and Verdun 2009). These usually use less hierarchical and less formal modes of steering and policy-making, based on the creation of incentive structures and non-legal sanctioning methods, such as ‘naming and shaming’, as well as learning, arguing and persuasion. Therefore, in the countries involved in the attempt at European integration, the candidate countries and, more generally, neighbouring countries, ‘governance’ is an unavoidable conceptual tool. To sum up the argument, governance theory has the potential to combine the goals of individual actors with the structural transformations that their interactions produce for the polity. From the point of view of the actors involved, governance is a means for achieving goals. It promises to guarantee the effectiveness of policy implementation not assured by mere coercion (Héritier 2002, 2003). It may improve implementation achieving behavioural compliance in a flexible way, allowing some degree of negotiation/negotiability in the compliance itself. It may reduce policy segmentation and poor coordination, a growing problem of traditional policies based on specialized bureaucracies. It may foster policy learning resulting from the involvement of a broader set of actors in the policy process, bringing about an increased range of information and also different values and preferences. It is also supposed to contribute to the legitimacy of outputs by involving partners that are also the targets of those same actions (Bellamy, Castiglione, Follesdal and Weale, this volume; Smismans 2006). At the same time, the development of governance forms can be interpreted in a systemic perspective. Governance can be seen as the result of the extension of functional problem-solving beyond the territorial boundaries and jurisdictions of the nation-state towards a

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broader functional regime, which is European but also international and global. The growing mobility options for actors and resources previously confined by stricter national regulatory regimes has generated an increasing need on the part of central political elites and governmental structures to resort to more consensual and less binding decisional rules and procedures. At the core of governance there is an evolution towards more ‘consensual’ decisions (or towards a higher significance, number and relevance of consensual decisionmaking) and an evolution from simply binding decisions towards a growing set of mechanisms and controls actually reflecting the competence and/or resource control capacities of various actors. In this perspective, governance can also be seen as resulting from and contributing to the decline of the nation-state. The weakening of the national political-electoral accommodation of conflicts, and the persisting weakness of the EU territorial accommodation of conflicts, have both left open a wide intermediate space of experimentation in new techniques and structures of conflict management and problem resolution (Scharpf 1999; Schmitter 2001; Balme and Chabanet 2008). Governance not only emerges out of the declining enforceability of behavioural conformity without the involvement of affected interests but also contributes to it. Governance goes beyond conflict management via the actors generated by the cleavage system (parties and ideological movements), the interest intermediation system (pressure groups) and the territorial system (central and local government) and adds additional conflict-management and decision-making processes and structures that are ‘transversal’ to these systems. In governance theory, traditional governmental structures become diluted into a less authoritative environment and see their specialization in the production of behavioural conformity reduced (Héritier and Lehmkuhl, this volume). Seen from these various points of view, the importance of governance practices and theories can hardly be underestimated. The definitional difficulties associated with the term ‘governance’ perhaps only reflect the sheer scope of the new ideological and material developments it is intended to cover and understand. Therefore, given the theoretical and empirical importance of governance, we necessarily need to come to grips with its nature as a ‘frame concept’, within which a plurality of meanings needs to be accommodated. This is the principal inspiration behind the NEWGOV project.

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An Introduction

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2 Governance as a ‘frame’ concept The minimal definition of a concept is a definition acontrario: a definition that identifies what the concept is not and does not refer to. At this most general level of abstraction, governance is not ‘government’. It differs from government defined as forms of ‘command and control’, characterized by the role of central public institutions, hierarchical relationships, electoral responsibility, hard legal instruments and erga-omnes binding decisions.1 The classic national government model assumes that demands from citizens, voters, consumers and taxpayers are transferred and aggregated by the political system and then generate a policy response, the implementation of which is the task of the public administration. The classic Community government assumes initiatives coming from the Commission, mediated and modified by the inter-governmental process and applied by national administrations. Any departure from these pure mechanisms deserves the title of governance. The a-contrario definition identifies a second element that is not ‘governance’: the private dealings and coordination among individual actors that do not extend obligations beyond them and with no direct or indirect intervention of public authorities, except in case of adjudication (cf. Kooiman 2000). Any departure from this pure form of self-coordination deserves the title of governance. In this case too, a grey area exists. On the one hand, it is clear that the concept of governance cannot cover the realm of all dealings among private partners, extending to contract law, private agreements and the norms of social routine. On the other hand, there are cases of agreements among private interests that acquire the status and form of a regulatory framework, which is usually referred to with the term of ‘private self-regulation’. The line may be hard to draw in many cases, but the general principle is that when these private agreements do not extend obligations and consequences beyond those who have subscribed to them, then they do not deserve to be labelled forms of governance. On the contrary, when they do, such extended consequences and obligations may also enhance the possibilities for public authorities to monitor such agreements more closely. Employing these two a-contrario boundaries, we have preliminarily defined governance as a field: the space for norm production which is intermediate between the legal rules produced following

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electoral-legislative-executive-bureaucratic channels according to constitutional procedures, on one hand, and private dealings, traditional norms and social routines on the other (Rosenau 2000). At the same time, we have also defined governance positively, as a specific mode of the production of norms (decisions, rules, policies) that we can call co-production. Governance is therefore a system of coproduction of norms and public goods where the co-producers are different kinds of actors. The general definition of governance as the ‘co-production’ of norms leaves open the question of the identity of the co-producers. Private actors are typically the producers of mutual contractual obligations within their sphere of autonomy, and governmental actors (national and international) are typically the producers of general validity and binding obligations. Governance is based on the cooperation of different kinds of actors that results neither in merely private agreement nor in public decisions. In fact, the co-producers can be public and private national actors, but they can also be public and private international or transnational actors; they can be public actors at different levels (local, regional, state, community or international institutions) or any other combination of the former. In this way, governance can indeed be based on private–public forms of partnership, but it can also involve innovative forms of decisionmaking between member states and community institutions or between international organizations, private actors and national public authorities, and so on and so forth. The level of involvement of public authorities in the co-production of governance varies. From a general point of view, governance modes are always set up and carried out in the shadow of hierarchy, with public authorities being somehow involved, at least in the minimal sense of allowing private actors to regulate what could be left unregulated or could be regulated differently. And national and international public authorities are always in the position to regain control of forms of co-production governance, when and if circumstances so require. Yet, the extent of the de-facto involvement of public authorities in forms of governance varies enormously from one case and field to another. In many cases, public authorities are present as the agent who pays the initial cost of overcoming the tendency of other actors to refuse cooperation. Then, more generally, public authorities must monitor the governance co-production, the

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An Introduction

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overall achievement of goals, the delivery of services and the negative externalities of governance outcomes for those delegated forms of policy-making and implementation that involve public and private agents. In the most intrusive forms of co-production, public authorities can be involved by threatening coercion (legislation) to induce recalcitrant partners to achieve a result. Eventually, in cases of exceptional circumstances, such as heavy losses and failures, public authorities are in a position to recapture the control that was delegated. Therefore, the role played by ‘government’ in ‘governance’ is not fixed, but it is a crucial variable of different governance modes. Different forms of ‘governance’, ranging from the most traditional to the newest, include a component of ‘government’, even if this component is present only as merely potential interference. The level of involvement of partners in governance co-production may also vary greatly. Participation in governance arrangements is by definition voluntary; opting out is always possible provided one is willing to bear the costs. Moreover, co-production is almost never the preferred way of dealing with problems and resolving conflicts. Governance arrangements are very often the second-best option for everybody. Strong private actors may prefer market competition, but they realize it is out of their reach. Governments may prefer direct legislation but realize that this is impossible, costly or inefficient. The European Commission may prefer to follow the Community Method and member-state governments may prefer to keep issues under their direct competence or intergovernmental negotiations, but both realize they cannot always achieve this. The possibility cannot be excluded that some partners will prefer participation in governance co-production to any other alternative decision-making mode. This, however, is likely to be the case only for those relatively ‘weak’ actors for whom alternative forms of market-based or authority-based production would not offer a similar degree of influence and public recognition. Under these general conditions, the level of actors’ involvement in governance co-production can range from elementary forms of providing information and consultation for feedback, to ever-more-demanding forms of direct and consistent involvement, from collaboration as direct participation in decision-making, even to the point of direct empowerment, leaving the decisions to partners within a broad and loose framework of reference.

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The definition of governance as ‘co-production by different types of actors’ avoids taking a precise stand on what is actually produced. Co-production may eventually lead to binding decisions on the partners, to general norms, simple goal definition, softer texts with recommendations, agreed-upon standards, guidelines, benchmarks, best practices, indicators, monitoring arrangements and timetables, with an increasing latitude for actors to choose how to meet the requirements. Similarly, the ways of achieving co-production also varies. As it is a form of co-production, by definition the mere use of public authority by officials backed by the power of the state apparatus cannot be used. In this latter case, we definitely leave the realm of ‘governance’ to that of ‘government’. In co-production, actors necessarily need to have a degree of independence; and yet to be interdependent means they are unable to impose their own preferred solutions and that they are aware of the costs of non-solution. Similarly, by definition, co-production excludes that the interaction is based solely on private competition among independent actors for the distribution of scarce goods. Assuming, therefore, the non-viability of both ‘coercion’ and ‘competition’, by definition the means to achieve co-production must be highly cooperative. Decisions must be reached by negotiations, deliberation, exchanges and consensus. Even if binding decisions are reached that are not unanimous, they must nevertheless be accepted by and acceptable to everybody. The emphasis of analysis must therefore be on a whole set of steering and control activities, on non-hierarchical and mutually interdependent relationships, on problem-solving style and on efficiency, transparency and consensusbuilding (Sbragia 2000). In governance co-production, the nature and role of sanctions also varies considerably, ranging from enforceability with precise and ex-ante defined sanctions to enforceability that largely rests on voluntary adhesion and perhaps only reputational or ‘blaming’ costs: not only the Open Method of Coordination but also many fields of decision-making in Justice and Home Affairs and in the Common Foreign and Security Policy are cases in point (Büchs 2007; De Bièvre and Neuhold 2007). Reputation costs are, however, particularly important because in governance co-production it is implicitly assumed that interaction is repeated over time for the type of issues concerned. This implies that there is a learning process about others’

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preferences, compromises and exchanges, that trust may widen the range of mutual concerns and may foster over time a commitment to the governance process itself. It also implies the potential costs of bad reputation, of being ‘blamed or shamed’ for failure. The institutional context of governance co-production is characterized by far less institutionalized interaction among the actors involved than the very institutionalized (and in many cases ‘constitutionalized’) procedures of governmental decision-making. One of the characteristics of governance is indeed its continuous and considerable creativity in devising new modes of interaction and therefore the continuous creation of always-new hybrid forms. While traditional government (in democracies) is characterized by a precise number of procedural stages that have to be traversed at one stage or another (independently of how much negotiation, consultation, etc., is taking place across these procedural stages), governance modes are driven by problem pressure more than by procedural constraints and evince, therefore, a considerable degree of institutional creativity and flexible adaptation. Governance identifies a field of continuous adjustments and dynamic change. In fact, governance is hard to institutionalize by definition. The development of these networks leaves open the continuous request for accession of new claimants and outsiders, without the possibility of defining exhaustively and ex ante who has property rights to be an insider and to participate. Finally, governance as co-production leaves open the question of the rigidity of the mode of implementation. The classic rigid mode of implementation of public bureaucracies, defining detailed goals, procedures and standards is excluded. Governance implies more flexible implementation and more latitude of action for actors to implement via adjustments to circumstances; it may imply rounds of renegotiations for implementation adjustment via mechanism of information and consultation. Governance mechanisms are more open and modifiable, even in itinere, although it may be impossible to define precisely a specific modality for their implementation.2 In conclusion, at a relatively high level of abstraction, governance can be defined as a co-production mode of decision-making among different types of actors, while the type of actors involved, the extent of involvement of public authorities and of partners, the outcome of the production, the decision procedures, as well as the institutional context and the type and role of sanctions all vary and define

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different kinds of governance mode. Governance arrangements are less ‘obvious’, less ‘visible’, ‘more specific’. Therefore, their forms are much more differentiated by policy domain, type of actors, etc., than are more traditional forms of government. The more we approach specific empirical realities, the more the list of properties can be specified. Figure I.1 below presents in synthetic form the eight dimensions of variation in forms of governance. For each dimension, the main status/values that the dimension can take are indicated. These statuses can sometimes be organized in ordinal categories going from less to more. In other cases they are nominal categories. Some of the combinations of the categories’ statuses are logically impossible. Some others give birth to empirically unlikely classes (low frequency). Yet the sheer complexity of the concept of ‘governance’ defeats any exercise of simple typologization. This is why most existing simplified and intelligible typologies tend to be incomplete, exclude some of the instances associated with governance and, therefore, are challenged on that basis. This is also why I have preferred to chart the complexity of the property space of the governance concept rather than discussing existing typologies. This choice is also in line with the polysemous approach followed by the NEWGOV scholars.

3

Old versus new governance

The project on which this book is based adds the word ‘new’ to governance. This forces us to take a stand on the issue of ‘new’ versus ‘old’ governance. Many criticisms have surrounded the widespread resort to the ‘new governance’ terminology. These criticisms point to the ambiguity of referring to recent versus old forms without being able to clearly identify the time frame. The problem is not only temporal. What appears new in certain policy fields may have been extensively practised in other fields. Finally, concerning the level of government, what is new at the EU level may have a much older history at the national level, or the other way round (Treib et al. 2005). These criticisms are analytically correct, and yet the term ‘new’ can be justified by pointing to a number of elements of novelty. First, ‘new governance’ clearly stands against the old use of the term ‘governance’ in English, which referred to the process aspect of

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Figure I.1

– different level

– metagovernance partner (monitoring outcomes

– equal partner

– agent paying the cost of initiating co-production

Level of involvement of public authorities

– empowerment within

– direct participation in decisions

– direct and consistent involvement and collaboration

– consultation for feedback

– providing information

Level of involvement of partners

– agreed upon standards, guidelines, benchmarks, time tables

– simple goals definition

– best practices, indicators

Content of co-production

– exchanges and consensus

– deliberation

– negotiations

– highly cooperative, nonhierarchical

Ways of achieving co-production

of norms by different \types of actors

Governance co-production

The property spaces of

– precise

– lack of recognition

– exclusion

– blaming and shaming

– reputation

Nature and role of sanctions

The eight dimensions of variation in forms of governance.

– public and private international or transnational

– public and private national

Identity of co-producers

production of norms by public authorities

Government

– depending on the openness to new claimants on the definition of procedural and decision rules

– from highly informal to highly institutionalised

Institutional context

– renegotiation for and during implementation

– information and consultation during implementation

– adjustment to circumstances

– flexible

Mode of implementation

Private dealings, traditional norms and social routines

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government, to ‘governing’, as opposed to the traditional study of the institutions of government. The distinguished tradition of studies on policy formation and implementation was attentive to the role of societal actors, to consultations and negotiations, etc., but did not focus clearly on processes of co-production. The term ‘new governance’ may also be justified in opposition to the traditional specific activities of public authorities in the attempt to model and direct macro-socio-economic processes. The term ‘governance’ was originally associated to activities of ‘economic planning’ and ‘concertation’, which theoretically and politically are no longer fashionable. A similar meaning was originally given to the so called ‘neo-corporatist’ structure of socio-economic decision-making, involving the peak organizations of employers’ associations and trade unions under the strong mediation of governmental authorities (Mayntz 1996). A further element of newness in the forms of governance is associated with the most recent studies of European integration. If old governance was mainly concerned with political systems with a precise identity, overlapping territorial and membership groups and relatively well-defined policy jurisdictions, the acceleration of European integration in the 1980s created a new layer of decision-making that could no longer be considered an international negotiation system; but nor was it regarded as a federal government. This has contributed to new transnational governance characterized by multi-level vertical negotiations, transforming executive politics, and by the considerable complication of horizontal negotiation involving crossnational actors (Egeberg 2006; Tömmel and Verdun 2009). Through the White Paper on Governance, the EU publicly declared that in a number of areas it was willing to put at stake the legitimacy of its actions on the mise en oeuvre of governance arrangements (European Commission 2001). The Commission referred to the transparency of the arguments, the opening of the decisional process beyond and outside formal legal arenas, the extension to the implementation process, the broadening of participation rights and the resort to rounds of negotiation. This emphasis on new governance forms was then further strengthened by the EU’s attempts to Europeanize accession and neighbourhood countries. On the one hand, the EU was unable to simply hierarchically impose the acquis communautaire before accession. On the other hand, accession and neighbourhood

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An Introduction

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countries have limited resources and capacities (expertise, money, personnel) for hierarchically coordinating their adoption of, and adaptation to, the acquis. In this situation, it was natural for both European and national public actors to seek cooperation with nonstate actors to share or shift the burden, by pooling resources and delegating certain tasks (Tulmets 2005). The accession and approximation of Southern and Eastern neighbours to the EU has been a field of experimentation for the emergence of new modes of governance (Börzel, this volume; Paraskevopoulos et al. 2006; Dezseri 2007). Even the rapid internationalization process of many decisional areas and problem-solving issues under the aegis of globalization contributes to the emphasis on ‘new’ forms of governance. This has created growing interdependencies, new uncontrolled negative externalities and correspondingly increasing attempts to create effective structures of international regulation of supra-national common goods involving migration, environment, trade, financial transactions, etc. At the same time, the multiplication of private and public international organizations – from multinational corporations to transnational social movements, from transnational professional associations to scientific organizations – has enormously complicated the analytical task of grasping this new world due to their overlapping competencies, ill-defined boundaries and mutual dependencies. The older uses of the term ‘governance’ did not clearly point to the discovery, elaboration of and experimentation with forms of co-production that indicate modalities of actors’ coordination as sources of social order and collective decisions. Nor did it reflect the growing importance of a decisional network of a public–private nature and of decisional networks involving different levels and types of public authority (Börzel and Risse 2005). Nor did it incorporate the new style of decision-making so heavily dependent on non-hierarchical and mutually interdependent relationships and problem-solving styles, or efficiency, transparency and consensus-building as key characteristics. Therefore, if the analytical distinction between ‘old’ and ‘new’ forms of governance remains sometimes difficult to define precisely and becomes blurred in some border and historical cases, nevertheless the bulk and core of current governance presents features that justify the label ‘new’.

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4

The content and orientation of the book

As revealed by the five chapters that follow – which are based on the four NEWGOV clusters and their projects and on the work carried out by the ‘Democracy Task Force’ – there is significant variation among them concerning the dimensions that governance theory has developed. The ‘identity of the co-producers’; the level of involvement of public authorities and of partners; the outputs of co-production (from binding decisions, to the softest monitoring arrangements and timetables); the means of achieving co-production, the nature and role of sanctions; the institutionalization of the context of decisionmaking; the mode of implementation, and eventually the resulting capacity to generate convergence in cross-national policies all necessarily differ across the different projects. And yet the considerable variety of projects and fields falling under the aegis of NEWGOV does not prevent them from sharing a common understanding of ‘governance’ at a general level. As articulated in the first section of this chapter, they all regard governance as the ‘co-production’ of norms, rules and policies by different types of actors, different by level (local, state, European, international) and/ or by nature (private, semi-public and public). This co-production is understood by all projects as being achieved differently from, and outside of, traditional electoral-legislative-executive national arenas and procedures and differently from, and outside of, the traditional EU Community Method. They also share a set of common premises, and together they seek to rectify some of the flaws and to fill some of the gaps in the existing governance literature. The extent to which new modes of governance can deal more effectively than traditional modes in a multi-level polity with problems stemming from the international environment (e.g. poor economic growth, the rise of unemployment, strains on welfare states) and the daunting challenges of incorporating former socialist economies and societies is examined in the chapters by Rhodes and Visser and by Börzel respectively. In contrast to the more normative tradition in governance studies, which tends to exaggerate the importance of new modes as the ‘new new thing’, they and our other contributors share the view that ‘new modes’ – whether tackling older (socio-economic) or newer (EU enlargement) challenges are nested amongst ‘older’

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policy instruments and structures, and that what is novel rarely marks a complete departure from institutional and policy-making traditions. As revealed by Rhodes and Visser and Héritier and Lehmkuhl, in most cases traditional instruments have evolved over time, producing ‘hybrid’ forms of governance, in which traditional hierarchy frequently coexists with more deliberative, partnership-based instruments. Indeed, it is unlikely that ‘new modes’ have much real effect in terms of policy outcomes unless there is a linkage to more traditional governmental processes (Diedrichs, Reiners and Wessels). The theme of the ‘shadow cast by hierarchy’ on new governance, and of the threat of recourse to more traditional legislated or law-based solutions, is a common concern in all the following chapters. The early literature on new modes of governance also often neglected the connection between the emergence and operation of new modes and the issues of power distribution among actors. The contributions to this book try to correct that imbalance. Governance tools emphasize problem-solving needs and issues but they also affect power resources. There are ‘leaders’ and ‘followers’, ‘winner’ and ‘losers’ in shifts from older to more novel forms of governance, raising the question of who sets the trajectory of change and with what consequences. For the EU, new modes of governance depend on coalitions and networks and are not immune from the kinds of institutional power struggles that have always characterized the way in which the Commission as an agent has bolstered its powers and autonomy vis-à-vis its member-state principals (Héritier and Lehmkuhl; Diedrichs, Reiners and Wessels). Lastly, the issue of empowerment and disempowerment of different actors is also important for understanding the consequences of new forms of governance for political accountability, responsiveness and legitimacy of decision-making processes. New forms of governance may turn out to be more conducive to participation, inclusion and responsiveness but they can also be more technocratic and exclusive. If not coupled with representative institutions, they may generate long-term political legitimacy losses. This too is a common concern across all of our projects, and the chapters in this book, although it was specifically the concern of our democratic task force, whose work is synthesized in the chapter by Bellamy, Castiglione, Follesdal and Weale.

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Notes 1. This a-contrario definition is not compatible with those meanings of governance as a new concept that includes the totality of all decisional processes, from pure and simple government to all other forms of intermediate public–private partnership, and eventually to self-regulation. In this meaning, government is a part of governance rather than being its a- contrario definition (Giuliani 2008: 32). 2. Eventually, and particularly when we deal with supra-national governance, it is also possible to classify modes of governance according to their capacity to generate convergence in cross-national policies. The capacity of European modes of governance to induce policy changes in member states towards common political objectives may be minimal for simple benchmarking and/or recommendations. It increases if benchmarking is coupled with voluntary binding policy objectives and peer pressure. It attains further capacity for influence if a structured coordination process is added, and that capacity is further reinforced if legally binding policy objectives are associated with sanctions for non-compliance. Of course, the maximum capacity of policy convergence will be offered by harmonization through legally binding regulations (Citi and Rhodes 2007).

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1 New Modes of Governance Policy Developments and the Hidden Steps of EU Integration Udo Diedrichs, Wulf Reiners and Wolfgang Wessels

1

Introduction: Two sets of competing expectations

The discussion of new modes of governance in the European Union has attracted a great deal of attention from both academic and political audiences in recent years (Zürn 2000; Tömmel 2007; Börzel 2007b). The introduction of the Open Method of Coordination (OMC), originally praised as a fresh and bold step towards integrating new policy areas into the spectrum of EU activities, has been very much at the core of the debate (Hodson and Maher 2001). But, in addition, other unorthodox developments have been taken as signs of the fact that the classical Community Method is being accompanied or even replaced by innovative and experimental methods of decision-making, in fields such as freedom, security and justice, with its highly mixed and differentiated combination of first and third pillar components (Monar and Dahmani 2007), the expansion of soft law in defining formal and informal policy instruments, the rising importance of private actors in shaping and implementing EU policies or the growth in agencies as a result of an increasing delegation of tasks and competencies. The term ‘new modes of governance’ has become a much-used catchword for changes in the fabric of EU decision-making, whose actual scope and importance, however, have not as yet become fully clear. In our conceptual framework, ‘governance’ refers to patterns of interaction and coordination of social and political actors for the 19

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purpose of adopting and implementing collectively binding decisions. More specifically, it hints at the preparation, adoption, implementation and control of decisions, revealing both a structural and process dimension. Thus, it is embedded in institutional structures defining the rules of the game, as well as specific interaction principles guiding actors’ capacities, behaviours and orientations (Diedrichs, Reiners and Wessels 2011). Consequently, three dimensions of change are especially relevant for the analysis of governance and policy-making in the EU: 1. the sphere of authority between the public and the private; 2. institutional forms and patterns of decision-making between (in) formal intergovernmental cooperation and strongly supranational community procedures; 3. different types of policy instrument in the space between hard and soft law.

Public-private sphere

This three-dimensional approach to understanding modes of governance allows for differentiation with regard to the question as to whether new modes are actually being observed. This may be the case when the private sphere is increasingly involved in decisionmaking, breaking down traditional notions of an authoritative

Nature of instruments Pattern of decision-making Figure 1.1

The governance cube: describing a three-dimensional space.

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allocation of values by public institutions, or when the nature of instruments shifts from traditionally binding acts towards the growing use of non-binding, informal and ‘soft’ acts in areas where such developments have been rarely observed. Finally, new modes may be observed in a shift in the mix of institutional and procedural provisions, e.g. when intergovernmental cooperation is replaced by provisions on majority voting or when new mechanisms such as the OMC are established and added to existing decision-making provisions in a given policy area (e.g. in social policy or research policy). Changes in modes of governance may be observed in one or several of these dimensions, but not necessarily in all of them. The features of modes of governance may thus be mixed with regard to the three dimensions, combining rather traditional patterns of public–private relations with remarkable shifts in institutional interactions (e.g. in Common Foreign and Security Policy), and again such changes may be accompanied by new instruments (e.g. in Justice and Home Affairs). In general, this initial starting point warns us against using the idea of new modes in a too homogeneous and narrow sense. We need a contextualized perspective that takes into account the composition and configuration of different features of a policy area over time. Within this wide perspective the questions of how new modes of governance emerge and evolve, how they are executed and how they can be evaluated in a comparative approach are of particular importance. The investigation that follows uses ‘new modes of governance’ to indicate the dynamics of change over a broad range or policies within the institutional architecture of the European Union over the past 50 years or so. Thus, modes of governance are understood as closely interrelated to the systemic evolution of the institutional architecture of the EU and the specific features of its institutional and procedural functioning. We assume that new modes of governance are interrelated with the legal and living architecture of the EU, by adding new dynamics and dimensions to the integration process (Wessels 2005a, 2005b). This also means that we cannot separate the discussion about modes of governance from the overall evolution of the EU system, as has become apparent particularly in Treaty changes over time, with the Lisbon Treaty as – probably or possibly – the final stage in this process for some years to come. Those Treaty reforms, adopted by the

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European Council, reflect basic demands for adjusting the institutional and procedural landscape of the EU, in response to major internal and external challenges. Thus it does not come as a surprise that the emergence of new modes has taken place at a crucial phase of the integration process, linked to the process of policy expansion and the ‘conquest’ of new areas of competence and responsibility for the European Union, and reflecting specific tensions which arise from the member states’ desire to tackle common problems of modern welfare states while preserving a high degree of autonomy and capacity for national governments. We see in that a perennial tension in which European states have to make a trade-off between a problem-solving impulse to use the EU level efficiently, effectively and legitimately for national objectives, on the one hand, and a ‘sovereignty reflex’ against transferring too many competencies and instruments to the EU level on the other. The key question thus lies in the interpretation of such developments as either a case of continuing a long integration trend with perhaps different means or rather one of attempting to retain national powers and perhaps even to regain lost influence. In this respect, a time-dynamic perspective on new modes of governance appears particularly meaningful if it is linked to the two following contrary expectations, which will serve as guidelines for the analysis in the remainder of this chapter. • The first set of expectations considers new modes as attempts to find innovative methods for decision-making which may at first not fit the classical forms of the community method but still try to enhance the set of common approaches in order to tackle problems arising from interdependence. While reflecting a high degree of variety and differentiation, their functions and forms are regarded as temporary and transitional, open to further upgrading and enhancements at later stages. Though not being fully consistent with traditional forms of decision-making, they are nevertheless compatible with the broader trends of the EU system and have to be understood as implicit steps towards further integration. Thus, in this argument, it is expected that member states will eventually transfer the experimental and diverse forms of joint activities they develop together outside the legal framework into some kind of treaty provision, meaning a transition from ‘softer’ to ‘harder’ forms of decision-making. Following this line

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of argument, new modes can be observed by a shift in the pattern of institutional interaction, which forms a part of the overall institutional development of the EU. • A second set of expectations, opposed to the first interpretation, sees new modes of governance as a reflection of a diminution in the institutional development of the EU, leading to a high degree of differentiation and even fragmentation between and among policy areas. In general, in this argument, new modes of governance are regarded as a weakening of the Community Method, whose attraction for the member states has supposedly lost considerable value and importance in recent years. Within an overall trend of reversal of basic integrationist dynamics, member states opt for new modes in order to find particular institutional and procedural solutions within distinct areas of political and legal action, thus breaking up the familiar set-up of the community and leading to a new range of fuzzy and often confusing provisions. Thus, new modes are regarded as a possible open or hidden strategy for disintegration. In this view, former modes of governance are expected to be replaced by new modes, which do not develop from soft law into hard law but remain soft. Guided by these competing interpretations, we will approach the emergence, execution, evolution and evaluation of new modes of governance from an overall systemic perspective of the EU but closely informed by specific patterns observed in a number of policy areas in all three pillars. These will provide empirical evidence for the trends and directions we observe and allow us to assess the role and impact of new modes of governance in the overall integration process. 1.1 Approaching modes of governance: What is new? Following a three-dimensional approach on modes of governance covering (a) the specific forms and patterns of decision-making (institutional modes of policy-making), (b) the types of policy instruments ranging between hard and soft law, and (c) the sphere of authority between the public and private domains, we regard modes of governance as ‘new’ if and when: • ‘old’ institutional and procedural provisions for decision-making are transformed or further developed, particularly by up- or downgrading existing modes into more communitarized and

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supranational patterns – or the other way round into softer and less-demanding coordination processes such as OMC. Thus, the mixture between different old and/or innovative ways of decisionmaking is changed by enhancing certain modes in favour of others; • the nature of the policy instruments (binding/non-binding decisions) is modified by using soft law in particular. The growing use of soft law has been widely identified as a way of steering without coercion, leaving broad ranges of autonomy to EU institutional actors, member states and private actors with regard to the implementation of measures and to their individual adjustment to common objectives; • the involvement of private actors and autonomous institutions is extended and strengthened. Private actors take over, in general, a more autonomous and self-sufficient role in decision-making, appearing as partners and less as the subjects of public authority, as in the social dialogue (Art. 138 and 139 TEC). Furthermore, the delegation of tasks and competencies to agencies plays a major role in shifting authority from classical EU institutions to new actors. Thus, in a particular policy area, new modes are identified as innovative in the sense that they are experimental and untested – at least in the specific areas of our research. But it may also mean that already familiar ways of decision-making in certain policy areas are introduced into other areas, that old modes are incrementally adjusted or that the mixture of modes has changed over time. Therefore, we do not assume that one single model of governance will necessarily prevail over others but that the composition of governing modes will be enriched and enhanced.

2 The emergence of new modes of governance: External shocks and spill-over as driving forces? New modes of EU governance emerge (and evolve) in a specific context which is framed by the legal and the living architecture of the EU and which provides opportunities and constraints for using specific forms of decision-making. The interaction between different types of factors is a crucial condition for understanding the emergence of new modes of governance.

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As a general trend, new modes do not simply emerge as a result of policy goals to be achieved but are to be seen as a peculiar expression of the interrelation between policy objectives, institutional concerns and windows of opportunity exploited by political entrepreneurs. This mechanism of introducing new modes consists of three major steps in a mutually interlinked ‘feedback spiral of EU governance’. First, demands for common action arise among the member states and lead to the use of the Treaties or to the introduction of cooperation outside the formal framework of the Treaties, depending on the sensitivity of the policy areas involved, the member states’ interests in play and the institutional possibilities available at a specific moment. Informal practice may lie at the start of the process. Second, the provisions of the Treaties and informal, sometimes quasi-constitutional provisions are applied by the actors at the national and European levels, giving meaning and effect to the written and unwritten rules that lie at the basis of cooperation. At the same time, the ‘real games’

Formalisation and hardening of provisions in the Treaties

‘Real-games’ played flow into their re-definition

Adjustment of the legal and informal foundations

Informal cooperation outside the Treaty framework

Demands for common action among Member States Figure 1.2

The new modes of governance ‘feedback spiral’.

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played by actors flow into the redefinition of their action, creating a feedback process which is driven by a constant adjustment of the legal and informal foundations to the demands and needs expressed by the member states. Third, pre-existing informal practice may lead to a formalization and legalization at a later stage, particularly when policy areas which have not traditionally belonged to the scope of the EC/EU, become part of its institutional and procedural sphere of application. At the same time, Treaty provisions used in the past may be reformed and adapted in order to allow for more efficient, effective and legitimate policy-making. When new demands arise, the process may start again. The European Council plays a key role in this process as an interface between member states’ preferences and EU institutional concerns, pushing the evolution of EU governance further forward, particularly by shaping EU Treaty reform (Wessels 2010). The activation of this process and the process itself have to be seen in the light of a basic dilemma: confronted with fundamental challenges – often initiated by external shocks and not infrequently linked to earlier decisions taken under the effects of perceived spillover – governments in the EC, search for solutions at the EU level in order to deal with common challenges. Respecting the preoccupation of transferring too many competencies or too much power to EU institutions, they find themselves faced with a veritable dilemma of combining their problem-solving impulse with their sovereignty-defending reflex. As a consequence, they opt for a soft, informal and non-binding way of dealing with an issue, thereby initiating the feedback spiral. Thus, the achievement of certain policy goals is accompanied by concerns to avoid or circumvent classical community procedures, thereby reflecting member states’ preferences in favour of preserving national authority and influence, while at the same time encouraging joint approaches rather than classical interstate cooperation or no cooperation at all. (Wessels 1997). The push for common action may be triggered by the following: • External shocks and demands, emerging from major international crisis that generate new reactions and adaptations by the EU, or from a constant and rising pressure from the EU’s external environment that challenges its economic, political and/or normative position. In economic terms, the Lisbon process since 2000 has

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been driven by concerns with the EU’s international competitiveness; in political and security terms, the wars in former Yugoslavia and in Kosovo have triggered new dynamics in the CFSP, which have resulted in major reforms and in the establishment of the ESDP and led thereafter to a cautious but visible differentiation of governing modes under the umbrella of intergovernmentalism. In Justice and Home Affairs, the 11 September 2001 shocks paved the way for common decision-making in key sectors such as the common arrest warrant and encouraged the adoption of measures in the Hague Programme. • Policy-related objectives, defined in terms of effective problemsolving as a reaction to policy failure, the need for expertise, spillover and policy demands by member states or societal actors, are highly relevant. Here we find particularly the objectives of the Lisbon Process, which aim at strengthening the EU’s international competitiveness, as a major source of inspiration for introducing means and methods for improving policy output in crucial areas such as research policy, pension reform or social policy. But policy failures also play a role as a driving force for changing and adjusting institutional and procedural provisions in Justice and Home Affairs or in the common foreign and security policy, where the trend has been towards a strengthening of common mechanisms and instruments. • Institutional and constitutional legacies, particularly those found in the development of the legal architecture of the European Union, and serving as the basis for its living architecture (opportunity structures) play a prominent role. We find that changes to the fabric of EU governance take into account the pre-existing institutional provisions and try to expand and enhance their efficiency and effectiveness. In this regard, the member states in the European Council have a key role in shaping and changing provisions regarding EU modes of governance. Member states try to open up new opportunities for problem-solving, while preserving their say in the process. The European Council acts as the engine for institutional reform and as the gatekeeper of governing modes, such as the OMC, where ultimately the heads of state and government decide on the major improvements and steps ahead. • Normative impulses mainly grounded in the endeavour of rendering EU decision-making more democratic, transparent and thus

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more legitimate. Here, the impetus generated by the perceived need for diminishing the EU’s democratic deficit has led to the expansion of governing modes in the direction of more supranational clout by granting the European Parliament more influence in decision-making. 2.1 Emergence within the three pillars More specifically, demands for the introduction of new modes identified in our empirical analysis hint at an expansion of the Union’s state-like functions and in particular its problem-solving capacity in key sectors of economic and social competitiveness (Hodson and Maher 2001; Borrás and Jacobsson 2004; Shaw 2008). The objectives defined by the Lisbon summit in 2000 and the Barcelona summit in 2002 in terms of innovation, competitiveness or economic growth became crucial for research policy, pension reform and social policy (Borrás and Jacobsson 2004). Policy failures or policy gaps have also been identified as the basis for introducing or improving modes of governance when it comes to experiences gained. Perceptions of insufficient national efforts in tackling major challenges facing modern welfare systems (employment flexibility, the ageing of societies or declining environmental standards) have also provided a stimulus for institutional and policy-making innovation. On the other hand, the issue of transparency and legitimacy has been presented publicly as the driving motive for changing the fabric of EU governance, particularly by Treaty reform, the establishment of the OMC and subsequent improvements in the institutional and procedural provisions. Finally, the external standing and role of the EU has also played a major role in driving the development of modes of governance, not only in economic terms under the Lisbon heading but also with regard to the CFSP and ESDP, whose development are not least a reaction to the changed international security environment (Diedrichs 2007, 2008). In Justice and Home Affairs, the external dimension of crime and domestic threats to security has been a major factor in defining more comprehensive policy goals for the EU. Particularly within the former EC area of competence, the emergence of new modes of governance follows a double rationale. New modes have rarely replaced traditional patterns of decision-making but rather have been used in a complementary way. They emerge in order to cover policy areas where coordinated action by all member

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states is regarded as necessary and useful but where there is no explicit or only weak reference within the EC Treaty, as in the case of research policy (Art. 163–73 EC Treaty) (Shaw 2008), the introduction of the OMC on pension reform, social policy (Art. 136–7, 144 EC Treaty), or environmental policy (Art. 6, 175, 95t EC Treaty) (Bähr et al. 2007; Bähr and Treib 2008). More centralized forms of decision-making coexist with less hierarchical modes and less binding instruments. Here, new modes of governance emerge in order to solve policy problems without resorting exclusively to the classical Community Method, considered as too costly for member states in terms of national sovereignty and autonomy, the preservation of domestic legacies or protecting sensitive issues areas where uncertainty over EU decision-making has prevailed. In the intergovernmental pillars of Maastricht, the CFSP and JHA, modes of governance have come into play basically as a reaction to the deficiencies of classical intergovernmental bargaining and its limitations for solving policy problems, while avoiding a move towards traditional and fully fledged patterns of communitarization (Monar and Dahmani 2007; Diedrichs 2008). However, while in the CFSP modes of governance were mainly located in the sphere of intergovernmentalism, adding elements of differentiation and a cautious introduction of other modal variants (e.g. coordination), JHA can be taken as an example of a policy area which has been largely transferred from intergovernmental cooperation in areas of significant sovereignty concerns to more community-oriented forms of policy-making without (initially) adopting the traditional Community Method (Monar and Dahmani 2007; Diedrichs 2008). Here, the hybridization of different procedures and instruments has been particularly significant since the Treaty of Amsterdam came into force (Monar and Dahmani 2007). In a number of sectors falling within this area, such as migration policy or asylum policy, it can be discerned that over time more centralized forms of decision-making and more binding instruments may develop as a result of partial and uneven communitarization, reacting to pressures and demands for more effective problem-solving, to spill-over and to the enlargement of EU membership. The member states thus tried to ensure a rather high level of centralization in certain policy sectors of JHA, out of fear that the accession of new member states might lead to a dilution of the acquis communautaire.

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In the CFSP and ESDP, the dynamics of the policy area are rather more cautious but reflect efforts to overcome intergovernmentalism by introducing new modes which allow for more effective concerted action by the member states. Thus, while taking Justice and Home Affairs and crisis-management missions in the CFSP and ESDP as examples of attempts to include new policy areas under EU jurisdiction, JHA generally reflects an endowment of areas hitherto dealt within intergovernmental forums with stronger and more coherent institutional provisions rooted in the common institutional framework of the EU rather than that of the CFSP (Diedrichs 2007). Basic reasons for this divergence may be identified in a combination of external and internal factors. First, the shocks of 11 September have had an extremely visible impact in Justice and Home Affairs, where many policy initiatives which hitherto had been blocked became possible (e.g. the European arrest warrant), leading member states to consider more seriously giving up sovereignty in order to enhance internal security. The general readiness to keep and preserve national autonomy was thereby weakened. Second, the prospect of the last enlargement round led the older member states to ensure future progress on issues highly relevant to them such as migration, asylum and visa policy where inaction due to institutional paralysis would have incurred high costs. It is thus no coincidence that the partial communitarization of areas of Justice and Home Affairs had been finished just before the new member states entered the Union. Finally, the interconnection of the policy areas located in JHA with other community fields of activity (such as the internal market, free movement of persons and non-discrimination) facilitated a more coherent community-based approach. In the CFSP, by contrast, the impact of international shocks and crises was not as critical, while inaction would incur political and diplomatic costs rather than social and economic ones. Finally, the interconnection with other EC policy areas – with some exceptions in the area of trade policy concerning sanctions or in development policy – was not as highly developed. As a cross-cutting trend, the growing importance of delegation in the shape of agencies reflects a strong pattern within the EU, but does not imply per se a weakening of the EU institutions, such as the European Commission. Some agencies have existed in a number of policy areas for a rather long period while they are quite new

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in other fields (particularly the CFSP and Justice and Home Affairs). Their competencies and capabilities differ enormously from one to the next, and many of them are charged with coordination among actors from several levels of decision-making rather than with securing more effective decision-making, so that their specific impact has to be assessed within the particular policy area under investigation.

3 The execution of new modes of governance: New instruments, new actors, a new mix? When it comes to the execution of new modes of governance, our major assessment is that there is, as far as we have observed, no overall trend towards softer instruments at the EU level as such but the actual use of such tools depends very much on specific conditions in single policy (sub)areas. Further, instruments of different quality and bindingness are rarely used in an exclusive way but rather in parallel or in combination with others. Already, since the coming into force of the Maastricht Treaty, the share of types of legal acts had undergone important changes. Here, the majority of legal acts have been regulations, accounting for almost 50 per cent of all secondary legislation adopted in that period. Next come decisions (39 per cent), while directives account only for a rather modest share of 4.3 per cent. The main sources of this dominance lie in the fields of regulatory policy areas such as agriculture and fisheries where regulations are intensively used for either shaping the market or for commercial policy vis-à-vis external countries. Competition policy and external relations account for a high number of decisions adopted, this instrument being used particularly by the Commission in exercising its regulatory role and for specific trade-policy instruments. The picture is much more mixed and balanced in other policy areas. Thus, policy-specific peculiarities play an important role in assessing the mix between different legal instruments. This picture changes, however, under the Amsterdam Treaty, with a considerably reduced share of regulations (37.9 per cent), in particular in favour of decisions (almost 47 per cent) and unspecified legal acts (rising from 7.9 per cent to 10.4 per cent). Particularly the rise of the latter could hint at an increased role of non-binding acts, but also to the dynamics of CFSP and Third Pillar decision-

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making. Finally, under the Nice Treaty and until the end of 2007, the observed trend since Maastricht has seen some modifications but has remained basically intact: the share for the adoption of regulations (39.4 per cent) as well as directives has risen slightly (from 4.8 per cent to 5.5 per cent), while all other types of legal act have decreased (decisions fell to 45.6 per cent and other acts to 9.5 per cent) (see Figure 1.3). From these general figures, an EU-wide substantial trend towards the use of non-binding, soft-law provisions can hardly be identified. The main shift has apparently taken place between the share of regulations and that of decisions, having become the most frequently used instrument ever since. The scope of decisions is much more limited than that of regulations, though both are entirely binding as to their contents. The shift from regulations to decisions in quantitative terms thus may be seen as signifying a reduction in overall

60 50

(%)

40 30 20 10 0 Regulations Directives Decisions Other

Maastricht (%) 48,8 4,3 39,0 7,9

Amsterdam (%) 37,9 4,8 46,9 10,4

Nice (%) 39,4 5,5 45,6 9,5

Figure 1.3 Share of types of EC/EU legal act adopted under the Treaty of Maastricht (11/1993–4/1999), the Treaty of Amsterdam (5/1999–1/2003) and the Treaty of Nice (2/2003–12/2007), percentagea. Source: EURLEX data 1993–2007. a The legal acts include acts adopted within the coordination method, such as employment policy guidelines, or recommendations by EU institutional actors (category: other).

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binding legislation in favour of more specific and discretionary binding acts. There has also been a general reduction in the share of binding legal acts since Maastricht, which mainly took place under the Amsterdam Treaty but which have not been confirmed under Nice so far. The use of hard- and soft-law measures in many cases reflects the observed differentiation and hybridization of governing modes (Peters 2008). The mixed composition of modes of governance reflects a basic trend of choosing options for steering beyond the classical Community Method, based upon binding legislation, which comes into play in particular sectors of policy areas (most of the CFSP, parts of JHA, of social policy, research policy and pension reform). However, speaking of a mix is rather misleading. Instead, a parallelism of different modes applicable in particular fields of action seems to be a more appropriate way of describing the situation. Observations indicate that in most cases innovative modes have been introduced alongside established modes of governance, while remaining rather distant from them. The OMC has been used for specific fields of action in social policy or research policy, for example, while other areas in these policy domains have remained subject to supranational decision-making and/or intergovernmental negotiations (Borrás and Jacobosson 2004; Bähr et al. 2007; Shaw 2008). A wide array of different modes is found in Justice and Home Affairs, where uneven communitarization has led to the emergence of specific variations in modes of governance (Monar and Dahmani 2007). The centralization of instruments via budgetary resources has also been a powerful trend. In the second and third pillar, a growing number of activities has been subject to EC funding, has increased the EP’s and the Commission’s influence and has reduced the degree of autonomy for member states. In environmental policy, hard law is the dominant instrument, while soft-law provisions are also used, although in a more modest manner (Bähr and Treib 2008). Here, the trend has been different from social policy, where hard instruments are used but soft instruments seem to play a more dominant role. In the OMC, basically target-setting or voluntarism can be identified as the key alternatives, with social policy and research policy being more inclined towards target-setting and pension reform to voluntarism, i.e. the

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combination of broadly defined objectives and weak instruments for their implementation. Instruments are customised to the specific needs of a policy area and the political, institutional and socio-economic interests in play. As to the involvement of private and public actors, a specific mix has been particularly important in the areas of social and environmental policy, as well as in pension reform, where elements of corporatism have been observed, including a role of private actors in the decision-making process. In pension reform and the social dialogue, private actors have become part of the process, while not yet being fully integrated into EU policy-making (Natali 2007). Thus, involvement as such does not equate with a substantially higher share of political influence, particularly when it comes to deliberative interaction in the shape of dialogues. In social policy, legal acts have been accounted for by social partners, while staying in the shadow of hierarchy imposed by the Commission, which has been able to intervene to spur activity. Thus it would be too ambitious to speak of a totally new dimension in EU decision-making, where private actors take control over specific issues and shape policies. Agencies include private actors in varying forms and ways, such as the representatives of employers and employees in the European Agency for Safety and Health at Work (EU-OSHA), the European Centre for Development of Vocational Training (CEDEFOP), and the European Foundation for the Improvement of Living and Working Conditions (Eurofound); they play a significant role in different agencies for the definition of policies and for the legitimation of agencies’ activities (Griller and Orator 2008). Finally, in the CFSP and Justice and Home Affairs the degree of involvement of private actors is still rather modest, although the growing participation of such actors may be assumed (Diedrichs 2008). Thus, in cases where public goods without major distributional impact (such as security) are in play, private actors are less likely to emerge as central actors in the definition of new modes of governance. Systematic evidence for a more dominant role of private actors in EU policy-making cannot be found; rather, a confirmation of already-existing tendencies has become apparent, i.e. the increasing involvement of private actors in community policy areas shaped by agencies or the Commission, the latter trying to establish networks of actors and supporting coalitions for its interventions.

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4 The evolution of new modes of governance: Towards the community method? Our key finding with regard to the evolution of new modes of governance suggests that there is an inherent dynamic from two directions. Where they start within the EC pillar, new modes try to bypass the Community Method while being open to further upgrading at later stages. When they emerge from within the second and third pillars, the direction of development heads – with different dynamics in each case – towards more community-like ways of decisionmaking without necessarily arriving at them – possibly deliberately, as the member states wish to avoid extending the coverage of the Community Method. While the third Maastricht pillar has revealed major tendencies towards partial communitarization at later stages, the development of the CFSP has been more cautious, revealing signs of differentiation and a mix of various types of governing modes (Monar and Dahmani 2007; Diedrichs 2008). The Community Method thus plays a twofold role: as an obstacle or threshold (which the member states first try to avoid) and at the same time as a longerterm line of convergence (when transformations become visible in the direction of more community-related modes). Therefore, in all of these cases, the Community Method may serve as the point of orientation for the development of (new) modes of governance in the EU. 4.1 Treaty change and the evolution of new modes of governance We have examined major trends in the evolution of the EU system where the extension of areas in which the Commission has the right and partly the monopoly of initiative, where there are participation rights for the European Parliament, where there is Qualified Majority Voting (QMV) in the Council (at the expense of unanimity voting) the judicial review by the European Court of Justice all indicate a general tendency towards a centralization of modes of governance in a more supranational direction. However, this has not led to the dominance of a clear-cut model per se. In fact, the EU’s legal architecture has strengthened the foundations for the use of supranational decision-making while at the same time opening up the space for combinations of different institutional and procedural provisions. The Treaty reforms since the SEA of 1987 opened the way for qualified

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majority in the Council, while Maastricht, Amsterdam and Nice were crucial for extending opportunity structures for supranational decision-making, particularly via the co-decision procedure (Wessels 1997, 2005b). Since the mid-1990s, this trend has been accompanied by a differentiation process, as indicated by the introduction of the OMC, the growing number of agencies and a further increase in combinations of decision-making procedures (Hodson and Maher 2001; Griller and Orator 2008). While Treaty changes provide opportunities, incentives and constraints for decision-making in the EU, analysis of the ‘living architecture’ of the EU shows that the treaty provisions have been intensively used by actors; since Maastricht, the European Parliament has been more dynamically engaged in co-decision and consent than in cooperation and consultation, revealing that the new provisions on enhanced parliamentary participation are of growing importance. But, at the same time, they do not account for a majority of EP activity to date. In the Council, the use of Qualified Majority Voting has been handled with a high degree of caution, suggesting that the potential for supranational decision-making is not being fully exploited by the member states. They seem rather to prefer a mode of governance based on consensus. Nor is the adoption of instruments of soft law significant overall but depends on the specific nature of the policy area, the political will of the member states and the resistance of domestic social, economic and political structures to European solutions. The evolution of modes of governance thus reveals a complex and multifaceted picture characterized by overall systemic dynamics as well as policy-specific trends. Therefore, across different areas, the evolution of modes of governance has shown tendencies towards innovative combinations, while the Community Method still serves as a point of orientation and is being extended and reinforced. 4.2 The evolution of new modes of governance within the three pillars In the former EC sphere of competence, the establishment of the Community Method including majority voting in a number of key policy areas, has generated a new drive forward in modes of governance. Intergovernmental or mixed negotiation systems have been replaced by supranational decision-making systems, e.g. in social, environmental and research policy, opening up possibilities

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and opportunities for a new institutional dynamics without strictly determining the actual use of any one specific mode. In a number of key policy areas crucial to the welfare state, the shift from intergovernmental negotiations towards more mixed models has, however, been accompanied by a rather cautious use of Treaty provisions and a tendency towards non-binding instruments. In social and environmental policy, a differentiation of policy areas and modes of governance took place, triggering a partial transformation of procedures while keeping intergovernmental provisions for specific cases. Core areas of national welfare states such as social security, funding for employment policy and collective interest representation have remained under unanimous decisionmaking in the Council, while health and safety at the workplace, or working conditions, and information of workers, were opened up to Qualified Majority Voting. This differentiated has been deepened by the rather fuzzy relationship between procedural modes and legal instruments, particularly with a view to the bindingness of legal acts (Bähr and Treib 2008). Figure 1.4 shows a rapid increase

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Figure 1.4

Legal instruments in social policy.

Source: Bähr et al. 2007.

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in the use of non-binding instruments in the field of social policy particularly since the 1990s, when new modes became more prominent in the EU. However, it also becomes clear that binding instruments are not in decline but are also rising in number, although less quickly. On the other hand, in environmental policy, the picture appears to be the contrary: here, binding instruments have been adopted increasingly since the 1990s, whereas the rise in non-binding policy output has been less steep (see Figure 1.5). Both developments in social and in environmental policy, however, reveal that the mix of new and old modes of governance in the EU is not a sign of overall stagnation in classical methods of steering but instead reflects a differentiation of the toolset available for integration. It also underlines our assessment that the introduction of new modes of governance is not primarily about the replacement of more traditional modes. EU policy on research and information society both reveal a dominant pattern of binding policy instruments, with a higher general

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Figure 1.5

Legal instruments in environmental policy.

Source: Bähr et al. 2007.

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quantitative level in research, while the degree of bindingness is higher in the area of information society where more directives have been adopted and where the Commission has also been extensively involved in implementation, using (the threat of) sanctions in the shape of appeals to the ECJ (Shaw 2008). In both policy areas, OMC processes have also been created, involving even softer features in terms of target definition and procedural requirements than in employment policy. In this regard they reveal similarities with OMC processes in pension reform which have been assessed as weak both in terms of policy output and impact on member states. Coordination processes, in particular the OMC, have undergone a period of expansion, differentiation and formalization in recent years. Since their origins in employment policy, ever more fields have been brought under this kind of ‘coordination’, while the specific form of the procedure has been adjusted to each particular case. In the area of pension reform or social inclusion, coordination processes have rather diffused goals, coupled with legally non-binding commitments for achieving them, while in employment policy or in research policy at least there is a higher degree of specificity of targets, even if commitments are still not legally binding. In general, the profusion of coordination processes since the 1990s may be grasped by indicating major trends: almost all of these mechanisms have been triggered by European Council decisions, confirming its role as the ‘architect’ of governing modes in the European Union. Second, the Lisbon process of 2000 has been a key factor in policy terms for creating new cases and has served as a model of inspiration for a number of policy areas where an ‘exportation’ of coordination mechanisms has been observed. The Treaty base is rather vague regarding coordination processes (i.e. the legal base may be strong or weak, meaning that references in primary law are in some cases explicit, in others rather more diffuse), but it is almost never really absent. This means that the coordination mechanisms introduced are not simply created as a parallel structure in isolation from the legal framework of the Union, but rather refer to key objectives and provisions in primary law. In some cases (sustainable development, immigration and enterprise), even the European Court of Justice may be responsible for certain aspects of the process (Laffan and Shaw 2005). In most cases, common objectives for all member states have been defined, except for tourism and ‘better regulation’ (Laffan

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and Shaw 2005). Thus, coordination processes, although deviating from the classical Community Method, regularly take up elements of it, in order to provide for coherence and consistency across member states. In the former second pillar, major dynamics in governance have been delivered by the establishment of the European Security and Defence Policy since 1998 (St Mâlo) and 1999 (the Cologne summit), which led to the introduction of cautious incentives for coordination (in the area of improvement of military capabilities which is subject to a regular review) and for delegation (by the creation of the European Defence Agency), in the shadow of intergovernmental negotiations (Diedrichs 2007). These are not (yet) rooted in the legal architecture of the Union but more in institutional agreements among the member states deliberately choosing options outside the formal framework of the treaties. Since the Lisbon Treaty has entered into force, the Defence Agency has become part of the Union’s institutional set-up. In the former third pillar, the Amsterdam Treaty was a critical juncture, providing for the communitarization of visa, asylum, immigration and other policies concerning the free movement of persons. This process has had rather a diverse impact on the modes of governance, revealing a dividing line between sovereignty-loaded areas where mainly non-binding measures have been taken and those areas amenable to more binding instruments (Monar and Dahmani 2007). The fact that binding legal acts produced throughout a decision-making mode have increasingly prevailed has constituted a major shift in EU governance since the creation of the Maastricht Third Pillar. Trends away from intergovernmentalism are thus to be observed in particular areas of the Third Pillar, whereby the adoption of community governance has taken place, while its use has been more limited in others, where a strong degree of intergovernmentalism has been retained. The overall trend reveals that tight forms of legislation and the use of directives as well as framework decisions (along the lines of EC directives) belong to the most powerful instruments since Amsterdam, while target-setting and convergence support for member states’ measures are less relevant in quantitative terms (see Figure 1.6). To sum up, the development of modes of governance in the former second and third pillars has been moving prudently ‘closer’ to the

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45 40 35 30 25 20 15 10 5 0 1999

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Figure 1.6 Texts adopted in the JHA area, 1 May 1999–31 December 2006 (post-Amsterdam period): evolution per year. Source: Monar and Dahmani 2007.

Community Method, including the communitarization of the policy sectors of the third pillar, while the conquest of new spheres of action for the EU has also tried to avoid the Community Method as being too costly for the member states in economic, institutional and political terms. In the second pillar, where new instruments have remained mainly intergovernmental, the Community Method is still further away, while in Justice and Home Affairs, the coexistence of different modes and trends towards hybridization are much more frequent, with a strong impact by hard forms of legislation. So far, new modes thus represent the changing composition of governance in particular policy areas rather than fully innovative phenomena. Furthermore, this changing composition is less a mix or combination in the strict sense than the coexistence or parallelism of different modes of governance across many policy areas.

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5 The evaluation of new modes of governance: Effective, efficient and legitimate? With regard to the evaluation of new modes of governance as effective, efficient or legitimate, our main finding is that there is a twofold balance to be struck. On the one hand, policy output may be taken as an indicator of the success of modes of governance, but this is only half the story: member states have tried to limit the impact of new modes in order to preserve their autonomy in decision-making, and therefore limited results may be regarded as successful from that perspective. Still, policy success or failure is not irrelevant; it may lead member states to reconsider their preferences and to redefine modes of governance, if and when they correspond to their interests, which may lead in turn to an upgrading of modes of governance. Thus, the performance and impact of new modes of governance does not appear to be especially high. Declared policy goals have rarely been met, be they in the CFSP or in cases where the OMC has been applied, compared to those other areas (such as environmental policy) where more binding instruments are available. The Area of Freedom, Security and Justice is particularly telling as in a number of policy sectors where binding instruments have been used effectiveness has been impressively high, while in those where soft instruments have come to the fore their impact has been modest. In that respect, although ‘softness’ is not the crucial indicator, we argue that the degree of success depends also upon the member states’ perceived benefits and the viability of specific policy projects. Elements such as target-setting have proved to be rather useful tools for driving policy development forward (such as the set of objectives and measures laid down in the Hague Programme in Justice and Home Affairs), while certain areas which remain sensitive for member states (such as police cooperation) have revealed rather modest progress. The nature of an instrument may even be more appropriate if it is less binding for achieving a visible impact, if and when the policy substance and the political will of the member governments appears sufficiently strong. This finding supports our assessment that new modes provide the member states with flexible and adaptable tools in their search for an optimal solution to political problems and that formalized classical legal acts may simply prove not to be the most adequate way of handling certain issues. Member states are involved

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in a constant process of learning whereby they may test some instruments and, where successful, they may extend their application to other fields. The increasing use of binding instruments in the Area of Freedom, Security and Justice may serve as an example of procedural and institutional ‘trial and error’. The OMC, in which target-setting (i.e. concrete targets are defined but without coercive mechanisms to enforce them) or voluntarism (i.e. broad and rather diffuse targets coupled with soft or little pressure on the member states to follow them) have prevailed, has been evaluated as rather ineffective regarding its stated policy goals. The combination of rather ambitious goals coupled with rather weak instruments in the OMC has led to deficits in effectiveness and output. The impact of target-setting in particular is mixed. ‘Naming and shaming’ does not work effectively in the OMC, and ambitious goals have mainly been missed, both in target-setting and in voluntarism. From an institutional viewpoint, however, this might just be what the member states had in mind when designing these processes. Where the OMC has been introduced in established fields of EU activity, such as research or social policy, it has, however, not substantially changed the institutional and procedural profile of a policy area but exists alongside other more traditional forms of decision-making. With regard to the broader public, there has been little attention at all to the ramifications of EU governance in recent years. Major shifts in legitimacy triggered by the perception of new modes of governance can therefore not be detected. However, partial public attention on their part of specific audiences is relatively high. Thus, for example, social partner organizations in the member states and at the EU level are highly aware of the OMC process in the social dialogue, even their commitment and final evaluation do not reflect a major impact. Private actors gather around agencies which sometimes establish a network of target groups and advocacy coalitions responding to specific policy challenges and demands. In general, there is so far no evidence that awareness of particular procedures is high as such, but this picture fits in with an overall assessment of the EU’s public image in general. If at all, it is outcomes that are appreciated by the broader public rather than detailed provisions regarding the procedural aspects of policy-making. On the other hand, from a member states’ point of view, new modes may be regarded as highly legitimate, given the described rationale

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of retaining national control in sensitive policy areas, as they respect and rescue their sovereignty and room for manoeuvre. Here, the dilemma of an equal consideration of governments’ problem-solving instincts and their sovereignty reflexes becomes clear. In this regard, even the OMC can be seen as successful if it allows member states to engage in forms of policy interaction at the EU level which are not perceived as a threat to their interests. Positive experience in such cases of limited cooperation or coordination is important as it paves the way for the further deepening of efforts under more formalized and more binding provisions.

6 Conclusion: The hidden steps of EU integration Summing up the findings and trying to embed them in a coherent approach with regard to the overall development of the EU system, our empirical investigation leads to a number of conclusions both at a macro-level (focusing on the impact of major Treaty reforms in the EU on its legal and ‘living architecture’) and on a micro-level (focusing on the different policy areas concerned) (Wessels 1997, 2005a, 2005b). Taking up the set of guiding assumptions of this chapter, we argue – in line with the first assumption – that new modes of governance may well fit in with the overall institutional and procedural dynamics of the EU system, whose basic trends over the past 50 years have not been substantially reversed nor become subject to fragmentation and reversal. Although not fully consistent with traditional forms of decision-making, they are nevertheless compatible with the broader trends of the EU system and can be understood as implicit steps to further integration. Shifts in modes of EU governance are subject to incremental rather than ‘revolutionary’ dynamics, which produce new institutional and procedural solutions which trigger in turn a process of differentiation. Instead of a consistent clear-cut architecture we find elements of mixture and combination, with trends in the direction of greater supranational governance exhibiting complex and evolutionary change. Within these dynamics, new modes of governance have emerged and evolved as a result of new policy demands, particularly in areas that have been transferred from intergovernmental cooperation in areas of highly pronounced sovereignty concerns to more community-oriented fields of policy-making, without necessarily

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adopting the traditional Community Method. This transfer, which accompanies an increasing upgrading of decision-making procedures, does not necessarily transform the mainly intergovernmental nature of a policy-making arena but rather opens up dynamics whereby either close relations to EC policies exist (the defence industry) or where policy gaps had to be filled. However, there has rarely been a substitution of older modes by more innovative ones. Instead, the coexistence of different modes and trends towards hybridization are much more frequent. So far, new modes thus represent the changing composition in modes of governance in particular policy areas. As stated, it is less the mix or combination than the coexistence or parallelism of different modes of governance which is observed. Following the metaphor of a treaty-based ladder (see Figure 1.7), new modes of governance emerge and evolve within a general upward

Exclusive competence

Transfer of competences to the EU

National competence

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Figure 1.7

Community method Living constitution

The treaty-based ladder and new modes of governance.

Source: Adapted from Wessels (2005b).

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trend in integration on the systemic level of the EU, with an expansion of shared or exclusive competencies with the Community Method as a point of orientation (Wessels 1997, 2005b). Fully in line with our first guiding assumption, new modes can be regarded as transitional and temporary phenomena, which aim at including new policy areas or at strengthening existing cooperation without – at least initially – employing the traditional Community Method. Following this interpretation, modes of governance reflect stages of approximation towards the Community Method, although at different speeds and in differentiated stages, producing to a certain degree of fuzziness and lack of transparency when it comes to the transition from one step on the integration ladder to the next. It is here that the ‘feedback spiral’ becomes important, triggering discussions and decisions on new steps in the integration process as a result of experience gained and lessons learned at earlier stages. These stages are not necessarily neatly distinguished but include a range of highly mixed, differentiated and hybrid arrangements which are open to upgrading and deepening at a later stage but do not neatly fit our demands for a clear-cut set of intra- and inter-institutional as well as procedural relations. The rule of thumb could even be formulated as follows: the higher the ladder goes in the transfer of competencies, particularly those of a sensitive nature – be it in economic, social, political or security policy areas – the more complicated the transition becomes and the more likely it will be that member states search for innovative interim solutions not primarily for blocking further developments but for retaining control and gaining experience. Our empirical research confirmed that this is the ‘window of opportunity’ for new modes of governance, whose concrete shape depends on the policy area in question. Spill-over may occur, but it does not generate an unequivocal institutional and procedural outcome. The Community Method represents a long-term goal and serves as an orientation point, against which changes and reforms are often measured. In other words, new modes of governance do not modify the EU system in the sense of breaking with the general trend towards further integration but have to be understood as an integral element of the EU integration process. They have been introduced by establishing innovative mechanisms of decision-making, whose impact and effectiveness have been generally weak in policy terms but rather successful in preserving member states’ autonomy and discretionary

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room for manoeuvre. This temporary deviation from the Community Method may therefore be regarded as a weakening of the EU’s institutional and procedural framework, at the expense particularly of the Commission and the European Parliament and to the benefit of the member states. On the other hand, it may also be seen as a creative and innovative answer by the member states for achieving institutional solutions when and where consensus is frail, policy objectives are not broadly shared and the political will to transfer further competencies to the EU level is uneven.

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2 Governing in the Shadow of Hierarchy New Modes of Governance in Regulation Adrienne Héritier and Dirk Lehmkuhl

1 Introduction The emergence and diffusion of new modes of governance in Europe has to be seen both in a wider context of more distant factors and a narrower context of more proximate factors. The wider context is defined by the continuing economic liberalization/deregulation and political enlargement of the European Union. The liberalization and deregulation of markets initiated in the late 1970s and continued until very recently has been of sustained importance and – under stricter political control – will be so in the future. The change in the political economy of most Organisation for Economic Co-operation and Development countries that accompanied this development has been described as a shift from interventionist to regulatory policies. It aimed at dismantling state monopolies in the provision of network services of various kinds and the creation of markets by allowing for the access of new market entrants. This development at the national level was actively promoted by European policies: the Commission pursued a policy of liberalization and deregulation. Simultaneously, though, the focus of European policies also included policies that aimed at correcting the negative external effects that markets and productive activity produce for the environment and human health (Héritier et al. 1996; Majone 1996; Eberlein 2005). 48

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The other more distant political factor influencing the emergence of new modes of governance is political enlargement. In three rounds of enlargement in 1995, 2004 and 2007, membership of the European Union significantly increased, bringing total membership to 27 and further applicants for accession waiting in line. This increase in membership has put the European decision-making institutions under considerable strain. Various rounds of Treaty revisions have only partially alleviated this strain which is reflected in lengthy decision-making processes, an uneven implementation of EU legislation across member states and concerns about the democratic accountability of EU decision-making. In this wider context of a politics of market creation and market correction on the one hand and rapidly increasing membership of the European Union on the other, a multitude of new modes of policy-making have appeared which all aim at speeding up cumbersome policy-making processes and rendering them more effective. It is these new modes of governance as applied in the creation and correction of market processes, or regulation, that are at the centre of our discussion. Two features are particularly striking in the increasing use of the new modes of governance. First, governments tend to rely more and more frequently on self-regulation by sectoral experts, particularly in areas of highly complex issues of market regulation. For instance, we encounter a rapid spread of delegation of regulatory activities to independent regulatory authorities at the national and European level. In other words, there has been a tendency to take decision-making issues of market integration out of the traditional governmental arenas and to shift them to functionally specialized independent regulatory arenas. A second salient feature in the spread of new modes of governance is the increasing delegation of complex regulatory issues to private actors. This has led to an extension of self-regulation of industry at the European and national levels and an increase in co-regulation or co-production of public and private actors. Both the need for expertise and the resources of private actors spurred the tendency of governments to rely more and more on self-regulation by industry, particularly in areas of high technical complexity. In our analysis of the new modes of governance in regulation we use a definition of new modes of governance which is empirically

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induced. We define them as (1) public policy-making involving the inclusion of private actors, and/or (2) public policy-making outside the traditional democratic-representative governmental arenas and the ‘democratic circuit’ (Schmidt 2005). Concomitantly, we define governmental action as public-policy formulation by public actors in the parliamentary/executive political arena within a defined territory. By using this definition we are able to capture a variety of new modes of governance in the area of regulatory policies while simultaneously excluding forms of traditional governmental intervention as public policy-making by public actors in democratically legitimated political arenas. This definition distinguishing between government and governance is crucial given the particular interest of the contributions to this volume in the link between traditional forms of government and new modes of governance or, more specifically, the role of the ‘shadow of hierarchy’ in the emergence and operation of these new modes. In analysing the new modes in accordance with the guiding questions of this volume, we first focus on the proximate causes that gave rise to the emergence of new modes (emergence), and second the instruments that are applied and their link to government (execution). Our attention then focuses on the development of the new modes of governance over time (evolution). Finally, we turn to the effects of the new modes and evaluate the conditions under which policy is effective with a particular emphasis on the influence of governmental intervention or ‘the shadow of hierarchy’ (evaluation/ effectiveness). Lastly, we consider the structural impact of the new modes on democratic accountability.

2

Emergence

2.1 A variety of new modes of regulatory governance Based on our definition of new modes of governance as (1) publicpolicy-making under the inclusion of private actors and/or (ii) publicpolicy-making outside the traditional democratic-representative governmental arenas, we empirically investigated different types of new modes of governance.1 They all extend to regulation in the sense of the creation of markets and the correction of negative market externalities. More specifically the new modes under investigation are:

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1. the delegation of regulatory tasks to independent authorities, or more precisely, the formation of regulatory networks; 2. the delegation of regulatory tasks to comitology which is located outside the main European legislative arena; 3. self-regulation by private actors; 4. the application of benchmarking or ‘the model of best practice’ under the open method of coordination (OMC); 5. the application of private dispute resolution; 6. tripartite policy-making. These new modes have been applied in a variety of regulatory policies ranging from financial regulation, energy regulation and telecommunications to environmental regulation, health and safety at work, competition and biotechnology policy. We will briefly illustrate the various new modes of governance as empirically investigated by the individual projects of the cluster. 1. One new mode of governance, the delegation of high-expertise regulatory tasks to independent regulatory authorities, is a new mode of governance which in recent decades has spread rapidly across countries and is frequently used at the European level too. We focus on the regulatory networks at the European level (Coen and Thatcher 2008a, 2008b) which have been formed in highly complex areas of market integration such as energy, telecommunications and financial markets in order to facilitate the exchange of information among national regulators and to render national regulations mutually compatible. Thus, in the energy sector, a forum of stakeholders met in the Florence Energy Forum for electricity created in 1998, followed by the Madrid Forum for gas in 1999. The Commission created the Committee of European Energy Regulators (CEER), a network of independent national regulators of electricity and gas, in 2000 and established the European Regulators’ Group as an advisory group of independent national regulatory authorities (Decision 2003/796/96/EC) in 2003 (Eberlein 2005). In financial markets, networks of regulators were created, such as the Forum of European Securities Commissions and the Independent Regulators Group (Coen and Thatcher 2008a, 2008b). 2. The delegation of specialized expertise-based decisions to comitology, involving the Commission in cooperation with member-state

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4.

5.

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experts in various comitology procedures, constitutes another mode of governance. It shifts policy-making out of political arenas and into functional expertise-based arenas. An example of such governance is the Lamfalussy procedure. This transfer of policy-making is meant to speed up the process of integration of financial markets (de Visscher et al. 2006). It also includes the above-mentioned networks of regulators such as the Forum of European Securities Commissions and the Committee of European Securities Regulators. The self-regulation of industry is another new mode of governance which builds on the expertise of industry actors when formulating public-policy measures in environmental regulation and energy regulation. Thus, in the field of recycling industrial waste in the plastic and paper industries, industry associations committed themselves to develop the necessary technologies to achieve quite important recycling targets (Héritier and Eckert 2007, 2008). Yet another mode of governance investigated are non-binding forms of benchmarking or the introduction of best practices that are to be applied as a mode of voluntary coordination. In the course of deregulation, the latter have been increasingly applied as a soft mode of steering, as in the attempt to prompt energy providers to observe ‘public service’ goals (Moral Soriano 2007, 2008). The Commission developed a policy of general-interest services defining targets for member states such as the security regularity and quality of supply to be observed on a voluntary basis but subject to public monitoring and a demonstration of performance. An as-yet-rare new mode of governance has emerged in competition policy where private actors increasingly engage in dispute resolution. More and more frequently a mode of dispute resolution established in the business community is used to secure compliance with EU competition policies and Commission decisions on mergers and acquisitions (Lehmkuhl 2008a, 2008b). Finally, bi- and tripartite policy-making, i.e. the social dialogue, was investigated, as applied in social and employment policy (Smismans 2008). The European Social Dialogue provides for the signing of collective agreements between employers’ associations and trade-union organizations at the European level

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allowing for self-initiated and self-implemented collective agreements (Smismans 2008). All of these different new modes of governance involve policymaking outside the traditional governmental arena. They all mark a tendency not to choose the traditional political arenas for policymaking on complex new issues of market integration and market correction but to entrust them to functionally specialized independent regulatory arenas or to shift long-standing issues of policy-making from the old governmental political arenas into new arenas of functional governance. The goals of new modes of governance While the goals of market integration seek to abolish barriers to market access for new market entrants and secure a functioning market and the observance of market rules, the goals of correcting the negative external effects of market integration seek to reduce the damages caused to human health, the environment and other goals of national welfare. Instances of new modes seeking to create markets and to secure their smooth functioning investigated in our research were comitology under the Lamfalussy process which seeks to advance market integration in the financial-services markets and which has produced important steps to create a European securities market (de Visscher et al. 2006, 2007); the role of independent regulatory authorities in member states cooperating in regulatory networks in telecommunications and energy regulation with the aim of advancing market integration processes by creating a European market, ensuring market access for new players and securing technical compatibility, etc. (Coen and Thatcher 2008a); and competition policy, with the Commission relying on private parties and their sectoral expertise in the resolution of disputes between market competitors. By contrast, the new modes in our study that focus on market correction in the sense of seeking to suppress the negative external effects of markets are the benchmarking process that is applied to the provision of public services by energy providers, seeking to ensure customers’ access to services at affordable prices, as well as the continuity and security of service provision (Moral Soriano 2007, 2008) and self-regulation by industry which aims at reducing the negative

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external effects of production and marketing processes, whereby firms, in committing themselves to environmental self-regulation by their associations, contribute to the recycling of waste in the plastic and paper industries (Héritier and Eckert 2007, 2008). 2.2

Emergence: Driving the move towards new governance

Beyond the changes in the overall context that have influenced a move towards regulatory policies and new modes of governance in the EU, i.e. liberalization and deregulation on the one hand and enlargement on the other, there are more proximate factors that may account for the increasing use of new modes of governance defined as public-policy-making that includes private actors and/or occurs outside the formal legislative arena. Our research findings point to four key factors which are at the basis of the emergence of new modes of governance as defined above. The need for expertise The need for expertise is an eminently important factor when it comes to accounting for the emergence of the new modes in regulatory policies. In all of our areas of investigation, from financial markets to energy regulation, the new modes of governance may be traced back to the fact that government deems itself unable to muster all of the technical and scientific expertise necessary to regulate highly complex areas of market integration and market correction. Beyond having more expertise, the new functional modes of policymaking are considered to be more flexible and speedy in adjusting to new and complex external challenges. Moreover, by being cut off from the mainstream of legislative political decision-making, sectoral governance is supposed to guarantee the credibility and stability of public-policy-making in these highly complex areas in the face of changing political preferences of governments. Some examples may illustrate this motive. The need for expertise has been at the roots of instituting both regulatory networks in the energy sector and comitology procedures in the regulation of security markets. In the case of the Lamfalussy procedure, the competencies delegated to sectoral experts under comitology procedures include both policy formulation and implementation (deVisscher et al. 2006, 2008). The required expertise may consist in substantive information about market processes such as risks involved in

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financial market transactions, or more technical aspects of environmental engineering or environmental chemistry (e.g. recycling) (Héritier and Eckert 2007, 2008) or specific mediating competencies combining economic and judicial expertise as in the case of private dispute resolution in competition policy (Lehmkuhl 2008a, 2008b). In energy regulation, the management of the electricity grids, for technical and security reasons, has been defined as a task of the transmission-system operators. Setting the right rules for the technically complex area of network operation already challenges the capacity of specialized national agencies at the national level. When it comes to cross-border issues, national regulators lack the mandate to intervene, and a supranational body such as the Commission lacks the technical expertise and the capacity to engage in regulatory details. Hence, the bulk of operational and regulatory cross-border issues is left with the transmission system operators. Pre-empting legislation A second factor giving rise to new modes of governance identified in our research is the effort of industry actors to thwart legislation. Firms – as a rule – shun public intervention into their economic activities. In the case of problem pressure such as environmental or health hazards, industry prefers self-regulation to legislation. However, self-regulation is also costly to devise and to implement. As a consequence, industry is only likely to engage in collective action if confronted with a credible legislative threat or the ‘shadow of hierarchy’.2 In other words, governments have to exert some pressure before industry takes the necessary self-regulatory steps. Industry behaviour in the plastics industry may illustrate this: without the regulatory threat and a focused non-governmental organization (NGO) campaign, the European PVC (polyvinyl chloride) industry would not have engaged in the costly and demanding exercise of developing a recycling technology and committed itself to demanding recycling targets and sustainable production standards (Héritier and Eckert 2007, 2008). In the case of regulatory networks in telecommunications, the Commission threatened to initiate legislation unless the national regulators participating in the regulatory network proposed a decision on how to coordinate national regulatory provisions (Coen and Thatcher 2008b). Or, to give still another example from energy regulation, the shadow of hierarchy

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in the form of a the credible threat of legislation by the Commission appears to have been a key factor in the willingness of European Transmission Systems Operators to coordinate national transmission systems activities and of market operators to harmonize network access and conditions for usage and to promote intra-community exchanges and free trading. New modes as a default option A third, closely linked cause underlying the emergence of new modes of governance identified from our findings is that, given a certain problem pressure to act at the national and European level, member states prefer a new mode to a formal transfer of national policy competencies to the European level, i.e. communitarization. These soft modes of governing allow for some action without implying a formal competence loss for member governments. From the viewpoint of the Commission, which is more eager to communitarize, new modes present a default option or second-best solution. The latter would have preferred the Community Method but anticipates the opposition of member states to the Commission’s attempt to propose legislation in matters previously solely of domestic competence. Therefore, it settles for the second-best solution, the new modes, not excluding the possibility that in the future the soft modes of governance may be transformed into hard legislation. The case of policy-making under the European Social Dialogue offers a case in point of new modes as a second-best solution or default option. While the Commission has sought to introduce a community social and labour-market policy, member states have been loath to yield competencies to the European level (Smismans 2008). Similarly, the regulatory networks in which national regulators exchange information were established in response to Commission pressure to establish a European sectoral regulator to coordinate national regulatory activities (Eberlein 2005). While the Commission was pressing for the creation of a European regulator, member states flatly refused to follow suit and only accepted the introduction of regulatory networks where national regulators meet. Regulatory networks appear to be a compromise between actors pressing for greater European integration and those fearing it, especially national governments (Coen and Thatcher 2008a, 2008b). In the area of general-interest services, the use of the Open Method of Coordination and benchmarking

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also reflect member states’ reluctance to yield legislative competencies to the European level (Moral Soriano 2008). Improving implementation A fourth proximate factor giving rise to new modes of governance is their use as a means of improving national compliance with EU legislation and to compensate for a lack of implementation resources. It has been shown that implementation, if not transposition,3 leaves much to be desired, particularly in policy areas such as environmental, health-and-safety regulation and market integration.4 In health-and-safety regulation, the attempt to improve implementation played an important role in motivating the introduction of the Open Method of Coordination and benchmarking (Smismans 2008). Similarly, during the 1990s, concerns had emerged about the lack of coordination among national regulators, uneven implementation across member states and the need for more policy learning between national officials. By introducing networks of regulators at the European level, a better coordination of national policies was sought, and greater efficiency in energy regulation (Coen and Thatcher 2008b). In the case of competition policy, a new mode to secure better implementation was sought by including private actors in the enforcement of European competition law (Lehmkuhl 2008b).

3 Execution: A variety of instruments and actors In pursuing the objectives of market integration/creation and market correction, the new modes studied here use a variety of different instruments that are meant to achieve these goals and are applied in a variety of constellations of interacting public and private actors. 3.1

A variety of instruments

Instruments that are used to attain a stated policy goal are generally classified into instruments of command and control, incentivization, bargaining, persuasion, information/monitoring and model function. The instrument of command and control implies a clearly defined policy goal, monitoring strategies and the application of sanctions in the case of non-compliance. Incentivization defines positive and negative inducements to produce a desired behaviour. The instrument of bargaining relies on an exchange of resources and

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positions between actors to reach a defined policy goal. Persuasion builds on the power of arguments and reasoning to influence actors’ behaviour. Information and monitoring depend on the spreading of information and possible monitoring of the desired performance and the publication of the results (‘naming and shaming’, or the reputation mechanism) to prompt the desired behaviour. Using a model to elicit desired behaviour relies on the positive influence that a successful behaviour may have on other actors. Looking at the new modes analysed in our cluster – i.e. the delegation of regulatory tasks to regulatory networks, the delegation of regulatory tasks to comitology, the self-regulation by private actors, the application of benchmarking or the model of best practice under the Open Method of Coordination, the application of private dispute resolution and tripartite policy-making – we find little empirical evidence for the application of command-and-control instruments. Rather, softer instruments such as incentivization, bargaining, persuasion, information and ‘naming and shaming’ prevail. For instance, the different regulatory networks that we study in the areas of energy and financial markets reveal the importance of providing information. Actors mutually inform each other about national policies or the behaviour of market actors, hoping that simple information and invoking a best practice will lead to a better coordination of member states’ regulatory practices. In spite of the absence of supranational intervention, this instrument allowed for some degree of convergence of national practices (Coen and Thatcher 2008a; Lehmkuhl 2008a). Benchmarking is a practice that under a new mode of governance can facilitate goal achievement by providing information about other member states’ performance. Participants in regulatory networks, such as energy regulation, may also be involved in a performance review process, benchmarking and informationserving as performance-enhancing instruments crucial for developing sound policies (Eberlein 2005). The use of indicators, ranking and naming and shaming has also been positively viewed as creating a mass of data and more transparency with respect to the performance of service providers, while at the same time conveying ‘the illusion of rationality’ and seeking to change the behaviour of individuals in the name of ‘naturalized’ indicators (Halpern and Le Galès 2008). Incentivization as an instrument to achieve stated policy goals may also be identified in the new modes under investigation here. For

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instance, self-regulation by industry – based on a collective commitment to self-regulation and often prompted by industry’s intention to pre-empt legislation – may also be fuelled by the calculation of achieving an advantage on the market by selling an environmentally friendly product. As is shown in a comparison of environmental self-regulation in the plastics and paper industries, the absence of these market incentives has resulted in a lack of compliance in the case of the plastics industry. Although economic incentives to engage in recycling activities strongly boost compliance in the paper sector, they are almost absent in the PVC sector (Héritier and Eckert 2008). While we observe a prevalence of the instruments of information/ imitation and incentivization, command-and-control instruments understood as prescriptions imposed by governmental actors followed by sanctions in case of non-compliance are still found to be of relevance in an indirect sense. The ‘shadow of hierarchy’ as a threat of governmental intervention frequently looms large over the new modes and their instruments in case the latter should prove to be ineffective. If this should be the case, the new mode may be replaced by governmental intervention. This directs our attention to the possible link between soft instruments and hard instruments such as command and control and, beyond this, to the more general question of the nature of the linkage between the new modes of governance and governmental intervention and between public and private actors’ activities. 3.2 A mix of public and private actors Given our working definition of new modes of governance as the inclusion of private actors in the formulation of public policies and/or policy-making outside the main parliamentary/governmental arena, an important part of our research has focused on the inclusion of private actors in policy-making. This begs the question of how – in concrete instances of decision-making – the regulatory activities of private actors relate to the activities of governmental actors. We may distinguish different types of cooperation or co-production with public actors and conceive of them as located on a continuum, ranging from (1) a form of self-regulation by private actors in which public actors play no or only a marginal role to (2) a form under which public actors define the overall framework conditions or objectives

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of regulation that are then specified by private actors’ self-regulation and (3) a form of cooperation where public and private actors jointly produce regulation. Instances of the first public–private actor constellation are environmental self-regulation by industry in the plastic and paper sectors. Here, in the implementation of voluntary accords, governmental actors – although members of a monitoring board – play only a very limited role. Although a threat of legislation played an important role in bringing about self-regulation, once instituted, governmental actors did not closely follow the private actors’ activities. In the case of the PVC industry, due to a conflict between different DGs (Directorates General) in the Commission, governmental actors refused to publicly acknowledge the voluntary accords, and members of the European Parliament, although formally members of the monitoring board, never participated in the meetings (Héritier and Eckert 2008). In the case of self-regulation of the energy industry under the Florence Energy Forum, the Commission is also just one among many actors (Eberlein 2005; Héritier 2006). An example of the second constellation in which public actors define the overall framework and private actors subsequently decide on the specifics of the regulation, is provided by health-and-safety regulation. The first two autonomous European collective agreements that were adopted at the cross-sectoral level, i.e. the Framework Agreement on Telework signed of July 2002 and the Framework Agreement on Work-Related Stress of October 2004, introduced their own reporting systems. Under these systems the European social partners commit themselves to implement their obligations within a specified period of time. The agreements are embedded in a legislative framework imposed by public actors. The national member organizations have to report on the implementation to an ad-hoc group under the responsibility of the European Social Dialogue Committee (Smismans 2008). In the case of energy transmission systems, the cooperation of the operators occurs within the context of framework goals defined by public actors which are then specified by the network operators. It may be that the third energy package may move more in the direction of the third constellation, i.e. a coregulation of public and private actors. The third constellation of co-regulation between public and private actors on an equal footing frequently occurs in environmental

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legislation (Halpern and Le Galès 2008), a case in point being the setting of environmental standards by private standardization organizations and their subsequent incorporation into European legislation. The link between public and private actors in policy-making under the new modes is closely linked to the question of how the ‘shadow of hierarchy’, i.e. the credible threat of legislation and governmental intervention, is linked to the operation of the new modes. 3.3 Government and new modes of governance It has been a central argument and a central empirical finding of our research that old forms of government and new forms of governance are very frequently linked. The shadow of hierarchy is important not only in prompting the emergence of new modes in order to avoid legislation but also as a credible threat to secure their effectiveness (Hériter and Lehmkuhl 2008). A credible threat of legislation is reflected in legislators clearly committing themselves to a regulatory issue: they may seek to organize a supporting political coalition based on logrolling in parliament; they may also commit themselves by informing the public about the importance of an issue and/or garnering political backing by building on NGOs’ mobilization campaigns. Legislators may also engage in ‘brinkmanship’ by gradually raising the likelihood of threatened legislation (Halfteck 2006: 56–9). In the case of a legislative threat, governmental action precedes a new mode of governance. Under a different scenario, it is conceivable that a new mode fails and is replaced by legislation. The policy solutions negotiated under private actors’ self-regulation may be considered as insufficient or the implementation of the policy measures are found to be wanting, leading to governmental intervention and a policy measure adopted in the classic parliamentary governmental arena. Instances of the first sequence of a credible threat of legislation leading to self-regulation is – as mentioned above – the voluntary accord formed in both the European paper and PVC industries. Thus, the European PVC industry only committed itself to self-regulation in PVC recycling after it had been under strong pressure from environmental associations and the preparation of legislative action by the Commission. The shadow of hierarchy is also of consequence for the implementation of self-imposed standards. Unsurprisingly, it

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is the lack of public acknowledgement and active monitoring of the implementation of the voluntary accord in paper that are at the basis of the initially only modest performance of self-regulation in this industry (Héritier and Eckert 2007, 2008). Viewed from both perspectives, the different degrees of cooperation of private and public actors under the new modes and the perspective of the link between new modes and the shadow of hierarchy, rarely do we find the application of the various new modes in pure form without being linked to public action; nor do we find new modes of governance without links to some form of governmental prompting or pressure.

4 Evolution: Old and new modes in a longitudinal perspective Moving beyond a static description of the new modes of governance as analysed in our research, the question arises: once the new modes of governance have been established, how do they develop over time? What patterns of change may we observe and what are the underlying processes driving the development of the new modes? Can we observe specific sequences of new modes and governmental action? In a very simplified way, three distinct empirical developments become apparent from our empirical cases: 1. a shift from old forms of government to new forms of governance; 2. a shift from new modes of governance to old forms of governmental intervention (if a new mode has failed to successfully produce policy decisions, old forms of government may be fallen back upon); 3. new modes of governance and governmental activities may also operate alongside each other, for running parallel to each other, they may mutually reinforce each other, complement each other, undercut each other or have no effect on each other at all. Empirical instances of a shift from old forms of government to new forms of governance are empirically observed in environmental regulation when, for instance, in clean-air policies the instruments of legislation and command and control were to some extent replaced by the selling and buying of environmental pollution rights based

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on incentivization (Héritier et al. 1996). Another instance of environmental regulation moving from the application of a new mode to governmental action, i.e. legislation, is offered by the European auto-oil agreement. In the first instance, the aim was that the mineral-oil and automotive industries should reach a voluntary agreement under which they commit themselves to reducing vehicle emissions. The disappointing result of a lowest-common-denominator agreement between the two industries then gave rise to a political decision to engage in legislation (Héritier et al. 1996). An empirical example of the parallel operation of new modes of governance and governmental action is provided by the case of competition policy. Here, private-dispute resolution may be used as a tool of implementation of European competition policy. At the same time, the possibility of referring an issue to the Commission or to national courts remains unaffected (Lehmkuhl 2008a, 2008b). If such changes in the application of new modes of governance over time are to be observed, what are the underlying processes that drive such changes over time? Given the variety of new modes analysed in our joint research, the answers to this question will vary depending on the different modes under scrutiny. However, in spite of the diversity of the new modes, changes in the shaping and application of the new modes of governance over time appear to be mainly driven by (1) a process of instrumental learning; (2) a contest over the distribution of costs of benefits of the new modes and over decision-making power; and (3) a process of layering of different instruments. The process of instrumental learning is based on a comparison among actors with respect to their relative performance. If one actor takes an innovative regulatory step, and the other actors compete with the former in the same market, the better performance of one actor may imply a market loss for the other actors. It is therefore in the interest of the actors to follow suit, to learn from the first actor and to take the innovation on board. A case in point would be a better national regulation of financial products in order to make them less risky. Instrumental learning may also simply be based on a process of learning from mistakes made in the past. Thus, in the case of regulatory networks, all concerned actors, the Commission, national governments and industry initially considered regulatory networks to be low-cost institutional solutions because they are politically nonsalient. Over time, the institutional rules were tightened in order

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to avoid ambiguities and to provide more guidance for joint action. Most recently, plans for establishing a proper European agency have been developed (Coen and Thatcher 2008a, 2008b). Similarly, the newly formed European Competition Network was preceded by a looser form of coordination between national competition authorities (Lehmkuhl 2008a, 2008b) and will very likely be formalized in the imminent future. The case of self-regulation by industry in environmental policy provides a case of instrumental learning. In the course of implementing their agreement, the actors learned how to better reach their defined goals and to redefine their goals in the light of experience and in the light of new external events. These processes seem to be rather incremental and slow. Thus, we find that industries both update and change their contracts in order to address the issue of exporting raw waste material outside Europe (Héritier and Eckert 2008). Evidence for instrumental learning was also found for the OMC in the field of health and safety. It illustrates the need to take external developments into account: the Lisbon strategy set out a broad framework of socio-economic guidelines and priorities and, thereby, shifted the focus of the mode of governance (Smismans 2008). A contest and ongoing implicit bargaining process between the actors concerned over the distribution of decision-making power will lead to a shift of decision-making power and a change in the new mode of governance over time. The redefining of competencies in the changing of the institutional set-up of the new modes may extend across levels: the member states oppose the shift of regulatory powers to the European level, whilst the Commission is keen to communitarize sectoral policy-making. Instances of a contest over institutional power are found in the analysis of different regulatory networks which have undergone a stronger formalization over time. At the heart of the development there was a more or less explicit power struggle between the Commission, national regulators and national governments. The Commission demanded additional competencies, but member states refused to oblige. The compromise was to form a network of national regulators at the European level (ERGEG) (Coen and Thatcher 2008a, 2008b). Another contest for power unfolds horizontally between EU institutions. For example, in the application of comitology in financial market regulation, the Commission gained increasing power over

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the Lamfalussy process (DeVisscher et al. 2006). At the same time, the Parliament sought to obtain some role in the process and to have a voice in the appointing of staff to the agency and in holding the agency accountable (Varone et al. 2004). Another cleavage in the contest for regulatory power may be identified in energy regulation between the national regulators and the large network firms (European Transmission System Operators). Yet another power contest driving changes in new modes is over the distribution of costs and benefits of a mode of regulation, as in the self-regulation of industry in environmental policy: adjustments in the self-regulatory measures may be traced to attempts to alleviate the cost burden on medium-sized enterprises or particularly hard-pressed industries (Héritier and Eckert 2008). A third typical process of development of new modes of governance over time appears to be a process of sedimentation (Le Galès and Halpern 2008) or layering (Streeck and Thelen 2005). The metaphor of layering indicates that new modes and new instruments are introduced while the old modes of governmental intervention are left in place. The simple addition of new modes and instruments to already existing ones offers the advantage that no political costs arise in overcoming the resistance of those opposing the abolition of the old ones. Layering also implies that at every point in time new and old modes exist alongside each other, the old ones being ‘shelved’ or ‘latent’ for a certain period but in principle still available for reuse in case enough political support should emerge. An example of sedimentation or layering may be seen in the provision of general interest services in energy. Here member states were reluctant to yield competencies to the European level resulting in parallel policy-making at the national and European level: the soft mode of OMC was promoted by the Commission. OMC is used as a soft tool providing the Commission with all the information it needs concerning member states’ performance and practices and may allow for the establishing of a coherent framework for community action (Moral Soriano 2008). A long-term analysis of the development of policy instruments across three decades (Halpern and Le Galès 2008) points to the conflicts and controversies surrounding their creation, implementation and modification. The findings show that in environmental and urban policy-making, policy instruments rarely entirely change.

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Rather, they either reorganize pre-existing elements or are borrowed from other sectors or political and institutional contexts. The specificity of EU policy-making lies precisely in the development of original forms of policy instrumentation that combine old and new policy instruments. This complexity of instruments can be described as a sedimentation and leads to the conversion of old modes in new contexts. It is also found that there are now more and more legal hybrids combining soft and hard law. While such hybrid mechanisms were not absent in the past, they have become more frequent. All these processes of instrumental learning and ongoing battles for gains in competencies, the redistribution of the costs of benefits of regulation as well as the adding of new modes to already existing modes of policy-making and their recombination, i.e. layering, contribute to changes in the institutional set-up and provisions of new modes of governance over time.

5 Evaluation: Policy effectiveness and democratic accountability In evaluating the new modes of governance, we first examine to what extent the forms of regulation investigated here were able to achieve the policy objectives they set out to obtain in the first place. We secondly address the question of the impact of the application of new modes of governance, focusing on aspects of democratic accountability. 5.1 Policy effectiveness We use a limited definition of policy effectiveness: we measure the effectiveness of an individual policy by its outputs (decisions). To what extent does the performance of the different types of sectoral governance under scrutiny here bear out the initially defined goals? We are specifically interested in whether the new modes of sectoral governance in themselves contribute to the efficacy of policy-making or whether they require the ‘shadow of hierarchy’, i.e. legislative and executive decisions, in order to deal effectively with the problems they are supposed to solve. We are not evaluating effectiveness in a more demanding sense which would also include interaction effects between different measures in the same policy area or the interaction effects of measures across various policy areas. Nor do we question the ‘rationality’ of the objectives of individual measures as

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defined by political decision-makers.5 Moreover, we were only able to measure policy effectiveness at the level of decision-making output. To analyse the impact of these measures regarding their ultimate objective of changing the behaviour of other actors would in each case require an in-depth analysis of the implementation process and its impact on target groups behaviour across countries. Empirical evidence regarding decision-making output under the new modes we have studied reveals that the comitology procedure under the Lamfalussy procedure in regulating financial markets reveals a steady decision-making output. In the context of the four Lamfalussy directives adopted by the Council and the European Parliament, the decision-making process in comitology worked smoothly. With one exception, where the Commission revised some Committee of European Securities Regulators (CESR) decisions instead of including them in the implementing measures, there were few conflicts. CESR appears to operate in an effective way. Nevertheless, two problems persist: its limited budget as funded by the member states and occasional pressure exerted by some member states seeking to influence their national regulators. Finally, the provisions of the Markets in Financial Instruments Directive (MiFID) took longer to be implemented by member states than was expected (Varone et al. 2004). In energy regulation, the delegation of decision-making to nonlegislative and private actors (independent regulatory authorities and market and transmission system operators) have achieved their declared goals, i.e. decisions to introduce market mechanisms in the energy sector. The same holds for the sectoral networks (CEER (Council of European Energy Regulators), ERGEG (European Regulators’ Group for Electricity and Gas), ETSO (European Transmission System Operators) and EuroPEX (Association of European Power Exchanges)). However, the shadow of hierarchy played an important role in bringing about these decisions. The Commission did credibly threaten to enact legislation in order to speed up the decision-making process. However, there is also empirical evidence of failure: in the case of the Spanish energy regulatory authority (CNE (Comisión Nacional de Energía)) and the European Madrid and Florence Forums. The Spanish case presents an example of ineffectiveness due to the fact that the government did not allow for enough autonomy on the part of the energy regulator. In the case of the Florence and Madrid Energy Forums, they did not produce decisions as expected because a wide variety of decision-makers and stakeholders with conflicting

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interests were included in the process. While the exchange of information functioned well, producing clear regulatory proposals proved to be more difficult. In some instances, the Commission subsequently regulated contrary to what was proposed by the forums (Eberlein and Newman 2006; Moral Soriano 2008; Coen and Thatcher 2008a). In other cases, the transmission systems operators in the energy sector have failed to agree on a long-term and methodologically solid compensation mechanism for cross-border trade. In another policy instance, the comparison of the regulation of GMO (genetically modified organism) products at the World Trade Organization (WTO) and EU levels shows that labelling as an instrument to regulate the circulation, marketing and use of GMO in the EU, allows the wide range of effects and consequences of GMO technology to be highlighted (Steffek 2007). However, by pursuing two competing objectives, namely to actively support the international competitiveness of European biotechnology industries and to simultaneously achieve a high level of environmental protection led to sometimes contradictory decisions questioning the efficacy of each individual measure. In another instance, the empirical findings on self-regulation by industry (Héritier and Eckert) suggest that a regulatory threat triggers voluntary activity but then that impact fades away during implementation. In the absence of a shadow of hierarchy, industry may find it difficult to comply with self-selected objectives. This became apparent in the PVC sector halfway through their ten-year commitment, at which point the industry achieved only limited progress. In short, there appears to be some evidence of a successful decision-making output under the new modes. In some cases, such as self-regulation by industry, however, a close link to the shadow of hierarchy seems to be of importance for producing this effect. 5.2 The structural impact of new modes: New modes of governance and democratic accountability Among the many implications of new modes of governance, two features stick out. The first is that, by themselves, the new modes as defined above are detached from the principal arena of democratically legitimate policy-making under representative government. They operate outside the classic ‘democratic circuit’ (Schmidt 2005). The second is that the new modes also typically focus on clearly

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delimited sectoral areas. Based on special expertise, the new modes may produce effective policy output in their respective, limited, ‘functional’ areas. Overall, they constitute a patchwork of segmented arenas, each of which focuses on its particular public-policy issues. In operating in this functionally clearly delimited way, although producing high-quality output, new modes may at the same time produce negative external effects for other policy-making arenas beyond their immediate concern. We define accountability between actor A and actor B as the power of elected actor A to control and sanction the exercise of decisionmaking delegated to B. B informs A about how it has fulfilled the task that has been delegated. In case of dissatisfaction with the decisions of B, A may force B to leave office or may sanction B. In linking the new modes as defined above to democratic accountability, we distinguish three different strands of democratic control and their potential for holding B accountable. The first and central one is the classic mode of democratic control through democratically elected representatives and their control of governing functions. It is based on the mediating role of political parties and citizens’ support. Government can take an integrated perspective of the public good across the entire political territory and resort to courts for adjudication. If subject to this traditional governmental democratic control, new modes could be held accountable. A second strand of democratic control may be conceived of as a functional mode of representation of all stakeholders affected by a particular policy dealt with under a new mode who are empowered to monitor, possibly discharge or sanction in case of dissatisfaction the actors operating under the new mode. The participation of stakeholders offers the possibility of taking into account all affected interests in a more or less balanced way when decisions are made. This is the type of democratic control most frequently used under the new modes of governance. A third strand of democratic control may be seen as the link between new modes and the public sphere and civil society whereby public debates and the media take issue with the policy-making activities under the new modes and may function as a (diffused form of) corrective. Democratic accountability, in the strict sense defined above, would only be guaranteed if the decision-making output of new modes is subject to the control by elected governmental actors under the first

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form of democratic control and if stakeholder democracy included the right of removing an actor to which a particular task has been delegated. The third form of democratic control – the critique of the public and the media – would provide information about the performance of the new modes but by itself would not allow consequences to be drawn in case of poor performance. As regards the potentially negative external effects resulting from expert decision-making within functionally defined limits, which type of democratic control would best allow for an internalization of these costs? The most obvious way to reduce these negative externalities is to link the new modes to the first classic strand of democratic accountability, i.e. supervision by a democratically legitimate territorial government. In doing so, the individual new mode with its negative external effects is linked to the control of a central political arena of democratically elected parliamentarians and their government. This should allow an overall view of the consequences produced by functionally limited policy-making arenas. Arenas of legitimate territorial government are responsible for the entire range of policies of a polity and – by taking an overall view of all simultaneous policy processes within a territory – should be able to decide whether to strengthen measures in one arena and lessen them in others, or to redistribute funds from one policy arena to another. By contrast, multi-stakeholder representation, while taking into account the interests of the immediately affected interests, does not consider policy effects beyond the immediate functional area of concern. Control through the public sphere and civil society at large may function as a useful additional corrective, but by itself it is not sufficient to correct the redistributive effects of new modes with negative externalities. Our empirical research shows that in the case of the financialmarket regulation under the Lamfalussy process, the European Parliament has successfully fought to gain some control over the process. Wary that too many policy decisions might be adopted at the comitology level, it proposed and obtained most of its amendments to safeguard its prerogatives. However, the Level 3 committees are not answerable to the Parliament (Varone et al. 2004). Environmental self-regulation of industry maintains some links to the European Parliament although this link is very weak: MEPs could participate in monitoring the implementation of the agreements but,

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de facto, showed very little interest in these technical matters. There are the beginnings of a system of multi-stakeholder representation, although it is heavily biased towards stakeholders from industry. Finally, public control is weak since NGOs do not function as watchdogs of implementation either in the plastics or in the paper industry (Héritier and Eckert 2008). Stakeholder participation in the WTO’s biotechnology regulation reveals that the current participation of civil-society organizations (CSOs) fulfils the democratising potential inherent in new forms of participatory governance. CSOs act as a ‘watchdog’ which observes and critically comments on the policy process; and CSO representatives participate directly in the policy process, acting as ‘deliberators’ and working closely with national governmental delegates, international civil servants and experts. Comparing the practices in the EU and WTO, it appears that the different roles assigned to CSOs as watchdogs and deliberators are sometimes hard to reconcile (Steffek 2007). In short, in a first instance the new modes of governance may practise a form of stakeholder participation. In a second instance, they may be linked back to and report to democratically elected governments. In a more general way, they may be subject to some control by CSOs. Only the first form of democratic control would allow for the rendering of democratic accountability in the strict sense.

6 Conclusion In this chapter we argued that two distant causes gave rise to new modes of governance defined as (1) public-policy-making under the inclusion of private actors, and/or (2) public-policy-making outside the traditional democratic-representative governmental arenas. The two more distant causes were economic liberalization/deregulation and political enlargement of the EU. In this wider context we analysed and empirically illustrated the varieties, goals, emergence, execution, evolution and the evaluation of a number of regulatory new modes aiming at the creation of markets and the correction of market processes. We also identified four more proximate causes of the emergence of the new modes under analysis: the need for expertise, the attempt of private actors to thwart legislation, the use of new modes as a

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default option for more integrationist actors and, finally, the attempt to improve the implementation of European policies. In the execution of the new modes, a variety of instruments and public–private actor combinations are used. Of the classic toolkit of instruments that are used to reach a stated policy goal, incentivization, bargaining, persuasion, information and ‘naming and shaming’ prevail. In the concrete decision-making process we mostly find some combination of activities of public and private actors ranging from an only marginal role for public actors to their full cooperation. Most new modes are linked in some way to governmental action. The shadow of hierarchy not only prompts the emergence of new modes in order to avoid legislation but also serves as a credible threat to secure their effectiveness. Once the new modes of governance have been established, how do they develop over time? In the evolution of the new modes we distinguished a shift from old forms of government to new forms of governance and a shift from new modes of governance to old forms of governmental intervention. If a new mode has failed to successfully produce policy decisions, old forms of government may be fallen back on. But new modes of governance and governmental activities may also operate alongside each other. The processes driving the development of new modes over time are instrumental learning or a contest over the distribution of the costs and benefits of the new modes and over decision-making power. We also identified a process of layering of different instruments. In evaluating new modes of governance, we first examined to what extent the new modes of governance investigated here were able to achieve the policy objectives they originally set out to obtain. We secondly addressed the question of the structural impact of the application of new modes of governance focusing on aspects of democratic accountability. We used a limited definition of policy effectiveness and the effectiveness of an individual policy measure as measured by its outputs (decisions). There appears to be some evidence of successful decision-making output under the new modes. In some cases, such as self-regulation by industry, however, a close link to the shadow of hierarchy seems to be of importance in order to produce this effect. As regards the structural impact of new modes we argued that new modes of governance, as defined above, are detached from the main

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arena of democratic policy-making. We went on to argue that the typical focus on clearly delimited sectoral areas has specific implications for democratic accountability. Democratic accountability is only guaranteed if the decision-making output of new modes is subject to control by elected governmental actors under the democratically legitimate policy-making under representative government. Stakeholder democracy, a form of functional democratic control, does not allow to control for the negative external effects of functionally delimited new modes of governance. The third form of democratic control, the critique of the public and the media, would provide information about the performance of the new modes but does not allow action to be taken if their performance should be found wanting.

Notes 1. The empirical evidence on which this chapter builds was collected in the different projects of Cluster 2 directed by Adrienne Héritier and Dirk Lehmkuhl: Project 5: New Modes of Governance in the Shadow of Hierarchy (Adrienne Héritier and Sandra Eckert, European University Institute). Project 6: After Delegation: Regulatory Agencies and Network Governance (David Coen, University College London, and Mark Thatcher, London School of Economics). Project 7: Governance and the EU Securities Sector (Frédéric Varone and Christian de Visscher, Université Catholique de Louvain; Université Catholique de Louvain and Josefin Almer, Swedish Institute of European Policy Research). Project 8: European Public Services Regulation (Leonor Moral Soriano, Granada University). Project 9: Choice and Combination of Policy Instruments (Patrick Le Galès and Charlotte Halpern, Fondation Nationale des Sciences Politiques). Project 10: Private Dispute Resolution: Legitimate and Accountable? (Dirk Lehmkuhl, St Gallen University). Project 11: The Role of Civil Society in Democratising European and Global Governance (Jens Steffek, Bremen University, and Stijn Smismans, Trento University/Cardiff University). 2. Or, alternatively, if threatened with the risk of market loss due to a loss in reputation. 3. The study of the implementation of European law can only be conducted on the basis of in-depth case studies focusing on the details of administrative processes and interaction with target groups of the measure in question.

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4. The study of the implementation of European law can only be conducted on the basis of in-depth case studies focusing on the details of administrative processes and interaction with target groups of the measure in question. 5. Such a questioning would, for instance, direct attention to the inherent problems of a stated policy goal, its limits and its being chosen for purposes of success being easily measured, but may not be apt to deal with the core of the problem at hand.

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3 Drawing Closer to Europe New Modes of Governance and Accession Tanja A. Börzel

1 Introduction Since the end of the Cold War, the EU has sought to stabilize the former Communist countries by encouraging them to transform into fully fledged Western style democracies and consolidated market economies (Vachudova 2005; Grabbe 2006). The prospect of membership provided the EU with a powerful tool to shape the path of their political and economic transition. Yet accession appears to have been both a blessing and a curse for countries aspiring to become members of the EU. On the one hand, the implementation of the acquis supports their transformation from authoritarian regimes with state-controlled economies into liberal democracies with market economies. On the other hand, accession countries face great difficulties in restructuring their economic and political institutions in order to meet the conditions for EU membership. The adoption of, and adaptation to, the acquis ran into serious problems concerning both the effectiveness and the legitimacy of EU policies. Since these countries are ‘weak’ states that often lack the absorption capacity rather than the willingness to effectively implement EU policies, accession problems cannot simply be solved in the ‘shadow of hierarchy’ (command and control). Accession countries in Central, Eastern and South Eastern Europe have to adopt the entire governance package enshrined in the Copenhagen criteria and acquis communautaire. But the EU also seeks 75

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to export its governance model to countries that have no membership perspective or at least will not have one in the near future. Eastern enlargement has stretched the EU’s ‘backyard’ considerably towards the East. Ukraine, and some of the newly independent states have been admitted to the club of ‘close friends’ (Magen 2006; Tocci 2007), which already included the EU’s neighbours in the Southern Mediterranean and the Middle East (Gomez 2003; Bicchi 2006). In order to turn the ‘ring of friends’ into an area of security, stability and prosperity, the EU seeks to foster the approximation of its Southern and Eastern neighbours with key parts of the acquis (Lavenex 2004; Magen and Morlino 2008). New modes of governance seem to be particularly appropriate for the study of the EU’s attempts to Europeanize accession and neighbourhood countries. On the one hand, the EU is unable to impose hierarchically the acquis communautaire on accession and neighbourhood countries. Before they join, their relationship with the EU remains in the realm of classic diplomacy and international negotiations. The EU’s supranational institutions do not even cast a shadow of hierarchy, since the supremacy of EU law and its direct effect, which empowers domestic courts to enforce EU law without the consent of national governments, only takes effect after accession. On the other hand, accession and neighbourhood countries have been limited in their capacity to coordinate hierarchically their approximation to the acquis. The adoption of, and adaptation to, the acquis communautaire has created an enormous policy load, which has met with limited resources (expertise, money, personnel) that were already strained by managing the transition from authoritarian and socialist rule. Given the limited capacity of both the EU and the accession and neighbourhood countries, it would be only rational for public actors, both at the European and the national level, to seek cooperation with non-state actors to share or shift the burden by pooling resources and delegating certain tasks. Non-state actors, in turn, could exchange their resources for influence over policies which would significantly affect them. Finally, the European Commission has strongly encouraged accession countries to involve non-state actors in the adoption of, and adaptation to, the acquis to ensure both greater effectiveness and legitimacy of the accession process (Tulmets 2005). In other words, the accession and approximation of Southern and Eastern neighbours to the EU

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appear to be most likely cases for the emergence of new modes of governance. Unlike the other contributions to this book, this chapter focuses on new modes of governance in the EU’s attempts to impact upon states, which are not (yet) members. More specifically, we seek to explore the role of new modes of governance for the implementation of EU policies and EU primary law in different types of states – ‘weak states’ in particular, including Southern European member states, Central and Eastern European (CEE) candidate countries and associated states in the former Soviet Union and Northern Africa. The first section will explore which new modes of governance are employed by the EU to facilitate the adoption of, and adaptation to, EU policies and EU law in countries with weak state capacities. To what extent do the EU and governmental actors resort to new modes of governance to cope with the challenge of accession and approximation to the EU? The second section seeks to explain why new modes of governance appear to be rather scarce and weak in accession countries. Do weak governance capacities foster and hinder the emergence of new modes of governance? How important is a credible shadow of hierarchy for ensuring the involvement of business and civil society organizations in policy formulation and implementation? Is civil society willing and capable of exploring the opportunities offered by the EU? The third section assesses the effect(iveness) of new modes of governance. Do they lead to more effective policy outcomes in the accession and approximation to the EU? What is the potential of new modes of governance when compared to the established community principles? Do they require political trust and a ‘negotiationoriented’ culture in order to make (EU) policies more effective? Finally, the fourth section discusses the structural impact of new modes of governance on accession and neighbourhood countries. Do new modes of governance reinforce certain pathologies of the political institutions in transition countries or, on the contrary, are new modes of governance able to compensate for some of the institutional weaknesses? Besides the question to what extent new modes of governance facilitate the effective transfer and adoption of EU policies, we will also explore their implications for the political and societal structures in accession and neighbourhood countries. Are new modes of governance an effective means of capacity building?

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Do they trigger administrative or political reforms? Do new modes of governance undermine traditional forms of representational democracy by fostering functional interest representation? The chapter concludes with some policy implications regarding (new modes of) governance and accession. The analysis shows that new modes of governance can help bring countries up to the Europe level required for accession and approximation. Yet, they do so only if both state and non-state actors have sufficient capacities and trust each other. Given that these conditions are often absent in accession and neighbourhood countries, we should be cautious in our expectations regarding the utility of new modes of governance and focus on less innovative methods, such as capacity-building.

2 New modes of governance: What are they? Defining new modes of governance is not an easy task. What may be old in the EU-15 may appear rather new to the accession and neighbourhood countries, which have only recently regained their sovereignty and have never experienced supranational forms of governance, such as the Community Method. We adopt a similar understanding of new modes of governance to that of Adrienne Héritier and Dirk Lehmkuhl in their chapter. They are structures and processes of coordination that aim at adopting and implementing political decisions outside the traditional governmental arenas and that: 1. are non-hierarchical: decisions are adopted and complied with on a voluntary basis; i.e. actors cannot be bound against their will; and/or, 2. systematically involve non-state actors, for profit (e.g. firms) and/or not for profit (e.g. non-governmental organizations) in policy formulation and/or implementation. While this definition may appear rather encompassing, it discriminates against modes of governance which used to dominate our understanding of politics for many generations and against which the research on (new modes of) governance emerged to begin with, i.e. government, command and control, state regulation, and the hierarchical adoption and enforcement of political decision by state actors (Rosenau and Czempiel 1992; Rhodes 1996; Pierre and Peters

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Table 3.1 The realm of new modes of governance Actors involved Decision-making/ Implementation

Non-state only

Non-state/state

State only

Non-hierarchical

Voluntary agreements

Soft law (implementation) Transgovernmental regulatory networks

Hierarchical

Wage bargaining of social partners (implementation)

Public-private partnerships Transnational regulatory networks Tripartite negotiations (implementation)

-/-

2000). It also excludes the lobbying and mere advocacy activities of non-state actors aimed at governments as well as supranational and international organizations. The latter do not fulfil the coordination requirement and usually operate in the governmental arena. Finally, international diplomacy and interstate negotiation systems only qualify as new modes of governance to the extent that states use means other than international law to coordinate their actions. As we will see in the following section, new modes of governance have been rather rare in governing accession. Our empirical evidence is mostly limited to weak forms, including consultation of civil society and business actors in the implementation of EU policies, the contracting out of certain management functions and public–private partnerships. In regional policy, EU Treaty Law and the EU’s external relations, however, we observe instances of tripartite negotiations, soft law, mutual recognition and transgovernmental regulatory networks, which conform more closely to our definition of new modes of governance.

3 Emergence: Factors fostering and hindering new modes of governance 3.1 Seek and ye shall find? Contrary to our initial expectations, new modes of governance have not been central to the efforts of accession and neighbourhood countries to approximate to the EU or in the EU’s attempts to bring them closer to the acquis. This is even true if we further relax our definition

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and also consider modes in which non-state actors are not involved on an equal footing (e.g. consultation and contracting out). In Southern and Central Eastern European accession countries, traditional modes of governance have clearly dominated their approximation to the acquis communautaire. State actors have mostly relied on command-and-control regulation to adopt and adapt to EU policies. This is even true in the field of environment, where the costs of accession already imposed an extraordinary financial and administrative burden on the three southern European countries that joined in the first half of the 1980s. Greece, Portugal and Spain had just completed their transition to democracy and seriously lagged behind in their socio-economic development. Given their limited capacities, they were unable to cope with the huge implementation load simply by imposing hierarchically the new environmental policies. About a decade later, the CEE countries found themselves in a similar situation when the EU opened accession negotiations. Yet none of the Southern and CEE governments sought to enlist the help of non-state actors in coping with the challenge of accession. They did not try to share or shift the burden by pooling resources or delegating certain policy tasks to non-state actors. Likewise, civil-society organizations and businesses did not use their expertise or money to gain systematic access to the policy process and to influence the implementation of policies that significantly affected them. Consultation, outsourcing and, to a lesser extent, voluntary agreements have been the only forms by which non-state actors have become involved. Thus, environmental organizations and research institutes have helped their governments to draw up inventories of protected species or lists of conservation areas as required under the Wild Bird and the Fauna, Flora and Habitats (FHH) Directives. Likewise, business has participated in the preparation of national guidance documents on standards for the best available technology under the Integrated Pollution Prevention and Control Directive. Yet non governmental organizations (NGOs) have been able to yield greater influence on the implementation of EU policies by social mobilization and litigation against state authorities than by consulting or cooperating with them. Interestingly, such confrontational strategies may eventually lead to a greater involvement of the public since state actors seek cooperation with civil-society organizations in order to avoid

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litigation and/or to increase the legitimacy of unpopular political decisions (Koutalakis, forthcoming). Business seems to prefer hard regulation over more flexible modes of governance that would give them a greater role in implementation. State authorities, on their part, are equally reluctant to give non-state actors a role that goes beyond consultation or selective contracting out, even if environmental directives explicitly prescribe the participation of non-state actors (Buzogany forthcoming [a]; Guttenbrunner forthcoming). In the Eastern neighbourhood countries, environmental non-profit organizations also often lack the tradition of acting as civil-society actors and demand a more assertive hierarchical approach by governments (Lavenex 2008). The findings on environmental policy are corroborated in the field of social policy. Concurring with the EU principle of social partnership, the CEE accession countries introduced tripartite negotiations between representatives of employers, employees and the government. Yet attempts to institutionalize social dialogues have shown limited success. In Poland, the work of the Tripartite Commission has been repeatedly stalled by political conflict and was circumvented by ad-hoc consultations launched by the Polish Government. In Estonia, there has never been a permanent tripartite institution. Only the Lithuanian Tripartite Council appears to have produced some concrete policy outcomes. The inclusion of the social partners in the management of implementing agencies, e.g. in the distribution of EU agricultural subsidies, has been equally disappointing (Grosse 2007b; Grosse 2008b). In regional policy, by contrast, new modes of governance appear to play a more prominent role – although they are also firmly embedded in a hierarchical mode of governance. While the CEE central governments have been reluctant to share power with regional actors, the EU’s insistence on the principle of partnership combined with diverse pre-accession assistance programmes that empowered diverse subnational non-state actors spurred the emergence of more or less stable partnerships among various sub-national authorities, firms and civil-society organizations in the design and implementation of regional development programmes. Such development partnerships take different forms and do not conform to a particular national model. What they have in common, though, is their ‘layering’ – i.e. they all form part of a predominantly hierarchical

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and centralized governance regime that is characteristic of regional development policy in CEE accession countries (Bruszt 2008a). The approximation of accession countries to the EU appears to be largely governed by traditional modes of governance in which central states predominantly use hierarchical coordination to adopt and adapt to the acquis communautaire. Not surprisingly, new modes of governance play a more prominent role in the EU’s attempts to bring accession and neighbourhood countries up to European standards. Thus, in the EU’s relations with associated neighbourhood states, transgovernmental networks and networks of regulators have emerged, which are partly organized around European agencies. This is particularly the case in more technocratic and depoliticized policy areas, such as pharmaceutical and environmental regulation or research. Legal harmonization of pharmaceutical regulation in CEE accession countries with the EU could only be achieved with the help of two regulatory networks: the Pan-European Regulatory Forum and the Collaborative Agreement between Drug Regulatory Authorities in the European Union Associated Countries. Both initiatives were facilitated by the European Agency for the Evaluation of Medicinal Products. These transnational networks have brought together national and European regulators with industry representatives facilitating processes of ‘horizontal regulatory learning’ about which EU standards had to be uniformly implemented and which parts would allow for some flexibility (Koutalakis and Prange 2006; Borrás et al. 2007; Koutalakis 2008b). We find similar examples of regulatory alignment through transgovernmental and transnational networks in the European Neighbourhood Policy (ENP), e.g. in the implementation of the EU Water Framework Directive at the regional level of transnational water basins, Israel’s full association to the EU’s Research Framework Programme, or the membership of Eastern neighbourhood countries in relevant regulatory for a dealing with aviation security (Lavenex et al. 2007; Lavenex 2008; Lavenex et al. forthcoming). Such transgovernmental networks have even emerged in more sensitive areas of Justice and Home Affairs. Here, the limited competencies of EU actors and the incapacity of the EU for tackling threats to internal security via supranational hierarchy have spurred the emergence of horizontal forms of intensive transgovernmenalism or network governance that extend beyond the EU member states to ENP countries.

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These do not entirely lack, however, hegemonic traits (Lavenex and Wichmann 2009). Interestingly, the emergence of new modes of governance in accession countries may not only vary across but also within policy sectors. Environmental organizations, which are a national chapter of a transnational NGO (e.g. the World Wildlife Foundation or Friends of the Earth), are much more inclined to cooperate with state authorities and business than local grass-roots groups (Fagan 2004; Schwartz 2006). Likewise, competitive and export-oriented companies, such as pharmaceuticals in Hungary or the construction industry in Romania, are more open to exchange their expertise for policy influence than structurally and financially weaker sectors, such as industrial farming, which not only have hardly any resources to offer but take no interest in improving the implementation of costly environmental regulation (Buzogany forthcoming [a]; Buzogany forthcoming [b]). Such variations notwithstanding, overall we find limited evidence for new modes of governance at the national level of accession and neighbourhood countries. Accession countries have witnessed at best the emergence of nascent forms of cooperation between state and non-state actors that hardly go beyond consultation – with the exception of regional development policy. Moreover, there are some signs for an increasing role for new modes of governance in the EU’s external relations. Finally, in the shadow of EU Treaty law on the free movement of goods and services and on state aid control, we identified some new modes of governance that are often overlooked. The principle of mutual recognition in services and state-aid soft law have helped an increasingly heterogeneous EU to make its policies work in situations in which old and new member states have not been able to agree on further integration. In the field of EU state aid control, a major revision of regional aid became necessary due to enlargement and increased disparities in the EU-27. Soft law facilitated the adaptations (Blauberger 2008a). Regarding trade in services, the Bolkenstein Directive of 2004 is an attempt to use mutual recognition where the increasing wage differential between the old member states and the CEE accession countries created a major growth potential, but member states were unable to agree on a harmonization of service regulation. While political opposition reduced the scope of the service

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directive, service providers will be regulated in one member state and supply their services in others (Schmidt and Nicolaïdis 2007). Allowing services trade in the absence of harmonized services regulation, mutual recognition relies on binding administrative cooperation. In this way, national administrations become responsible to transnational and European demands, which result in the harmonization of administrative cooperation (Schmidt 2008b). 3.2 Why do they (not) emerge? We have identified several factors that have fostered and impaired the emergence of new modes of governance. They are located both at the European and the domestic level and impact upon the willingness and the capacity of state and non-state actors to engage in cooperation with each other. At the domestic level, weak state capacities have provided an important incentive for both state and non-state actors to cooperate. Approximation with the EU requires immense resources, a demand that is hardly met by the weak governance capacities of the accession and neighbourhood countries. On the one hand, limited resources and problem-solving capacities may provide important incentives for state actors to resort to new modes of governance in an attempt to pool resources and share compliance costs (Börzel forthcoming [b]). Thus, public authorities did have an incentive to seek cooperation with companies, scientific experts and civil-society groups, which could offer technical know-how, scientific expertise and legitimacy to the process of harmonizing domestic environmental or pharmaceutical regulation with EU requirements (Börzel forthcoming [a]; Koutalakis and Prange 2006). At the same time, non-state actors had an interest in exchanging their resources for influence over the legal and administrative implementation of EU policies. While companies have sought to reduce compliance costs with pharmaceutical and environmental regulation by increasing flexibility and receiving derogations, environmental and consumer groups wanted to secure the strict application of EU requirements. On the other hand, it is precisely the lack of resources that has impaired both the willingness and the capacity of both state and non-state actors to cooperate (cf. Börzel forthcoming [b]). First, despite weak capacities, state actors still have an institutional self-interest in maintaining their political power. Thus, political parties in

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Poland resisted the introduction of new modes of governance aimed at increasing transparency, public participation and accountability of administrative agencies since it would reduce their political influence on the administration (Borrás et al. 2007; Grosse 2007b, 2008b). Similarly, in the field of regional policy-making, central governments in the CEE countries were reluctant to involve non-state actors in decision-making since it would reduce their control over the discretionary spending of EU funds (Bruszt 2008a). Second, the top-down nature of the accession process, in which accession countries had to download a vast number of EU laws in a relatively short time, has been counterproductive to the involvement of non-state actors, which is time-consuming and prone to deadlock or lowest-common-denominator solutions. Moreover, the strict application of conditionality by the Commission and its focus on the absorption capacity of member states has increased the autonomy of central governments and further induced the use of hierarchical modes of coordination (Grabbe 2006; Buzogany forthcoming [a]; Buzogany forthcoming [c]; Guttenbrunner forthcoming; Bruszt 2008a). Third, state actors have lacked the personnel, the level of coordination between ministries and sub-national authorities, as well as the political skills required to experiment with decentralized and inclusive modes of governance. The involvement of stakeholders in the implementation of environmental policies often failed because different parts of the administration hackled over competencies, particularly when a policy cuts across different portfolios, as in the case of the Water Framework Directive or the social dialogue. Nor are state actors always capable of casting a credible shadow of hierarchy, which is a major incentive for non-state actors to get involved in public-policy-making to avoid command-and-control regulation. Political instability and frequently changing governments further reduce their credibility as reliable negotiation partners, which was a major reason why civic dialogues failed in Poland (Grosse 2006, 2007a). Weak capacities do not only provide an incentive for state actors to seek cooperation with non-state actors. They can also have the opposite effect. In the case of the Integrated Pollution Prevention and Control Directive, environmental authorities have often shied away from cooperating with companies since they were afraid of being captured given the superior knowledge, human resources

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and funding of firms and business associations (Guttenbrunner forthcoming; Koutalakis 2008b) or have at times been captured by powerful private interests, as in the case of the agency administering EU agricultural subsidies in Poland (Grosse 2007b, 2008b). Finally, capacities of state actors to engage with non-state actors have been severely hampered since such institutionalized arenas have largely been absent in the countries of our study. Non-state actors are not only reluctant to cooperate because they doubt that state actors are capable of translating mutual agreements into policy outcomes given weak enforcement powers, the still-unconsolidated regulatory framework, unstable majorities in parliaments and frequent government turnover. Often, their own capacities are equally wanting. Particularly, civil-society organizations do not have sufficient organizational capacities to offer themselves as reliable partners to state actors. Or they lack resources to exchange to begin with. Social dialogue in Poland, Lithuania and Estonia suffers from the organizational weakness of trade unions, which are ridden with internal divisions and rivalry over dwindling memberships (Grosse 2006). Business also appears to be rather weak, with regard to both its financial resources and organizational capacities. Yet there is significant variation between sectors. Highly productive industries, which are usually strongly export-oriented and attract foreign direct investment, tend to possess the relevant capacities, which are lacking in the case of small and medium-size enterprises. Thus, pharmaceutical companies in Hungary have had no difficulties in providing the technical expertise required to define best-available-technology standards as demanded by the Integrated Pollution Prevention and Control Directive. Since the application of the directive is necessary to ensure market access for some sectors, they also take an interest in fostering the regulatory capacity of states while less competitive sectors continue to avoid compliance. Somewhat ironically, however, firms share the preference of state actors for command-and-control regulation precisely because the monitoring and enforcement capacities of public authorities are weak as a result of which more flexible measures, such as voluntary agreements, could give rise to legal uncertainty. As a result, Hungary, Poland and Greece apply even stricter standards than required by the EU (Buzogany forthcoming [a]; Guttenbrunner forthcoming; Koutalakis forthcoming). In Romania or Spain, by contrast, where

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the (full) privatization of industry in some sectors has lagged behind (e.g. power plants), state and business actors have worked together to avoid or at least postpone compliance with EU legislation (Buzogany forthcoming [c]; Font and Fernandez forthcoming). The low governance capacities of both state and non-state actors as a major impediment for the emergence of new modes of governance are in line with an argument of the governance literature that new modes of governance require both a strong state and a strong society (cf. Börzel forthcoming [b]). The findings on the importance of governance capacities and the shadow of hierarchy in particular are also corroborated by the emergence of new modes of governance in the context of EU Treaty Law. Trust among member states in each other’s monitoring and enforcement capacities has proven to be a major precondition for the functioning of mutual recognition for services. Unlike in the case of goods, most services cannot be traded independently of their production. Rather, if services are being traded, either the provider or the consumer has to travel abroad. Hence, the home country has to control the compliance with regulations, from which only the host country profits, where the service provider offers its services. The latter, correspondingly, has to trust the former much more as it has to behave altruistically rather than egoistically. Egoistically, poor member states with high employment rates might have more of an interest in exporting services than in ensuring that they comply with all regulations (Schmidt 2008a). While mutual recognition in services relies on sufficient state capacities at the national level, in state aid, it is the European Commission’s competence to prohibit individual state-aid measures and to require the recovery of illegal aid that casts a strong shadow of hierarchy over the application of soft state-aid rules. Given the Council’s initial refusal to adopt secondary legislation, the Commission has made a virtue of necessity. In order to prevent or settle political conflict over individual decisions, the Commission has sought to establish more general criteria for state aid which it deems still admissible. These criteria have been codified into a complex system of soft law. Although soft rules are formally non-binding for member states, the European Commission hardly allows any aid which deviates from its own criteria (Blauberger 2008b). In the EU’s external relations with neighbourhood countries new modes of governance are also more likely to emerge when both sides

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display a similar level of governance capacity. Thus, the active participation in regulatory networks by stakeholders representing specialized levels of public administration or relevant non-state actors presupposes a certain decentralization of political powers and civil society autonomy that does not necessarily exist in neighbourhood countries. Moreover, the lack of qualified personnel and expertise, particularly by sub-national actors, has resulted in rather asymmetrical relations. Third-country participants in policy networks tend to become passive receivers of EU templates. As a consequence, formally horizontal modes of network governance resemble ‘hierarchy in disguise’ in practice (Lavenex 2008; Lavenex et al. forthcoming). The impairing effect of weak governance capacities on the emergence of new modes of governance is reinforced by a state tradition which is hostile to the involvement of non-state actors in public policy-making. Not only are new modes of governance incompatible with the legacy of authoritarianism and socialism of most accession and neighbourhood countries but new modes of governance do not necessarily correspond to the newly established institutions of representative democracies either. Thus, non-elected interest groups and civil-society organizations are not always accepted as legitimate representatives of societal interests. Moreover, their involvement in the policy process outside majoritarian institutions is often considered to be a continuation of traditional clientelistic networks. This perception has been reinforced by attempts by Polish politicians to use civil dialogue to circumvent opposition and deadlock in parliamentary or party arenas (Grosse 2006, 2007a). Finally, the privatization of formerly public services, or their delegation to non-state actors, has met with strong opposition at the sub-national level, where local politicians and consumer groups have, for instance, resisted the involvement of private companies in the provision of drinking water (Guttenbrunner forthcoming; Buzogany forthcoming [a]). Likewise, the civil-society tradition in the transition countries does not always resonate with new modes of governance either. Civil society largely emerged in opposition to the authoritarian state. Many civil-society organizations still see themselves as ‘watchdogs’ rather than partners of the state in public-policy-making. Thus, environmental organizations often tend to pursue more confrontational strategies using public campaigns and litigation to exert pressure on public authorities (Buzogany forthcoming [a]; Koutalakis forthcoming).

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Domestic factors have largely impaired the emergence of new modes of governance in accession and neighbourhood countries. Europeanization, by contrast, has helped to overcome some of the obstacles, although the EU has not always been consistent in its attempts to foster new modes of governance. First, EU pressure induced state actors to resort to new modes of governance. On the one hand, the EU may legally require the involvement of private actors (e.g. the principle of partnership or participatory policy instruments in environmental directives). Thus, it may be rational for state actors to apply new modes of governance in order to gain access to EU funding or to avoid negative consequences, such as delays in the accession process (accession conditionality) or infringement proceedings. This may largely explain why new modes of governance are more prevalent in regional policy than in other areas. EU requirements for new modes of governance are most explicit in the principle of partnership, which the Commission introduced in the 1980s to open up bilateral relations between national governments and their regions at the domestic level, seeking to turn structural policy into a process of multilevel cooperative policy-making. The emphasis of the Commission on the absorption capacity of accession countries may have strengthened the role of central government rather than decentralizing policy-making powers to the regional and local levels. But while the EU gave central states the prerogative to control regional policy-making, its assistance programmes led to the creation of new actors that used the opportunities offered by the partnership principle to form development partnerships, particularly after accession, when the Commission lapsed back into its original preference for more decentralized structures in structural policy. Moreover, societal actors and sub-national authorities could politicize issues of territorial decentralization and exert pressure on state reforms towards a greater devolution of power (Bruszt 2008a). In a similar vein, the legal prescriptions for public involvement of the FHH or the Water Framework Directive empowered environmental organizations in the policy process. They could either exert pressure on public authorities by taking them to court and or lodge a complaint to the European Commission, respectively, as Polish, Spanish and Greek NGOs successfully did (Guttenbrunner forthcoming; Font and Fernandez forthcoming; Koutalakis 2004). Alternatively, state actors seek to involve societal actors to avoid litigation and

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help avoid conflict with other stakeholders, as the Greek authorities did in order to facilitate the implementation of the FFH Directive (Koutalakis forthcoming). Second, the EU does not only provide incentives and governance paradigms that may favour new modes of governance. It also helps strengthen the governance capacities of accession countries. The transfer of funds and expertise through community programmes and twinning processes provides state as well as non-state actors with additional resources they can exchange. Participation in EU pre-accession programmes in the 1990s strengthened the capacities of municipalities, firms, NGOs and universities for participating in national and regional development programmes after accession (Bruszt and Vedres 2008). Likewise, transnational regulatory networks, such as the Pan-European Regulatory Forum in pharmaceuticals, the ‘Seville Process’ under the Integrated Pollution Prevention and Control Directive or the Network for the Implementation and Enforcement of Environmental Law have fostered the building up of technical knowledge as well as trust among regulatory authorities, firms and consumer and health organizations from the accession countries (Koutalakis 2008a, 2008b; Font and Fernandez, forthcoming; Fernandez and Font, forthcoming). European push-and-pull factors have helped accession countries to escape the ‘low equilibrium trap’ (Bruszt 2008a), both in the South and in the East of Europe (cf. Börzel forthcoming [a]). However, the building of governance capacities has been unequal, favouring state over non-state actors. Not only has the downloading of a vast number of EU policies in a rather short period of time not allowed for the involvement of private actors but accession conditionality and the focus of the Commission on the absorption capacity of the candidate countries have strengthened the autonomy and the resources of central government actors in hierarchically imposing policy outcomes (Bruszt 2002). This is even the case for regional and agriculture policy, in which the Commission explicitly requires and encourages the involvement of sub-national and private actors.

4 Execution and evolution: The resilience of government and hierarchy The forms of new modes of governance we have found in the context of accession are not only rare, unstable and atypical for accession

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and neighbourhood countries but they are strongly dominated by governmental actors. While consultation, tripartite negotiations and public–private partnerships involve business and civil-society actors, their role is quite weak. Governmental actors have been unwilling to relinquish political control and to give non-state actors a real say in the policy process. This may also explain why regulatory networks are transgovernmental rather than transnational in character. Soft law and mutual recognition, finally, exclusively rely on the coordination of governmental actors at the national and EU levels. New modes of governance can help mobilize the resources of state and non-state actors in promoting the adoption of, and adaptation to, EU policies. The EU has employed both incentivization (conditionality) and command and control (participatory requirements of EU policies) to push accession-country governments towards involving the social partners or civil-society partners in the implementation of the acquis. Moreover, by providing financial and technical assistance through funding programmes and twinning, the Commission has also sought to foster the exchange of resources between state and non-state actors. If they choose to engage, public administration, business and civil society mostly exchange information. At the same time, political and legal action (protest, litigation, complaints to the EU) by non-governmental organization against the ineffective application of EU policies have been a major incentive for public authorities to open up the policy process so as to avoid further conflict (Koutalakis, forthcoming). Soft law and mutual recognition also work through the provision of information on how the Commission interprets and applies EU rules on state-aid control and on how national administrations monitor and enforce national regulations. Likewise, transgovernmental networks exchange experience on best practice (Koutalakis and Prange 2006; Lavenex et al. 2007; Koutalakis 2008b). While soft instruments appear to prevail, command-and-control regulation still looms large. Even when EU policies specifically provide for flexibility and cooperation in their application, state actors tend to resort to uniform and legally bindings standards. Thus, Polish standards for implementing the criteria for best available technology to meet EU emission limits are stricter than those defined at the EU level. Lacking the expertise to deal with the technical details of the BREFs (Best Available Techniques Reference Documents), Polish

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authorities prefer to adopt regulations that leave no discretion in the application of the Directive (Guttenbrunner, forthcoming). Moreover, new modes of governance and soft instruments often combine with old modes of governance and command-and-control regulation. EU policies do not only prescribe more participatory forms of policy-making, which can be hierarchically enforced by the European Commission and the European Court of Justice. Procedural regulations regarding public and stakeholder involvement mostly serves to help implement rather than substitute for legally binding standards adopted and enforced in the governmental arena. The result is often a process of ‘layering’ (Bruszt 2008a), whereby new modes of governance are introduced without basically challenging or altering the dominant features of traditional governance structures and processes. Thus, regional development programming in CEE accession countries primarily proceeds through government-controlled sectoral programmes, in which regional actors are not involved. Design and implementation, by contrast, allows for some regional input via a separate ‘regional programme’ (Bruszt 2008a). Mutual recognition and soft law, finally, operate in the shadow of EU Treaty law, where the Commission and the European Court of Justice can impose decisions unilaterally regarding the opening of national markets for foreign goods and services and the granting of state subsidies. In sum, new modes of governance and soft instruments in accession and neighbourhood countries are not only rare; they are usually combined with old modes and command-and-control regulation. The shadow of hierarchy often looms in the background giving rise to asymmetrical relationships between state and non-state actors or a ‘hierarchy in disguise’ (Bruszt 2008a). Since new modes of governance have hardly been institutionalized in accession and neighbourhood countries, their evolution over time is hard to trace. If the case of the three Southern European countries, which already joined the EU in the 1980s, is indicative, we may expect new modes of governance to play a more prominent role in the future in supporting the effectiveness and legitimacy of old modes. Given the weak governance capacities of accession and neighbourhood countries, it is unlikely that new modes of governance will ever replace old ones.

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Regarding EU Treaty law, the embeddedness of mutual recognition and soft law appears to have an influence on their evolution, which is, however, independent of accession. Thus, mutual recognition develops through ECJ decisions concerning the application and derogation from EC law, and these exceptions are then codified through positive harmonization. Therefore, mutual recognition rarely exists without some form of minimum harmonization and/or voluntary standards, which are constantly developing. As a result, mutual recognition appears to serve as a predecessor to hard law rather than as a permanent alternative to it. A similar trend can be observed in the case of state-aid control, which has relied for more than 25 years on soft law. Only in 1998 did the Commission and the Council agreed to adopt secondary legislation on state-aid control. Interestingly, it has been the Commission that has resisted a hardening of the law since it has suspected some member states of seeking to weaken state-aid control by getting involved more deeply in stateaid regulation. The main reason why the Commission reconsidered its position towards hard state-aid law was increased workload. Given its limited capacities, the Commission had to concentrate on the most important and difficult cases. Moreover, soft law had become sufficiently precise in some areas to be applied in a more decentralized way. Since Eastern enlargement has significantly increased the workload of the Commission, a further shift from soft to hard law seems highly probable (cf. Blauberger 2008a, 2008b).

5

Evaluation: Effectiveness and structural impact

5.1 Handle with care: The (effect)iveness of new modes of governance To make policies work, state actors become increasingly dependent upon the cooperation and joint resource mobilization of non-state actors, which are outside their hierarchical control. New modes of governance allow state actors to tap into the resources of non-state actors and to facilitate their implementation. The more the actors affected by a policy have a say in decision-making, the more likely they are to accept the implementation of the policy outcome, even if their interests have not been fully accommodated. In short, new modes of governance can significantly strengthen the capacity of state actors in public policy-making. If they emerge, we may expect

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them to improve the effective approximation of accession and neighbourhood countries to the EU. There are, however, reasons to doubt that there is necessarily a positive impact of new modes of governance on effectiveness. Non-state actors can certainly provide public actors with important resources to make public policies work. However, it is unclear whether the mutual resource dependency of state and non-state actors actually leads to a net increase in the problem-solving capacity of new modes of governance. If states are so weak that they have to share authority with non-state actors, this can easily result in problem-shifting or agency capture. In some cases, new modes of governance arrangements simply amount to the privatization and deregulation of formerly public services rather than the adoption of effective public policies. This explains at least partly why the attempts of accession countries to involve private companies in the provision of drinking water have met with fierce resistance at the local level. Although private capital is badly needed, particularly by smaller municipalities, to meet the quality standards of the EU Drinking Water Directive, public pressure has prevented comprehensive privatization. Moreover, states with weak regulatory capacities may not have the ability to reassume responsibility for delegated tasks in cases of private failures as functions were delegated in the first place precisely because they were not capable of delivering them. Likewise, weak state actors may not be able to resist the pressure of non-state actors to adopt policies that serve the public interest, or, worse, are not able to judge which policies may be in the public interest since they lack the necessary information and expertise. Finally, the inclusion of non-state actors as the primary targets in the process of rule-making can certainly increase problem-solving capacity by ensuring compliance. Yet, including non-state targets in public policy-making might simply lead to lowest-common-denominator solutions or even result in deadlock. If those who have to bear the costs of compliance are involved in the negotiating process, they may attempt to weaken rules and regulations or to prevent them altogether. The empirical findings on the effect of new modes of governance on bringing accession and neighbourhood countries closer to the acquis are as mixed as the arguments found in the governance literature. New modes of governance may indeed promote the timely, complete and correct adoption of, and adaptation to, EU policies in

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accession and neighbourhood countries. Thus, the implementation of such complex regulations as the Water Framework, the Integrated Pollution Prevention and Control, or the FHH Directives greatly benefited from the expertise provided by environmental organizations, scientific experts and business (Börzel forthcoming [a]). They helped state actors to reduce compliance costs and to resolve conflicts among the actors involved. Likewise, the delegation of pre-accession preparations to the Pan-European Regulatory Forum proved more effective in ‘smoothening’ the harmonization of pharmaceutical regulations in CEE accession countries with EU requirements than the traditional mode of bilateral negotiations between the Commission and central governments. The participatory regulatory network has significantly reduced the demand of CEE accession countries for derogations in the pharmaceutical area and has contributed to a smooth transition to the new regulatory regime. This is in sharp contrast to the environmental acquis, where no such new modes of governance emerged (Koutalakis and Prange 2006; Borrás et al. 2007). In regional policy, development partnerships at the sub-national level have helped improve the absorption capacity of CEE countries by mobilizing information and resources that were otherwise not available, discovering new options and improving the local acceptance of governance policies. The cross-sectoral cooperation of state and non-state actors at the sub-national level encouraged the creation of encompassing and inclusive development programmes by institutionalizing multi-stakeholder deliberations over the goals of development and the best ways to achieve them. Typical examples would be local developmental associations among municipalities, firms and NGOs in Hungary that have helped micro-regions with weak and fragmented local states to mobilize resources for integrated development programmes (Keller 2008). Likewise, the inclusion of the social partners in the distribution of EU agricultural subsidies was instrumental in improving the absorption capacity of EU funding in Poland by disseminating information and increasing the social acceptance of EU policies (Grosse 2007b). At the EU level, the principle of mutual recognition has achieved approximation without resorting to harmonization, which may be unfeasible since the member states are unable to agree on common rules and standards. In the case of services trade, it was the only way to advance integration without harmonizing the regulation of

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services in the old and new member states. Given the significant wage differences present in the enlarged EU, the services directive aroused hitherto-unanticipated protests. The compromise therefore deleted any references to home-country rule. Nevertheless, as Article 16 prohibits member states from requiring authorization, registration and identification or demanding specific tools or materials from service providers, or form prescribing distinct contractual relations if this hampers the provision of services, mutual recognition necessarily enters through the back door (Schmidt 2008a). Likewise, soft law in state aid helped to improve the timeliness, legal certainty and transparency of Commission control, particularly in the CEE accession countries, which had substantially to adapt their state-aid policies to EU law. Since accession, they have indeed effectively converged towards the EU-15 average (Blauberger 2008a). Overall, new modes of governance have helped to preserve the unity of European law despite the increased heterogeneity of the member states, which might have required more flexible interpretations of European law to adapt it to a different environment. All in all, new modes of governance do contribute to effective approximation to the EU – if they emerge in the first place. However, they can also have the opposite effect by delaying the implementation and application of EU policies. CEE governments have often circumvented social dialogue because long-lasting debates in the tripartite commissions threatened the timely adoption of EU social policies (Grosse 2006). In a similar vein, the requirements for the introduction of new modes of governance, such as public involvement in water management, nature conservation or pollution prevention and control are often not easy to handle for state actors in accession countries who lack both the administrative capacities and the experience to cooperate with multiple stakeholders and accommodate their conflicting interests. While helping to foster the effective adoption of, and adaptation to, EU environmental policies, new modes of governance have at times created additional problems (Börzel forthcoming [a]). For instance, the selective inclusion of environmental organizations and consulting companies into the NATURA 2000 processes in Hungary has left other affected stakeholders, such as farmers or private forest owners, outside the policy cycle and diminished the overall legitimacy of the state’s nature conservation efforts (Buzogany forthcoming [c]).

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Like their emergence, the effectiveness of new modes of governance may depend on certain scope conditions, at least partly related to the governance capacities of state and non-state actors. The shadow of hierarchy provides important incentives to non-state actors not only to get, but also to remain, involved in regulatory networks and to comply with their outcomes, e.g. by mitigating compliance costs and enforcing agreements. In stark contrast to the Polish case, Hungarian state actors were much more successful in mobilizing private cognitive resources towards pharmaceutical harmonization through the institutionalization of credible independent drug authorization authorities that facilitated close contacts and continuous interactions with the industry (Koutalakis 2008a). At the same time, non-state actors require sufficient capacities to make use of the opportunities offered by new modes of governance. The social partners in Estonia and Poland are too weak and divided to negotiate agreements (Grosse 2006, 2007a). Local NGOs in particular suffer from similar problems in sustaining their participation in the management of nature protection areas (Koutalakis, forthcoming; Guttenbrunner, forthcoming). And sub-national actors lack the capacities to make effective demands on the central state for a broader participation in regional development programmes (Bruszt 2002, 2008a). Finally, new modes of governance may improve effectiveness, but this may come with certain costs with regard to legitimacy. While new modes of governance may increase the acceptance of a policy by involving affected parties and mediating conflicts of interest, they can also generate opposition and resentment. Because of their non-majoritarian character, new modes of governance are often seen as clientelistic, non-transparent, exclusive and thus undemocratic. Social dialogue, for instance, has given some of the social partners the opportunity to establish informal relations with decision-makers and to influence public policy in accordance with particularistic social interests (Grosse 2006, 2007a). In the context of EU Treaty law, mutual recognition and stateaid soft law have increased output legitimacy in terms of overall European levels of trade and competition. This may, however, look different from the perspective of individual member states. In concrete cases, market freedoms and state-aid control do not only lead to overall efficiency gains but also involve redistributive issues, thereby creating winners and losers. From the latter’s point of view, not only

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is output legitimacy lacking but it is also not compensated for by input-oriented legitimization. In the case of mutual recognition, legitimacy problems arise as a result of the horizontal transfer of power. While mutual recognition may allow services to trade despite the absence of harmonized services regulation, it deprives member states of the possibility of conducting controls of goods and services produced and provided by another country. As a result, the government of the country of destination cannot be held accountable for the quality of the goods and the services because they are not subject to its regulations. Nor have consumers in the country of destination the possibility of holding the government of the country of origin accountable (Nicolaidis 1997). Moreover, mutual recognition relies on binding administrative cooperation. In this way, national administrations become responsible also to transnational and European demands and are partly detached from their exclusively national political responsibility (Schmidt 2008b). At the same time, member states are much more flexible when regulating than under the Community Method, so one could argue that mutual recognition facilitates democratic selfdetermination and reduces the legitimacy deficit of national decision-making, which produces externalities for other member states by forcing countries to take these interests into account (Schmidt 2007). In state aid, problems of legitimacy mostly arise at the EU level, where the Commission takes decisions largely free from control by the Parliament or the Council, although they often involve important redistributive issues. Moreover, the progressive development of state-aid soft-law privileges certain potential state-aid beneficiaries over others. As for the new member states, the constraints of European state-aid control are sometimes characterized as being inadequately strict with regard to the restructuring of firms in critical sectors. In contrast, the Commission’s reformulation of regional aid rules leads to a decreasing ability of the older Member states to assist their underdeveloped regions by means of state aid (Blauberger 2008a). In sum, new modes of governance can help smooth the approximation to the EU and to render it socially more acceptable. However, they can also create additional problems of both effectiveness and legitimacy. We need to carefully study the scope conditions under which new modes of governance impact upon the working of public

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policies at the domestic and the European level. Governance capacities appear as key not only for the emergence but also for the effect(iveness) of new modes of governance. 5.2 Cui bono? The structural impact of new modes of governance Tracing the structural impact of new modes of governance on power relations is difficult since it is hard to isolate their effect. Not only are new modes of governance limited in number but their emergence coincides with other changes induced by accession to and approximation with the EU. Moreover, for Southern Central and Eastern European countries, accession to the EU has overlapped with their still ongoing political and socio-economic transition. The same is true for the neighbourhood countries of the former Soviet Union. Due to their inclusiveness, we might expect new modes of governance to strengthen civil society and the participation of a greater number and variety of state and non-state actors. Yet there is little evidence that new modes of governance have changed societal governance structures in accession and neighbourhood countries. Part of the reason certainly lies with their rarity. But even where they have emerged, the impact of new modes of governance on (domestic) power relations is at best differential. They may empower nonstate actors and local authorities vis-à-vis their central governments by legally prescribing public involvement in the policy process and opening new legal and political venues to propel their interests forward, e.g. by taking their case to court and lodging complaints with the European Commission. But non-state actors have often been too weak to exploit these new opportunities. Thus, accession to the EU has provided environmental actors with opportunities to put pressure on their national governments by lodging complaints with the European Commission in cases of non-compliance with EU environmental law (mostly in Southern Europe), or EU institutional requirements during the accession period (in Central and Eastern Europe). Yet, in all six countries, non-state actors have initially been too weak systematically to exert pressure on their governments and to engage in stable and sustainable cooperation to make EU policies work on the ground. Spanish and Hungarian environmental groups, often supported by transnational organizations, have been more successful in using the participatory prescriptions of the Environmental Impact

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Assessment, the Water Framework and the FHH Directive (Buzogany forthcoming [a]; Font and Fernandez, forthcoming) than their Greek and Romanian counterparts, partly because environmental mobilization in Greece and Romania is much more localized (Buzogany forthcoming [c]; Koutalakis forthcoming). They were often not willing either. The role of civil society in CEE accession countries resembled the situation in the three Southern European countries during the preand immediate post-accession periods of the 1980s. Next to capacity constraints, environmental groups still have to find their place in public-policy-making. Pooling resources with the state requires a cooperative attitude, which conflicts with the role of civil society in the past as a major source of opposition to socialist repression. As in Southern Europe, many non-governmental organizations see themselves as independent watchdogs rather than partners of government (Buzogany forthcoming [b]; Koutalakis 2004). In the field of regional policy, the partnership principle and EU conditionality have empowered sub-national actors and NGOs in accession countries to make effective demands for their inclusion in the preparation and implementation of regional development programmes. Yet, their structural impact has been limited since they are embedded in predominantly hierarchical governance structures as a result of which they do not offer sufficient incentives and resources to foster horizontal cooperation and power sharing in the distribution of structural funds. Rather, the shadow of hierarchy induces regional actors to build up vertical relations. As a result, the ‘layering’ of new modes of governance has only induced slow change at the margins and mostly contributes to the reinforcement of hierarchical modes of governance (Bruszt 2008a). Likewise, the introduction of social dialogue institutions in Poland, Estonia and Lithuania has done little to transform the socialist legacy of the administrative state towards a more ‘Western-type’ network model. On the contrary, new modes of governance have reinforced some of the pathologies of these states by undermining ‘classical’ modes of democratic legitimatization, allowing state actors to circumvent majoritarian institutions by resorting to civil or social dialogue (Grosse 2006, 2007a). Overall, new modes of governance have reinforced rather than changed existing domestic structures, particularly with regard to the dominance of executive actors at the national but also at the EU level

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(Grosse 2007b). While new modes of governance may have helped to get accession countries out of the ‘low capacity trap’ characterized by weak states and weak societies (Sissenich 2007), they have moved towards a situation of ‘stronger societies but much stronger states’ (Bruszt 2008a). While the EU has strengthened the governance capacities of both state and non-state actors, the former have been much more empowered than the latter. These asymmetrical power constellations are hardly conducive to the fully fledged evolution of new modes of governance. The structural impact of new modes of governance has not only been limited due to weak governance capacities, particularly on the part of non-state actors, and their low degree of resonance with the administrative and civic culture of the accession countries. The EU often does not exert sufficient pressure for adaptation, since its own institutions are too weak, as in case of social dialogue or the introduction of social and local partnership in executive agencies administering EU agricultural funds (Grosse 2006, 2007b). Sometimes its policies are inconsistent, oscillating between encouraging both the sharing and the concentration of central state powers, as they have done in structural policy (Bruszt 2008b). The EU has also started to turn away from attempts to directly interfere with the domestic institutions of its member states, emphasizing competition and subsidiary (Grosse 2008a: Chapter 5). Yet the principle of mutual recognition is an interesting example of a new mode of governance having an indirect effect on the domestic (administrative) structures of accession countries. While not making any specific prescriptions, national administrations are obliged to cooperate, for example, in order to assist each other in implementing the services directive. This may result in the harmonization of the administrative laws of member states. Moreover, it constitutes a significant break with the past principle under which member states were to implement EU directives free from any interference from the EU and other member states (Schmidt 2008b). Finally, since new and old modes usually work in combination (see previous section), new modes complement old modes and (partly) compensate for their weaknesses. By increasing both the effectiveness and the legitimacy of hierarchical modes, they sustain rather than change traditional governance regimes, which severely limits, however, the structural impact of new modes. So far, new modes

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of governance have done little to transform the state. On the contrary, they may have reinforced some of the pathologies of accession countries.

6 Conclusions: Much ado about almost nothing? New modes of governance have started to travel eastwards. Both the EU and accession and neighbourhood countries have resorted to non-hierarchical forms of coordination and the involvement of nonstate actors to foster approximation with the acquis communautaire. However, new modes of governance have not played the prominent role which the weak capacities of accession and neighbourhood countries would lead us to expect. Their emergence is uneven and varies significantly by policy area and state. Where they have emerged, new modes of governance often hardly go beyond consultation and contracting out and are only weakly institutionalized. If non-state actors are more directly involved in the policy process, their relations with state actors tend to be asymmetrical and at times merely disguise and legitimize hierarchical modes. While state actors may be weak, non-state actors are often even weaker. These findings have important implications for both the theory and practical application of (new modes of) governance. If it is correct that non-hierarchical modes of governance require both a strong state and a strong society, this results in a serious dilemma or even paradox (cf. Börzel forthcoming [b]): the lower the capacity of a state, the greater the need for new modes of governance to compensate for state weakness – but the less likely they are to emerge. This is particularly true if there is indeed a dialectical relationship between the evolution of a strong state and a strong society as implicitly assumed or explicitly claimed by the governance literature (for an overview of the literature, see Börzel 2007a). However, there are ways out of the low capacity trap. First, EU pressure is a prominent factor in inducing state actors to resort to new modes of governance. On the one hand, the EU may legally require the involvement of private actors. On the other hand, there is a normative logic that may drive the emergence of new modes of governance – it is the ‘EU way of doing business’. Second, the EU also helps strengthen the governance capacities of accession and neighbourhood countries. The transfer of funds and expertise

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through community programmes and twinning processes provides state as well as non-state actors with additional resources they can exchange. Given the asymmetrical power relations of weak states but even weaker societies, capacity-building by the EU should, however, focus much more on strengthening non-state actors. EU resource transfer also fosters policy learning and trust building. Finally, the monitoring and sanctioning system of the EU has empowered nonstate actors by opening new opportunities for them to pursue their interests, e.g. by taking their governments to court. State actors may resort to new modes of governance in order to accommodate the interests of non-state actors and avoid complaints to the Commission or legal proceedings. While the EU’s governance mix of conditionality, assistance and political dialogue provides an opportunity structure for the emergence and evolution of new modes of governance, we need to lower our high expectations regarding their role in drawing accession and neighbourhood countries closer to the EU. Both the EU’s enlargement and neighbourhood policies have to deal with countries which typically have both weak states and weak societies (Börzel et al., forthcoming). While capacity-building plays a prominent role in the EU’s governance export, it takes time as the example of the Southern European countries clearly shows.

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4 Seeking Commitment, Effectiveness and Legitimacy New Modes of Socio-Economic Governance in Europe Martin Rhodes and Jelle Visser

1 Introduction In this chapter we interpret and analyse the findings of a wideranging study of modes of socio-economic governance in the European Union at supranational, national and subnational levels, including the ‘micro-level’ of firms and local networks.1 The governance modes studied here are not always easy to classify as ‘new’ or ‘old’. Some have long pedigrees but have re-emerged in unexpected places; others resurrect forms of governance used in the past; others still are mixes of old and new. One project, on economic policy coordination in the EU, addresses the mix of hard and soft policies agreed between European and national-level policy-makers, with little effective involvement by non-state actors. Another focuses on the governance of independent central banks and their accountability to parliaments, publics and markets. The other seven, including one on international tax competition, focus more clearly on the cooperation of public and private actors in the production of common goals, frameworks, standards, norms, networks or goods that are not, and perhaps cannot be, adequately produced by either government or the market on its own (for details, see Table 4.1 infra). 104

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These modes of governance all involve forms of ‘negotiated contracting’ and ‘cooperative regulation’, to which we would add, in the case of transnational modes of governance, the centrality of ‘international monitoring and surveillance’. As we elaborate below, all of these modes also involve different kinds of ‘commitment device’ – institutional structures that seek to instil heterarchic policy communities with various degrees of hierarchy and order. As such, they also involve mixes of government intervention in regulating the arena of governance via different kinds of incomplete contracting (cf. Héritier and Lehmkuhl 2008) and different blends of ‘hard’ and ‘soft’ instruments – the former invoking legal or pecuniary sanctions, the latter generating certain ‘costs’ (especially ‘reputational’ costs) for defection, reneging or free-riding on agreements. After describing the varieties of socio-economic governance, subsequent sections of this chapter focus on the three main research questions of the NEWGOV project: emergence, execution, evaluation and evolution. We conclude with some observations on the structure and allocation of power. The core issues at stake are as follows. Regarding the emergence of new modes of socio-economic governance, different disciplines have identified different causal influences. Much of the political-science literature has linked the emergence of new modes of governance to the growing complexity of public policy problems, the search for new technical expertise, increased demands by interest groups for consultation and participation and the need to compensate for deficits in public-sector management and funding. The core argument in the political economy and sociological literature is more structural, suggesting that changes in industrial and economic organization – namely, the arrival of a service or knowledge economy, and the shift from Fordism to post-Fordism – have made older, centralized, hierarchical and standardized solutions to policy challenges obsolete, for both governments and firms. Consequently, it is argued, there has been a quest for new forms of flexible yet durable coordination under decentralized conditions, with only limited scope for the exercise of hierarchical power within and between corporate actors, interest organizations and states. Echoes of these ideas are found across our projects. But the preeminent, although not unique, source of changes referred to has been the new set of challenges triggered by greater international competition and the integration of the European economy. Both

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New approaches to • ECB economic • national govts. governance in the EU • Council • Commission • European Court of Justice • national and EU social partners The politics of central • Central Banks bank accountability • Finance Ministries • Parliaments in the age of globalization • press • financial markets ‘Varieties of • MNCs capitalism’ and • national economic governments governance in • regional bodies Central and Eastern • business associations Europe • unions

19a

20

19b

Emergence and evolution of administrative partnerships

18b

• firms • unions • municipal agencies • associations

• union confederations • employers’ associations • central government

Emergence and evolution of national social pacts

18a

Identity of the actors

Project

No.

• resources • legislation

• monitoringb

• recognition and access • resources • legislation (threat) • shadow of hierarchy (revoking delegation) • recognition and access • resources • legislation • delegation • judicial review (threat of penalties)b • monitoringb

Role of public actor(s)

Table 4.1 Varieties of modes of socio-economic governance.

• information • co-administration • investment

• informationc

• information • deliberation • consensus • co-administration • investment • informationc

• information • deliberation • consultation • consensus • co-administration • self-regulationa

Role of private actors

• mobilization of resources • general norms of production and cooperation • network formation

• standard setting (transparency) • monitoring and control

• goal-setting • framework for action • mobilization of resources • network formation • best-practice indicators • goal setting • monitoring and control • (network creation)

• goal-setting • framework for action • binding decisions

Content of co-production

• growth and development • investment • supply-side policies

• accountability • legitimacy

• urban regeneration • local development and investment • employment and social inclusion • stability • growth and jobs • cooperation with reform (‘strengthen ownership’)

• competitiveness • wage moderation • growth, employment and social inclusion • cooperation with reform

Goals

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Changing governance architecture of international taxation

Learning and local innovation systems

Democratization/ participation of civil society in new modes of governance

22

23

24

• resources (tax concessions; various supports) • shadow of hierarchy (amnesty) • recognition and access • resources • monitoring

• monitoring • legislation (threat) • judicial review

• recognition and access • monitoring • legislation (threat) • shadow of hierarchy (revoking delegation)

• information • deliberation • consultatione • delegatione

• information • deliberation (participative pacts) • co-administration

• informationd • deliberationd • consultationd

• information • deliberation • self-regulation

• competitiveness • improve tax basis • restore legality

• accountability • legitimacy

• standard setting • monitoring and control

• protection tax resources • accountability

• accountability • higher returns on investment • lower cost of capital • lower agency costs

• mobilization of (alternative) resources • network formation (trust building; participative pacts)

• best-practice indicators • standard setting (accounting and disclosure rules, harmonization of take-over laws) • monitoring and control • best-practice indicators • framework for action • standard setting (transparency)

Notes: a only in some countries (for instance Denmark) and some domains (wage-setting, worker insurances); brefers to activities of central (EU) actor in relation to member states (rather than to the state actor in relation to private actors, which play a minor role in this area); crefers to the position of social actors, interest groups and press in OMCs and central-bank monitoring; d refers to multinational firms and business firms (and corporate taxation); e delegated legislative power and consultation (as defined) only in the case of the European social dialogue.

• NGOs and civil society associations • Commission • European Parliament

• finance ministries • OECD • Commission • Council • European Court of Justice • business associations • MNCs • firms, producers • regional and local agencies

Towards new • shareholders corporate governance • managers regimes in Europe • stock markets • finance ministries • international and national regulators

21

108 Martin Rhodes and Jelle Visser

have important implications for policy-making and the sustaining or building of ‘state capacity’ (in the absence of what is conventionally understood to be a ‘state’) in the EU. We also find when analysing the emergence or changes in particular modes of governance – in social pacts, regional producer networks, international tax regulation or corporate governance – that there is always a specific dynamic of power relations in negotiations between public and private actors. In many such cases there is a credible legislation threat, or a ‘shadow of hierarchy’ from extant legislation, and a perceptible will on the part of private-sector actors to pre-empt legislation, mitigate its effects or expand beyond self-regulation by enlisting public resources and support. In other instances, government authorities enlist private actors for public ends. Regarding execution, the variety and combinations of actors, and their degrees of involvement in governance, vary a great deal across our projects. The ‘final goods’ they produce also vary, from best-practice indicators and common goals in economic policy coordination to the formation of network relations between firms and regional authorities, and binding decisions with distributional consequences in national social pacts. The common problematic element in the co-production of ‘final goods’ is whether cooperating actors and organizations at different levels are willing to commit themselves to a policy process and product and can be made to deliver on their promises. In understanding the success or failure of attempts to achieve cooperation and commitment, we suggest in this chapter the utility of a ‘soft’ rational choice, or ‘bounded rationality’, approach in which norms, reciprocity and trust are taken seriously (North 1993; Williamson 2000). In that light, ongoing experimentalism, reform and innovation in modes of governance can be seen as attempts to secure a higher degree of commitment to cooperation on the part of actors in return not just for material gains (power and resources) but also for the promise of greater policy effectiveness and legitimacy – i.e. ‘collective goods’ for the policy community. One characteristic of such learning and experimentation is that new governance modes are often mixes or hybrids of instruments (spanning, as indicated above, the spectrum between ‘hard’ and ‘soft’) that test the well-known trade-off between the degree of flexibility and the level of commitment in complex contractual relationships

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(Shepsle 1991). Because they are experimental, often betray initial design flaws, and fail to find an effective equilibrium in that tradeoff, they are often also unstable and contested, and not (as yet) institutionalized into formal or routine practices. Nor are they endowed with well-established legal and administrative procedures, let alone clear channels of political accountability. In our analysis below we attribute particular importance to commitment. For, if many new modes of governance have their source and rationale in government and/or market failure, commitment is the glue that holds together forms of governance that necessarily go beyond both government and market. That ‘glue’ can be based on different components – including not only prestige, recognition, reputation and trust but also exclusion, pecuniary sanctions and ex-ante forms of incentives and control. In combination (for none will be sufficient on its own) those components will constitute what we refer to as ‘commitment devices’, which only in very rare instances (e.g. certain national social pacts) proceed to the ex-post stage of explicit contracting. Thus, if ‘negotiated contracting’, ‘cooperative regulation’ and ‘international monitoring’ are all common features of new modes of socioeconomic governance, so too are attempts to impose a hierarchy of goals within, and new boundaries around discrete policy-making communities, and to classify, codify and license actor participation and consultation. We argue that such ‘hierarchical ordering’ – i.e. processes whereby actors are brought within (or excluded from) stable vertical relationships and particular policy goals prioritized – is critical for gaining the commitment of actors and therefore a key characteristic of many new modes of governance. Where most successful, a limited formalization and proceduralization of relationships among actors helps retain flexibility while also providing for varying but vital degrees of credible commitment. Where such ‘control systems’ are absent, non-hierarchical governance is likely to fail (Lodge 2007). This leads to our third principal question: how do ‘new’ modes of governance evolve and what do they imply for the structure of power and allocation of competences across levels of policy-making and political and economic actors? Most of the projects identify an ongoing redefinition of power and responsibilities across modes of socio-economic governance – often away from state authority, party

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or parliamentary control, and national constituencies. It is less clear, however, where power and competences are migrating to – perhaps, depending on the case in hand, to self-regulating agencies, to expert bodies or to supranational authorities – or how such new distributions and concentrations of power can be held accountable.

2

Varieties of modes of socio-economic governance

The nine projects discussed in this chapter offer a large variation in goals, content and the involvement and identity of actors. Table 4.1 provides an overview. The goals of our new modes of governance are many, including economic growth and development; higher employment and greater social inclusion; competitiveness and wage moderation; investment in physical and human capital; lowering the costs of capital; innovation and the upgrading of productive activities; stability and greater foresight; the prevention of tax competition; welfare reform; accountability and, in one case, legitimacy. These ‘final’ goods are reached through ‘intermediate goods’ – a diverse set of what we have already referred to above as ‘commitment devices’. ‘Commitment device’ is a generic game-theoretic term for an institution designed to alter the payoffs between the costs and benefits for actors so that the outcome is optimal for each and all, both privately and collectively, in so far as it reduces the risk of defection and allows the achievement of a common goal. Following from Shepsle (1991) and North (1993), a commitment can be ‘credible’ in two senses: 1. It is motivationally credible if the players continue to want to honour the commitment because it is compatible with the set of incentives and therefore self-enforcing. 2. It is credible in an imperative sense if a given actor cannot act otherwise because its actions are coerced or its discretion disabled. Motivational credibility and commitment can be achieved by ‘soft’ instruments (inducements) which alter incentives; imperative credibility will be achieved by ‘harder’ instruments (sanctions) which close off options. ‘Commitment devices’ will be built on different combinations of such instruments and the various mixes of inducement and sanction they entail.

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The ‘commitment devices’ found in the various modes of socioeconomic governance we survey in this chapter can be ranked from less to more demanding on actor investment and commitment, precisely in terms of the balance they achieve between inducement and sanction. The least demanding task is to produce a set of indicators for best-practice learning, involving little by way of commitment. The next steps involve a common goal; creating a framework for action, with targets, timetables and guidelines; and joint efforts in mobilizing internal and external resources. All of these are less demanding on the actors involved (because they do not necessarily compromise their autonomy) than, say, agreeing to a common standard, or committing to a set of transparency rules for enhancing trust, for the latter usually involve some kind of incomplete contracting and varying degrees of reputational cost for defection (Ai-Najjar 1995). Even more demanding are modes of governance that entail a more explicit form of contract in which the discretion of actors is disabled and their options minimized, such as agreement to arrangements for monitoring and control, the creation of a network that ties the decisions and resources of actors to others, and – most demanding on actor commitment – an agreement to binding decisions about the allocation and distribution of power and resources. As can be seen from Table 4.1, many of the modes discussed here deal with the lower and ‘lighter’ steps on this ladder – indicators, goal-seeking, frameworks for action, trust-enhancing rules and arrangements for monitoring. Only certain national social pacts aim to produce binding decisions with distributional consequences, in which commitments are made credible in both a soft (motivational) and harder (imperative) sense. Other projects, studying modes of governance in which actors aim to improve the conditions for investment, growth or innovation, stipulate the mobilization of resources, the development of general norms of production and cooperation and network formation as intermediate goods. The balance of elements in the implicit contracts underpinning these modes will be weighted in favour of softer forms of inducement, such as the reputational, and what Lohman (2003) refers to as the ‘audience’ costs of defection.2 Where accountability or legitimacy is the ‘final’ good, the modes of governance concerned tend to focus on trust-enhancing techniques such as transparency rules and mutual monitoring and control.

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The variation in what is being produced is therefore related not only with the final outcomes but also with the identity and degree of involvement of the actors concerned and the means (mechanisms and instruments) that are deployed in any given mode. Of particular importance is the position and involvement of public actors and their frequently observed role in securing credible commitments from other actors in an imperative sense, in other words via some kind of legal coercion or sanction. From Table 4.1 we learn that often a credible threat of legislation or ‘shadow of hierarchy’ based on extant legislation exists; another important ‘sanction’ is the ability to grant or withhold recognition and privileged access to the policy process, or the selective distribution of tangible resources. Judicial review in the tax domain or pecuniary sanctions with regard to the Economic and Monetary Union (EMU) Stability and Growth Pact (SGP) can be used as leverage for eliciting cooperation. In multi-level polities such as the EU, monitoring the performance of actors at lower levels, including both public authorities and private agents, has become an important instrument for achieving goals set at higher levels of policy-making, which, in its most ‘imperative’ form, may involve a resort to law (via the European Court of Justice) or the threat of law when compliance is not achieved. The most frequently mentioned resource that private actors provide is information. Information may be processed through lobbying and go in one direction (from the private actor to the public actor) or it may acquire a deliberative quality. Deliberation, together with openness to pragmatic experimentalism, is sometimes seen as the hallmark, the quintessential ‘soft instrument’, of new modes of governance, as opposed to conventional government based on hard law, and the command-and-control hierarchy of formal bureaucracy. We return to this aspect later, under the heading of ‘execution’. In Table 4.1 we distinguish between information, deliberation and consultation. In the latter two, governments or public actors take decisions only after consulting with private actors, often involving some kind of bargaining and the search a for quid pro quos in which credible commitments are achieved in motivational sense via inducement. From Table 4.1 we also learn that another critical resource that private-sector actors can deliver is assisting in the implementation of policies, by providing support and organizing consensus in the target population or even by becoming the co-administrators of policies,

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as sometimes occurs in professional training, social insurance, urban regeneration or regional investment. Yet another resource is the capacity for self-regulation (or self-policing), a role which is frequently claimed by private actors and is often therefore contested, in wage setting, financial regulation, tax competition and corporate governance. This may occasionally take weak neo-corporatist form, in which private actors are granted ‘public status’ (Offe 1981), thereby becoming the ‘agents’ of a ‘principal’. A case in point is Article 138 of the European Treaty that gives the European social partners the right to legislate on a particular issue and to implement their agreements, via lower-level bargaining, ‘according to what is customary’ in national contexts. Tellingly, however, this procedure has sometimes provoked a resort to hierarchy – in the form of a ‘monitoring and control’ response from the European Commission (Ramos Martin and Visser 2008).

3 The emergence of new modes of socio-economic governance Although we find it difficult to generalize, and do not want to dismiss the influence of more specific societal and economic changes, the proximate causes of many new modes of socio-economic governance seem related to structural changes in the international economy (i.e. the intensification of economic competition and the growing integration of the European economy, leading to a reduced capacity for economic management on the part of national governments) and an ongoing transformation of the EU’s multi-level polity. The latter has produced an expansion of EU policy authority, a growing complexity in the policy environment – spurring many experiments in transnational coordination – and the growth in bottom-up appeals for greater interest-group and non-governmental organization (NGO) participation. All have demanded, in turn, a search for new forms of expertise, novel means of consensus creation and an often belated attention to legitimation and accountability. Top-down pressures from the EU as an institution and locus for decision-making are equally important for the proliferation of functional interest governance at numerous levels. Encouraging and often actively sponsoring functional interest governance (as in the case of national trade unions and NGOs that monitor the implementation of European social, employment and environmental legislation) has

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provided the European Commission with an entry point for exerting influence in national policy arenas (see Alonso Vizcaino and Obradovic 2006) that it cannot usually or otherwise wield vis-à-vis political parties, parliamentary representatives, government executives and national courts. This trend can be seen as a form of multi-level ‘polity-building’ – and is one important source of attempts to introduce a degree of hierarchy and control into complex and rather heterarchic multi-level policy arenas and communities. As a result, technocratic influence and functional interest-group partnerships tend gradually to gain in influence against and in contest with more conventional forms of representation and policy-making, producing in turn attempts to endow such innovations with accountability and legitimacy. But these may turn out to be competing ambitions, especially when accountability is developed in response to organized interest-group demands, while legitimacy in the eyes of general publics and popular politics is simultaneously diminished. In a wider sense, the European integration process (Economic and Monetary Union, the completion of the internal market and eastern enlargement), which is often the source of new competitive pressures, and industrial and societal changes, has spurred the development of new relationships between private and public actors. National social pacts reveal that governments, faced with complex economic development tasks, or under pressure to address economic crisis, may try to engage non-governmental actors in the search for ‘common’ goals, part of a broader strategy for escaping political weakness and public resource constraints. Typically, such partnerships combine hierarchy, market and network forms of organization in response to market and/or government failure, and they are frequently unstable. Other new instances of socio-economic governance involving cooperation between public and private actors have also been responses to market and conventional government failure. Examples can be found in the strategies of local producers and regional governments in Italy and Poland (the regions of Campania and Łódź respectively), to make the local textile, clothing and footwear industries more competitive (Burroni et al. 2006), as well as in attempts by large multinational firms across various CEE transition economies to fill gaps in the micro-management of the labour supply after the state’s withdrawal (Hancké and Kurekova 2008).

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The demise of state socialism in Poland, and the need to conform with EMU membership criteria and internal market competition rules in Italy, led to a rapid dismantling of old modes of governance tailored to traditional and rather large firms, involving state control in Poland and public subsidies in Italy. Subsequently, however, the state failed to build effective alternative arrangements. In the industries studied, the resulting gap was filled in both regions by a revival or return to small-scale firms operating on the basis of low-cost production and personal relationships, involving a mix of legal and illegal elements in the shadow economy. Initially, the new ‘shadow’ economy seemed competitive and successful. That success was shortlived, however, and came at the cost of neglecting investment in sustainable competition goods and innovation and in securing local systems of governance that could deliver longer-run competitiveness. Whereas the national and local authorities in Poland tended to deny this ‘crisis’, in Italy certain innovative approaches have been found to help firms to emerge from illegality. These approaches differed from previous policies that had operated mainly through the exercise of control, the threat of sanctions or the provision of short-term incentives for legalization, without creating an effective alternative to the shadow economy. Burroni and Crouch (2008) talk about ‘fragmented’, ‘light’, ‘informal’ and ‘flexible’ governance based on personal networks – characteristics that these policies actually shared with the governance of the shadow economy they were trying to replace. The difference is that they are now interspersed with elements of associational cooperation and state control. The association element is visible in targeted regional agreements that allow cooperating employers to lower pay below the levels set in national collective agreements. The state provides incentives through an amnesty for firms that renounce ‘illegality’, as well as reducing temporarily both taxes and social security contributions. In the CEE economies, the state’s withdrawal from micro-managing the economy after the fall of Communism created the space for new modes of governance centred on private investment and large foreign firms. While retaining a role in macro-economic management (monetary and budget policy and minimum wage-setting), the state left the supply side of the economy to investors and multinational firms. With much regional variation, little involvement of associations and trade unions, and in pragmatic cooperation with

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regional governments and agencies, large foreign companies have been active in building rather flexible institutional structures that allow them to govern problems related to the economy and the wider industrial fabric (Hancké and Kurekova 2008). Limits to the use of state resources and hierarchical control rather than state failure or withdrawal have stimulated attempts across Europe to build local partnerships involving municipal authorities, firms and business associations, trade unions and other participants. In Italy (Graziano et al. 2007) and in a European-wide comparison (Regalia 2007) such initiatives have also been responses to financial incentives provided by the EU. Indeed, the European Commission has presented ‘the partnership model’ as a distinct mode of governance and condition for access to structural funds. This approach reflected, and intensified, the failure of previous development policies based on top-down state intervention (whether in the Italian Mezzogiorno or the East German Länder), due to the weakening of national unions and employers’ organizations, administrative decentralization and, given the need to respond to new competitive pressures, opportunities for gaining greater benefits from policies shaped according to local needs and capacities (Regalia 2007). The need for local public authorities to find additional finances and to reduce public-sector fragmentation through ‘coordination from below’ has also been an important stimulus for local partnership (Graziano et al. 2007). And yet, as we argue below, and as is well documented in studies of regional development and urban regeneration across Europe (e.g. Davies 2002), hierarchy is still a dominant trend in the mix of market, hierarchy and network in the institutional structures and relationships of the policy communities concerned. If market and government failures have been important in driving the search for new modes of governance, coordination failures have prompted the many shifts and experiments in governance in international tax competition (Radaelli and Kraemer 2007). The development of the EU’s ‘harmful tax competition’ arena has witnessed an evolving mix of hierarchy, negotiation and ‘facilitated coordination’, i.e. benchmarking, technical exercises on creating a common tax base and the exchange of ‘best practice’. The specific instruments used are codes of conduct, monitored procedures for tax-related state aids, directives and rules. The shift towards ‘harmful tax competition’ was

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motivated by political deadlock and zero-sum games in the ‘tax neutrality’ arena and the intention of the Commission to make progress in direct tax-policy coordination. But both the ‘harmful tax competition’ and the ‘corporate tax reform’ arenas have become increasingly ‘overshadowed’ by the ECJ and its hierarchical use of judicial review. Coordination of member states’ responses to the increasingly important role of the ECJ in EU-level tax governance is, at best, in its infancy, given potent opposition by certain powerful member states to EU minimum tax legislation. International competition and creating a European or international level playing field for mergers and acquisitions have been the drivers of changes in corporate governance, revealing a new and creative use by the state of codes of conduct and market sanctions to induce shifts in firm organization and behaviour. Across quite different Anglo-American and Continental European regimes, national governments have similarly pressed for ‘harder’ commitments through legally enshrined codes of conduct, as regards the protection of shareholders and minority interests (Goergen et al. 2005). Among large firms involved in mergers and acquisitions there appears to have been a trend to signal their ‘quality’ by adopting stricter corporate governance rules offering more transparency, disclosure of information and protection of minority shareholder rights. In these cases, by changing the law or hardening codes of conduct, the state has elevated the role of the ‘market’ as an efficient compliance mechanism, supposedly sanctioning those firms who defect from rules that seek to guarantee corporate transparency and shareholder surveillance. Just these few examples, on which we elaborate below, suggest that a large number of (not always compatible) policy goals have been pursued by new modes of governance. We would specify the following as the most important: • the quest for greater policy efficiency and effectiveness, related to general goals like growth, development, investment, employment, the protection of taxable resources, social inclusion, and welfare reform; • the search for new strategic capacities by various levels of government in the face of economic uncertainty and diminished or constrained public resources, both financial and administrative;

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• the attempt to develop a medium-term orientation in policy-making via policy arena management and network formation (with the aim of improving stability and control in increasingly heterogeneous policy communities) to which certain key objectives can be attached, such as the improvement of the supply side of the economy; • the inclusion of ‘stakeholders’ as ‘partners’ in EU-managed as well as nationally and locally coordinated policy processes; but simultaneously also their co-optation, not just for the purpose of gaining expertise and support but in support of a much broader aim to depoliticize the policy field and to reduce conflict; • the search for new kinds of accountability and legitimacy, a process which itself is triggered by the new democratic challenges created by the growing resort to new forms of government and governance.

4 Execution: New commitment devices and regulatory innovation Our multiple examples of socio-economic governance innovation in the EU demonstrate that it is possible to mobilize a wide array of societal resources in support of government ambitions, thereby overcoming the limitations of traditional public-sector resources and offering an added measure of legitimacy to public action. But, far from simplifying government-cum-governance, such collaborative endeavours – especially when they span the multiple levels of the EU and exacerbate collective action and coordination problems – have complicated the tasks of traditional government, along at least four dimensions. Salamon (2002) identifies three such challenges: 1. to management (the need for a new form of public administration); 2. to accountability (as traditional sources of authority are sidelined); 3. to legitimacy (as decentralized governance and the involvement of third-parties such as agencies and private interests render more complicated the garnering of public support via conventional democratic channels).

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We would add a fourth challenge – that of loyalty and commitment – given the evident need to bring a degree of order and stability to the heterarchic character of many socio-economic policy communities if ‘negotiated rule-making’ and ‘cooperative contracting’ are to succeed. We have already referred to government, market and coordination failures as spurs to experimentation with new modes of governance, and re-experimentation if, in turn, those new modes also fail. Traditional, bureaucratic, command-and-control government can become ponderous, sclerotic and unresponsive to societal demands and problems. Markets can also fail in several ways, through lack of restraint, exploitation of the commons and the dilemmas of collective action. And new governance and its associated instruments can also fail, especially when they depend on the commitment and loyalty of multiple actors with (partially) conflicting political goals. This is why the search for new ‘commitment devices’, or the redesigning of older ones, is so common across policy arenas where collaboration and the mobilization of public and private actors behind common objectives is the principal aim of ‘new governance’. As already argued above, although they do not exhaust their features, the development of new commitment devices has been central to the emergence of many new modes of governance. Much experimentalism in these modes is about testing the trade-offs between commitment (and order) and flexibility. Experimentalism is also driven by the need to find solutions to initial design problems. Nevertheless, we reject the idea that experimentalism and deliberation per se are the core ambitions of most examples of ‘new governance’. Experimental they may well be; but not so much in developing new forms of deliberative democracy – or ‘directly deliberative polyarchy’, to use the term favoured by Sabel and Zeitlin (2008) – but in their combination of tools and in the novelty of their quest for cooperation and coordination. For deliberation or the introduction of greater participation, accountability and transparency into policy processes are rarely objectives in themselves but frequently serve the broader purpose of increasing commitment and loyalty. Thus, as we illustrate below, greater accountability and transparency have often aimed to increase the scope of reputational assessment as a check against actor defection and free-riding. Deliberation and network membership (or

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‘stakeholder ownership’, to use European Commission jargon) have sought to depoliticize, pre-empt and reduce policy conflict. Social or civic dialogue has sought to eliminate the contestation of core policy goals. New regulatory systems have sought to use accountability and transparency as a source of self-policing via exposure to external scrutiny, increasing the reputational (and not just the financial) costs of defection and rules infringement. Deliberation processes, meanwhile, are linked simultaneously to building trust and loyalty, eliminating adversarialism and mobilizing joint resources. Reform of these policy systems reflects an ongoing quest to render them more effective both procedurally and in achieving the policy goals they aspire to. Salamon (2002: 608) lists three skills that are crucial for the successful execution of collaborative network governance (or, to use our terminology, to create effective commitment devices): 1. activation, or the ability to mobilize complex private–public partnerships; 2. orchestration, or the ability to blend partners into effectively functioning systems of interaction; 3. modulation, or the ability to find the right combination of rewards and punishments (inducements and sanctions) to elicit the necessary cooperation. Once again, we suggest adding a fourth: hierarchical ordering, or the capacity to create hierarchy amidst heterarchy, a skill that assumes particular pertinence in the European polity, given its supranational, national and local layers and the proliferation of semi-autonomous actors across them. Clearly the importance of these skills varies across our project. Activation, or mobilization, is very important in domains where the investment of private actors is the prime target, as in our projects on industrial development in Central and Eastern Europe and on local innovation and learning in the economy. It is probably also the key issue for local development partnerships. Orchestration, moving independent actors towards the same goals and creating frameworks for action are the core business of negotiating social pacts. They also lie at the heart of the Lisbon Process and the Open Method of Coordination. Finding the right mix of rewards and punishments

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(inducement and sanction) has been the central preoccupation in modulating the Stability and Growth Pact, in bringing public and private actors to the table in regulating tax competition and in reforms to corporate governance. In all of these projects, the ‘hierarchical ordering’ of relationships and goals remains a crucial and much-contested issue. Schelkle (2007) shows that in the case of the 2005 revision of the SGP, reputational costs were raised by creating a number of legitimate exceptions. The policy was no longer ‘one size fits all’ as in the first iteration of the SGP (i.e. rigid inflation, deficit and debt criteria) but rather one of ‘no more excuses’ for repeated defection, backed by a system of close surveillance – Lohmann (2003) uses the term ‘audience costs’ precisely for this kind of commitment device – from a quasi-regulatory network of Treasury officials, national central bankers and statistical offices, Eurostat and DG Ecfin. So, although SGP2 is in some respects a ‘softer’ version of SGP1, modulation (a new mix of rewards and incentives) and a degree of hierarchical ordering are central to the new ‘implicit contract’ underpinning budgetary coordination in the Eurozone. Deliberation and surveillance, on the other hand, are the aspirations of the revised Lisbon strategy, which, after the Kok report, supposedly pushes for the ‘national ownership’ of reform processes. It does so in part by calling for extensive consultation in the preparation and monitoring of the three-year National Reform Programmes and for governments to appoint national ‘Lisbon’ coordinators. But, as shown by Begg (2007), surveillance and deliberation may not be compatible goals – revealing a potentially important contradiction (and the source of failure or a shift to a more imperative mechanism for achieving commitment) in these experimental modes of governance. Avdagic et al. (2005) reveal that in the world of social pacting, deliberation and quid-pro-quo agreements, often effected in the shadow of hierarchy, are the key features of national partnerships. Soft sanctions, reputation costs and recognition play differing roles depending on country, policy area and specific time frames. There appears to be little stability in these arrangements, much less a clear and unambiguous tendency towards more or less ‘state’, ‘hierarchy’ or self-government; for even if the latter is clearly diminishing in the fields of social insurance (sickness, unemployment) across Europe as hierarchy creeps back in, it is perhaps gaining some currency in

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other areas, such as training and work–family arrangements (Visser 2008). Limiting themselves to a narrower field of application and one particular local context (Milan, Italy), Graziano et al. (2007) show that collaborative arrangements that combine local political leadership, public agencies and resources, with employers, unions, NGOs and private resources can produce significant improvements in policy formulation and implementation at the local level. That is the efficiency side of the equation. Regalia (2007) reveals the existence of a control and conflict-management side. Not unlike the strategy followed by national governments when negotiating social pacts, these partnerships, based on negotiated and/or deliberative methods, she argues, aim at involving and pre-committing the recipients of economic and social policies during the policy design phase, thereby creating ex-ante costs of defection and forestalling objections and vetoes in the implementation phase: in other words, activation, orchestration and hierarchical ordering. Thus, our cases do not approximate the kind of ‘governance without government’ that was predicted in the early governance literature. Rather, they are examples of ‘reinvented’ government (Salamon 2002). ‘Governance without government’ presupposes a significant capacity among private actors for coordination and self-government within very loose frameworks (Davies 2002; Schout and Jordan 2005). There are, it should stressed, distinct similarities between the modes of governance in our study and the kind of self-governing solutions to common pool problems studied extensively by Elinor Ostrom (1990). Information-sharing solutions and cooperative norms are important in any collaborative network. Such norms tend to develop in environments in which actors are predictable and trusted, and their commitments thus credible. This typically requires a social and political context that enables all those interested in a decision to be able to predict the basis for future decisions and to regard the governing criteria as legitimate – properties that are usually only guaranteed in small, stable communities with a strong identity. But the context in which the challenges of social-economic governance in the EU must be met is rather different, and the possibilities for governance without government or hierarchy substantially reduced. To be sure, elements of community are present in the local economies studied by Burroni et al. (2006), in the local partnerships

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studied by Graziano et al. (2007) and even in the national social pacts studied by Avadagic et al. (2005). Generally, local policy and regional partnerships rely on a mix of performance, state authority and resources, and the creation of ties and relations of trust between participants on the basis of a territorial frame of reference/identity for securing commitment (Regalia 2007). The predictability of the government and of the norms of trust and cooperation play a very important role in the ‘calculations’ of actors. A contrario, even at the level of local communities, as revealed, for example, in the study of steering shadow economies away from illegality (Burroni et al. 2006), the impossibility of predicting the government’s actions in the medium term, or its unreliability in policy delivery, is a major explanation for the failure of effective collaborative governance. We therefore see constant attempts across our studies to recreate hierarchy or hierarchical ordering through recognition, access and the allocation of competencies and numerous examples where heterarchy, based on flexible, highly adaptable and negotiated arrangements and networks, is endowed with something akin to a formal control system. One of our authors expresses this aptly: if you scratch a ‘new’ mode of governance you are quite likely to find an ‘old’ one (Schelkle 2008). Hierarchy is frequently present, not simply as a ‘shadow’ (Héritier 2002b) but as a constituent element of government- cum-governance (cf. Héritier and Lehmkuhl 2008). Where such mechanisms are either absent or very weak, as in many of the OMCs, then non-hierarchical governance is likely to be ineffective and inappropriate as a means of inducing policy reform (Lodge 2007). There has been a strong normative and even utopian element in new governance theory, not to mention a strong dose of naivety, in emphasizing consensus, cooperation and deliberation while neglecting the importance that power and the search for regulated actor interdependencies assume in any political system. For example, Amin and Hausner (1997: 17 ff.) argued for the emerging importance of ‘self-regulating structures’ in which ‘strategic guidance’ would be imparted by a ‘mixture of highly diffused and reflexive governance capability’. Leadership, it was thought, would emerge as ‘as an endogenous quality rather than the preserve of an external authority’ (Amin and Hausner 1997: 18). As noted by Klijn and Skelcher (2007: 605), such arguments have been typical of a literature that has (mis)interpreted

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new forms of governance as ‘predominantly characterized by horizontal relationships, self-steering and pluralism, and [that] too easily draws an association with deliberative forms of democracy’. Yet the reality of governing complexity in this most complex of polities – the European Union – reveals the constant quest for leadership and the instrumental use and manipulation of governance networks (or ‘hierarchical ordering’) by public actors and authorities. As discussed above, Radaelli and Kraemer (2007), in their study of international tax competition, demonstrate how the development of the EU’s ‘harmful tax competition’ arena has involved a mix of legal intervention, negotiation, persuasion and ‘facilitated coordination’ (the use of benchmarking and the exchange of ‘best practice’), the particular combination of which is dictated by political expediency. At first glance, this field may appear to lack hierarchical ordering, but that impression would be wrong. Radaelli and Kraemer (2007) show that in recent times both the ‘harmful tax competition’ and the ‘corporate tax reform’ arenas have become overshadowed by a judicial arena, dominated by the European Court of Justice and its use of a hierarchical, and highly formalized type of judicial review. In another example, Schelkle (2009) and Begg (2007), in their analyses of EMU’s Stability and Growth Pact and the reform of the Lisbon Process, go even further and argue that new modes are frequently thin disguises for more traditional ones. Once again, the modes of governance they analyse are less ‘deliberative’ fora, or forms of ‘reflexive governance’, than methods for bringing a degree of control and predictability to complex policy networks with weak institutional ties and only loose claims on actor loyalty and commitment. In this case, ‘new modes’ take the form of standardizing, automatizing and depoliticizing policy processes (commitment devices) which aim to ‘formalize’ policy systems. Jabko (2007) makes a similar point regarding the evolution of central banking. There, a recent shift towards transparency and accountability in relations between central banks and political representatives (which can be seen as a renegotiation of a standard principal–agent relationship) has been combined with increasingly stringent reporting requirements. Likewise, in another example of the ways in which apparently deliberative processes may involve subtle forms of hierarchy and control, Obradovic (2009) argues that internet-based consultations in EU policy processes (regarding, for example, impact assessment)

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involve the codification of already-existing informal consultation. She predicts the parallel future coexistence of older informal consultative practices with newer consultation processes that, rather than being open and experimental, are subject to strict controls on participation. Martynova and Renneboog (2008) provide a telling example of how markets can be used to ‘reward’ rules established and upheld by the state. This tactic must be seen against a background of varieties of corporate governance, with different conceptions and rules on supervision, share control concentration, minority rights and disclosure. Albeit far from harmonized, elements in these diverse corporate government frameworks – especially disclosure rights and the rights of shareholders – are being modernized, partly as a consequence of mergers and acquisitions between firms subject to different national standards of corporate governance. It turns out that mergers and acquisitions follow a logic of what the authors call ‘positive spill-over’, in which firms adhering to the strictest governance standards are rewarded due to market expectations of higher value creation for shareholders and, potentially, a reduction of private rents for managers. Social pacts tend to emerge in places where, and in times when, governments are ‘weak’, in the sense of relying on parliamentary majorities or internally fragile coalitions. Yet they must be ‘strong’ enough to impose at least a ‘shadow of hierarchy’ on one or both social partners in the areas where it matters to them (Streeck and Hassel 2004). In the area of industrial relations and wage bargaining (strike regulation, minimum wages, ceilings, recognition and, erga omnes, extension of ‘private’ collective agreements by public law), the role of the state differs across Europe, creating different entry points for law and the ‘shadow of law’ in shaping and sustaining ‘negotiated governance’ (Visser 2004; Hassel 2006). In local and regional social partnerships, our projects suggest that in addition to trust, reliability and predictability, positive rather than negative sanctions – i.e. the state’s capacity to distribute resources, to delegate authority and to upgrade local or regional supply-side services and administrative capacities – really matter (Burroni et al. 2006; Graziano et al. 2007; Hancké and Kurekova 2008). Hierarchy is generally present in the power of governments to recognize or to exclude private actors and to grant them privileged access

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to the policy process and in their capacity to tax private resources or grant concessions. Especially when social pacts and partnerships take the form of loose commitment devices with relatively low exante costs of membership, loyalty may have to be gained by other incentives including pay-offs or side payments. Rather than simply being the facilitator or broker of such agreements, in the new partnerships the state combines many roles: negotiator, guarantor and the enforcer of rules, and often bears a more conventional financing responsibility as well. Thus, while the growing complexity and integration of social, economic and political tasks and challenges in the EU renders the ‘steering’ role of government more rather than less important, our projects do not confirm the hypothesis of Salamon (2002: 608–9) – which is rather widespread in the ‘new governance’ literature – that this will restrict government to the role of ‘keeper of the rules of engagement’ among various institutions and actors. Attempts by the state to ‘steer’, ‘shape’ and intentionally design systems of cooperation and coordination – thereby manipulating the ‘rules of engagement’ – are revealed across the range of socio-economic governance instruments and innovations that we have studied, and strong elements of hierarchal ordering are still present, not just in principal–agent relationships (where conventional games of agency slack versus principal control are common) but in goal setting, incentive creation and the application of sanctions.

5 Evolution and evaluation of new modes of governance How do (new) modes of governance develop through time? Do we observe any convergent trends? Is there a tendency for one mode of governance to replace another or a movement towards more or less hierarchy? From the discussion above it should be clear that our projects tell a far-from-unequivocal story. We find the persistence of hierarchical ordering together with the use of new, more experimental and sometimes ‘softer’ commitment devices. As for the direction of change, it can go both ways: sometimes the response to failure and inadequacy in a particular mode of governance calls for more ‘state’ and law-based sanctioning capacity; in other cases, we see the reverse, with a greater reliance on soft sanctions, involving,

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for example, an elevation of reputational costs, as in the case of the revised SGP or in the domain of ‘harmful’ tax competition – but perhaps not for long. Jordan, Wurzel and Zito (2005) distinguish four possible forms of interaction between old and new modes of governance: coexistence, fusion, competition or replacement. Of these, replacement or wholesale substitution is least likely, and, in fact, none of our projects comes up with an example, although partial substitution was discovered when illegality was replaced by something else in the governance of the ‘shadow economy’. A general insight from our study on innovative approaches towards the shadow economy is that as long as policies do not provide alternatives to existing, inadequate or even illegal forms of economic governance, presumably by being more effective in providing employment, security and growth, they will fail. In that case, rather than promising or attempting wholesale substitution, policies should be experimental, adaptive and redirect rather than replace existing elements of governance. There are many examples, on the other hand, of coexistence, fusion and competition between ‘old’ and ‘new’ modes of governance. Part of the explanation for the absence of replacement may be that the administrative demands imposed by network-based governance are so considerable that ‘using them to steer the EU will only be feasible if the actors involved have sufficient administrative coordination capacities to coordinate amongst themselves efficiently, proactively and on the basis of agreed priorities’ (Schout and Jordan 2007: 2). Such capacities may not exist, however, for large firms or for the traditional social partners when they engage in social pacts and partnerships or agree to co-administration or greater self-regulation. Our projects suggest that even when voluntary commitments hold these collaborative arrangements together, they must be bolstered and cemented by a hierarchical ordering of goals or state intervention to discourage or encourage particular choices. As the reader will have gathered from the discussion above, rather than replacing each other, horizontal and vertical arrangements, or heterarchy and hierarchy, often coexist and complement each other in socio-economic governance. Graziano et al. (2007) refer to the fusion, or interpenetration, of old and new modes of governance. They view partnerships for local development as forms of administrative innovation, in which the sequence ‘plan → control → incentive’, wherein

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local authorities play the role of principal in a principal–agent relationship, is only partially being substituted by the sequence ‘plan → evaluation → learn’ through deliberative interaction among local stakeholders. This point mirrors a similar argument from local partnership analysis across Europe (Davies 2002; Regalia 2007). In this respect, rather than engaging in experimentation as open-ended deliberation, government uses governance experimentally but intentionally and instrumentally to activate and orchestrate the skills that other actors can contribute (Salamon 2002: 608). In their analysis of national-level social pacts, Avdagic et al. (2005) envisage a spectrum between ‘old’ and ‘new’ modes of socioeconomic governance. These range from traditional (1950s–1980s Scandinavian-style) neo-corporatism, with commitments based on the political exchange of resources and policy goals, through to a loose and flexible form of deliberation in which the partners exchange or redistribute little but whose mere ‘agreement’ on policy goals facilitates or legitimizes a policy shift or innovation. In all except the weakest forms of pacts, however, which tend to be unstable and ineffective beyond achieving limited short-term goals, most so-called ‘second-generation’ social pacts either accommodate competing actor goals via complex reciprocity or, in certain cases, come to approximate their ‘first generation’ neo-corporatist predecessors in terms of commitments, sanctions for defection and political exchange. Examples of complex reciprocity in social pacting combine elements of trust, loyalty and norms of cooperation with the ability of the actors, and especially the state, to transform non-cooperative into cooperative games via negotiation, trade-offs and pay-offs. Thus, as Natali and Rhodes (2008) demonstrate, pension-policyreform bargains between governments and trade unions in France, Spain, Germany and Italy in the 1990s and early 2000s could only be achieved via complex trade-offs. These all involved concessions by unions to pension-system modernizers in government in return for a maintenance of their policy influence or co-administration roles, and/or agreement from the government itself to vary the distribution of costs and benefits across different categories of union membership. As for broader-based and longer-terms pacts covering a greater variety of policy fields, the most enduring case – twenty years of

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uninterrupted social pacting in Ireland – has been based on extensive reciprocity, the development of dense actor networks and the broadening of a philosophy and practice of partnership across the public sector (O’Donnell et al. 2007). The key determinant of the Irish pact’s success are hierarchy – in this case the creation of a commitment device with new control and monitoring mechanisms to prevent free-riding and defection – and the capacity of the Irish Government to engage in an ongoing process of political exchange, swapping tax reform, the sustained value of welfare benefits and employment creation for wage moderation (Roche 2007). The weakness or absence of repetition and institutionalization in many other of Europe’s new social pacts, and their frequent limitation to one- or two-shot cooperation games, is likely due also to their lack of hierarchical ordering and the weakness of political exchange (Rhodes 2008). At the supranational level, there has been a period of experimentation and adaptation over the past decade as earlier ‘new’ modes of governance have been found wanting. Schelkle (2007) explored the revision of the initial Stability and Growth Pact (SGP1) in 2005, following a period in which the rule-based, hard coordination approach to national fiscal policy-making had produced a series of governance failures, i.e. the non-compliance with the Maastricht budgetary criteria after EMU membership was achieved. Initially, this provoked calls for a further ‘hardening’ via, for example, a stronger enforcement role of the European Commission. The revision of the pact (SGP2) went in another direction. Schelkle (2009) sees this as a step in the creation of a new regulatory state in fiscal surveillance – but one in which the reputational costs of defection are now more important than in the ‘hard-rules’ regime of SGP1. In international tax regulation there has been a similar shift from an earlier experimentation with a formal hard-rules framework to a use of softer instruments (dialogue and information exchange, peer review, ‘naming and shaming’, timetables). This is one of the most important examples in our study of a clear shift from ‘hard’ to ‘soft’ rules-based governance. In the 1990s, a shift in the governance mode or what Radaelli and Kraemer (2007) call the ‘policy narrative’ on international tax regulation occurred when the European Commission saw a chance to shift the debate from the deadlocked issue of ‘tax neutrality’ and harmonization of tax laws – deemed of

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prime importance for multinational companies – to the more politically fertile area of ‘harmful tax competition’. This opened a new regulatory arena and was initially paralleled by attempts to supplement the older ‘soft’ instruments (guidelines, codes of practice) with harder, more formal instruments and at the same time more politicized modes of governance, replacing bilateral tax agreements with a multilateral approach and taking action against non-member states listed as ‘tax havens’. However, this ran into formidable opposition from the private sector and was corrected. Since the strategy of threatening tax havens with sanctions caused opposition both within and outside the OECD, policy-makers reverted back to the earlier policy of using softer instruments, which turned out to be much less controversial. Radaelli and Kraemer (2007) do not interpret this as a general trend. In the case of the EU they see no linear development from the traditional Community Method to softer or more informal modes of cooperation; nor do most other detailed studies of EU policy-making trends (e.g. Diedrichs et al., this volume; Arnold et al. 2004). In tax competition, as in other areas of policy-making, a strict dichotomy between new and old modes, hard and soft law does not make sense here. Tax coordination is pursued both by soft- and hard-law instruments and by ‘hybrid’ packages combining both. Harder instruments lend force to softer instruments, and links between the two are established strategically and instrumentally by public actors. A similar example of coexistence, complementarity, and in some respects competition, between ‘hard’ and ‘soft’ instruments comes from European employment policy which, over the past decade or so, has seen the emergence (and subsequent weakening) of the entirely soft-law European Employment Strategy alongside the still salient Community Method, and its production of hard-law employment directives, and the inter-professional social dialogue, conducted in the ‘shadow of the threat of EU legislation’. The European Commission has deployed all three modes (sometimes shifting initiatives from one to the other in the face of member-state opposition) in its determination to propel the European employment agenda forward (Rhodes 2010).

6 The structure and allocation of power If many new modes of socio-economic governance involve the creation and redefinition of commitment devices, then the implications

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for the structure and allocation of power should be significant. In fact, the critical change appears to be the migration of influence and authority away from policy arenas subject to public scrutiny and democratic legitimacy. In other respects, as indicated by the importance we have given above to hierarchy and hierarchical ordering, even if they frequently rely on the creation of novel actor inter-dependencies, new modes of governance are unlikely radically to challenge traditional distributions of power. A key set of arguments here regards the role of the state, which, to use the words of Graziano (2008), is often no longer the ‘unique decision-maker’. Rather, the state takes on the roles of ‘the promoter, the referee and the guarantor of processes which are partially left to interaction among “stakeholders” ’. Power and competencies have drifted in this scenario from politicians and traditional political processes to specialist committees, technocratic experts and functionalist interest groups. Although civil-society groups are often also addressed, their much-vaunted influence is usually symbolic or curtailed. This latter view is supported by Obradovic et al. (2008) who observe that the introduction of the European social dialogue has strengthened the position of the Commission vis-à-vis the European Parliament, because while the Parliament does not play any role in this procedure, the Commission retains substantial control thanks to its provision of logistic support to the participating social partner actors. The position of the civic dialogue, although much discussed by academics, has remained weak and variable. Schelkle (2007, 2009) argues that in the case of the revised SGP, new arrangements have also strengthened not only the role of the Commission but also that of the ‘fiscally minded’ parts of national administrations. The Commission has also enjoyed a strong leadership role in many of the Lisbon-linked mega-processes (Begg 2007). Political representatives – and once again the European Parliament – have struggled to have much impact when expert committees assume a central role. Political representatives have done better, according to Jabko (2007), in central banking. He argues that greater central-bank transparency and accountability have given unprecedented oversight over monetary policy to parliaments. His point seems to be that, having surrendered control of monetary policy when central banks were first made independent by politicians, a second round of reforms

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has increased political oversight of an otherwise thoroughly technocratic process. Regalia (2007) argues that transformation in the power structure and allocation of competences depends largely on the origins and the motivations that lie behind specific initiatives. She usefully distinguishes four types of local or regional new modes of governance: 1. problem-solving coalitions empowered by higher-level institutions; 2. partnerships as routinized forms of access to resources and opportunities; 3. partnerships for experimentation with unconventional concerted solutions; 4. partnerships for innovation in local policy-making and implementation. While (1) and (2) tend to be status-quo-preserving, it is only in cases (3) and (4) that new modes of governance will affect established and traditional distributions of power and competences. Graziano et al. (2007) also see such partnerships as potentially new political arenas for the distribution and redistribution of power, sometimes creating opportunities for actors traditionally excluded from the decision-making process. But they contest the related argument that the state is thereby being ‘hollowed out’ – a notion popular with early analysts of ‘new governance’ (e.g. Rhodes 1994). They argue instead that state powers are not so much decreased as redefined and, in some cases, rebuilt with stronger administrative capacities. Regarding national social pacts, Avdagic et al. (2005) argue that depending on the country and policy sector there may be a reallocation of powers, but not so much in the mode of governance itself. Most such deals seek to work within existing power distributions. However, as a ‘second-order’ effect, the consequences of such bargains may result in significant power shifts – especially, for example, in those rare cases where such deals also strongly ‘rearrange’ preexisting wage-bargaining institutions. The rather popular notion that new post-Lisbon policy innovations have empowered new actors in deliberative fora is debunked by several of our projects, especially by Schelkle and Begg’s study of

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EU economic governance (Schelkle 2007, 2009; Begg 2007). As one rises to the national and supranational levels, they argue, the range of effective participation by a range of public and private actors is actually reduced. Thus, at the EU level of economic governance, the only venue where social partners could be included alongside technocrats and government ministers – the macroeconomic dialogue – is hardly alive. And while the social partners and, to a lesser extent, other civil-society actors do feed into the preparation of so-called Lisbon ‘mega-processes’, there is great variety across countries in how profound and influential these consultations are, and, at best, their influence is weak. In sum, innovations in modes of socio-economic governance have taken the form of the creation and redefinition of new commitment devices that seek to induce rather than coerce actor participation, agreement and compliance. Most of these devices are, however, prone to defection or reneging and the presence or the ‘shadow of’ hierarchy, and market sanctions, remain necessary to make them function. Finally, while many of these devices may also have empowered a wider range of policy actors than hitherto, it does appear that most of these newer policy systems and processes have emerged and developed beyond the reach of traditional representative government, raising ongoing questions regarding their democratic credentials.

Notes 1. The study comprised nine projects: Emergence and Evolution of National Social Pacts: Sabina Avdagic, Martin Rhodes, Jelle Visser, Rory O’Donnell, Maria da Paz Campos Lima, Marc van der Meer, Oscar Molina, Reinhard Naumann, Marino Regini and Miroslav Stanojevic. Emergence and Evolution of Administrative Partnerships: Maurizio Ferrera, Ida Regalia, Paolo Graziano, Matteo Bassoli, Stefan Sacchi, Valeria Sparano and Patrik Vesan. New Approaches to Economic Governance in the EU: Iain Begg and Waltraud Schelkle. The Politics of Central Bank Accountability in the Age of Globalization: Nicolas Jabko. ‘Varieties of Capitalism’ and Economic Governance in Central and Eastern Europe: Robert Hancké. Towards New Corporate Governance Regimes in Europe: Luc Renneboog, Marina Martynova, Joe McCahery and Grzegorz Pawlina.

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Changing Governance Architecture of International Taxation: Claudio Radaelli and Ulrika Kraemer. Learning and Local Innovation Systems: Colin Crouch, Luigi Burroni, Monika Ewa Kaminska and Andrea Valziana. Democratization/Participation of Civil Society in New Modes of Governance: Daniela Obradovic, Michal Federowicz, Martin Kay, David Lane, Zdenka Mansfeldova, Heiko Pleines. 2. Lohmann (2003: 97) argues that when seeking both credibility in commitments and flexibility in operation (i.e. adaptability to changing demands and circumstances) ‘an institutional commitment has bite only if it is made vis-à-vis an audience that can and will punish institutional defections.’

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5 Evaluating Trustworthiness, Representation and Political Accountability in New Modes of Governance Richard Bellamy, Dario Castiglione, Andreas Follesdal and Albert Weale

This chapter looks at the new modes of governance from a normative perspective, assessing their democratic legitimacy. Of the four questions underlining the NEWGOV project, therefore, we concentrate on evaluation, discussing only briefly and at the beginning how new modes of governance emerged, evolved and operate. Under new modes of governance we consider a variety of forms, such as regulatory networks negotiating agreed standards, policy coordination through benchmarking and comparative analysis of policy performance, and independent regulatory authorities whose responsibility is to set standards and define the terms of compliance in particular industrial or service sectors. But we also consider, more generally, the way in which committees and civil-society organizations play a role in European social dialogue and more generally in European governance. From a normative perspective, the emergence of new modes of governance has been supported on the basis of two main arguments. One is centred on considerations of effectiveness, suggesting that networks and private actors have greater expertise, which makes them able to respond more speedily and appropriately than public actors to changing circumstances in a given policy domain. The other is centred on the idea of credibility and the way in which expert-based institutions and arrangements can make more credible long-term 135

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commitments than directly political institutions, since they are insulated from partisan politics and from the political cycles characterizing democratic government. But it would seem that new modes of governance have emerged not only because of their alleged superiority in terms of effectiveness and credibility but also as an effect of the weakness of traditional forms of democratic legitimacy at the EU level. Moreover, new modes of governance have been promoted in areas where majoritarian politics at the European level is either unavailable or regarded as inappropriate. The more informal and less hierarchical ways in which new modes of governance function have been seen, by political and societal actors, as providing more participative and negotiated ways of decision-making compared to the more hierarchical and authoritative mechanisms of traditional democratic politics present at the national level. This supposed superiority of new modes of governance, however, is a rather contested issue and one that poses difficult questions in terms of legitimacy, democratic representation and political accountability. In this chapter, we shall assess how new modes of governance fare from these three perspectives, but we start first with a brief discussion of the emergence and nature of new modes of governance as part of European governance at large.

1

‘New’ modes of European governance

In spite of the different understandings regarding the scope and character of European governance, there is a basic agreement in the literature that at the centre of the governance web – where supranational institutions, intergovernmental politics and policy-making processes meet – lies the so called Community Method. Historically, this represents the way in which the different institutional components that make up European governance have been arranged; but it has also come to represent the ‘template’ for supranational policymaking with a functionalist logic of its own (Wallace and Wallace 2007: 342). This allows supranational institutions to widen their own power and competences as well as to act as ‘agents of integration’ (Haas 1958), thus creating a causal circle between the two processes (Majone 2005: 44). Majone (2005) summarizes the working of the community method by suggesting that it regulates the interaction between the

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main institutions of the Union according to three principles. The Commission’s ‘independence’ is at the basis of its exclusive prerogative to initiate proposals, execute policies, act as guardian to the Treaties and represent the Community internationally. The Councils of Ministers and the European Parliament have the power to ‘sanction’ the proposals made by the Commission. Finally, the ECJ ‘guarantees’ a balance between the institutions, while upholding the integrity of the European legal system (Majone 2005: 44). There can be thicker descriptions of the Community Method than the one offered by Majone. These point at the more substantive ways in which various institutions have assumed particular responsibilities in relation to different areas of policy-making. They distinguish, for instance, between a stricter application of the Community Method, with regard to areas such as agricultural and fishery policies, and slightly modified sets of rules of engagement and institutional responsibility used in areas such as competition policy, regulation and distributional issues (Wallace and Wallace 2007). These thicker descriptions imply the actual involvement of other actors besides the main institutional ones. Hence, a greater role is given to social, sectoral and regional actors, and, in some cases, to the mechanisms and autonomous logic of the market. Although this structure of governance is fairly innovative when compared with decision-making processes at the member-state level, the Community Method is characterized by traditional elements of governance, such as a hierarchical division of competences, binding decisions and the more or less uniform and strict implementation of rules through the use of sanctions for non-compliance. Alongside the Community Method, however, there have emerged other modes of governance aimed more specifically at policy coordination between different institutional and national actors and at forms of selective transgovernmental cooperation, departing from traditional governance in important respects. Their emergence and alleged growing importance in the EU is seen as part of the political weakening of the Community Method, but, in principle, these new forms of governance are neither specific to the EU nor to the supranational dimension (Wallace and Wallace 2007; Sabel and Zeitlin 2008). In the EU context, however, they seem to acquire a particular architectural quality, besides having, as already remarked, a specific political valence. Indeed, they are usually seen as part of two distinct, and

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often opposed, political developments. On the one hand, they are said to be promoted by national governments, in an attempt to rein in the growing powers of the Commission (Majone 2005: 60; cf. also Pollack 2003; and Citi and Rhodes 2007: 464, with particular reference to comitology). On the other hand, a less strategic and more functional interpretation of their emergence is suggested, emphasizing how they represent a form of pragmatic accommodation of a number of factors facing decision-making at the EU level. These include increasing complexity, deep diversity, uncertainty with regard to policy effects and diffuse concerns in European society about lack of legitimacy and over-centralization in policy-making (Scott and Trubeck 2002: 6–8). This more functionalist interpretation does not see the new forms of governance as necessarily diminishing the Commission’s political role, but, on the contrary, as part of a process of ‘competence creep’, in so far as the new forms of governance represent a way of enlarging EU competences to areas where supranational institutions have no formal say. In the EU literature, these more innovative forms of governance are described in various ways: as new modes, multi-level governance, transgovernmentalism, soft-law governance, experimentalism, deliberative governance, comitology, etc. (Wallace and Wallace 2007). Majone (2005), for instance, sees in them a kind of supranational form of ‘self-government’, where national governments and other social and local institutional actors try to find alternative methods of coordinating their policies and agreeing on converging standards and targets, than by simply delegating part of the decision-making and compliance process to supranational institutions. But, more comprehensively, and following Scott and Trubeck (2002), it is possible to distinguish between two departures from the traditional Community Method. The first kind of departure consists in a series of specific variations in the way in which the Community Method operates, such as the introduction of more flexible and non-binding legislation and the substitution of procedural prescriptiveness for substantive uniformity. Other specific departures comprise the introduction in the policy-making process of new institutional actors, in the form of comitology for instance, to partly direct and control the Commission (Hix 2005: 52–3); and the more frequent recourse to consultation with civil-society organizations through either ad-hoc initiatives or more institutionalized fora and procedures (Scott and

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Trubeck 2002: 2–3). This first kind of departure, therefore, corrects and transforms the institutional equilibrium and competences of the Community Method, whilst giving greater leverage to national and sub-national actors in the implementation of policies and in the application of directives and other legislation, without changing the basic principles of traditional governance. Scott and Trubeck call this ‘new, old governance’ (2002: 2). The second kind of departure from the Community Method is presented instead as being more radical, for it is said to amount to a wholesale alternative to the traditional logic of governance. The introduction of the Open Method of Coordination (OMC) in the fabric of European governance is considered as the most innovative amongst the new and alternative instruments (Citi and Rhodes 2007). Scott and Trubeck (2002: 3–6) list a series of characteristics that in their view sets the new architecture of governance apart; these include: • the valorization of forms of participatory governance, making civil society an important partner in policy-making; • the full acknowledgement of the multi-level nature of governance in the EU; • the recognition that legislation needs to adapt to diversity and to the principle of subsidiarity; • the centrality of deliberation in policy-making, both as an instrument for problem-solving and as a form of legitimation; • the adoption of soft-law measures and of flexibility in their implementation; • finally, an attempt to design policy-making processes and mechanisms that favour experimentation and knowledge creation. None of these characteristics is entirely new. In one form or another, they have been integrated in traditional governance, either as part of the process of policy formulation, or as second-best options, or as a growing trend in international policy coordination (Wallace and Wallace 2007: 349). From this perspective, what sets ‘new modes’ apart from ‘new, old governance’ is their more systematic application, or the fact that they are embedded in a new architecture (Sabel and Zeitlin 2008) or ecology (Sbragia 2008) of European governance, where a number of principles and preoccupations such as those listed by Scott and Trubeck apply.

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Summarizing the different ways in which the new European governance has been characterized in the literature, three core elements stand out. In structural terms, new governance is heterarchic, while old governance, even when it involves several institutional actors, remains hierarchical in character. New governance opts for soft-law and flexible instruments and therefore embraces a weak conception of authority and uniformity in organization and policy-making. Finally, new governance privileges deliberative, consensus-based and reciprocal learning forms of policy-making and problem-solving. In the reminder of this essay, we shall try to assess how the specific characters of the new modes of governance fare from the standpoint of normative legitimacy, looking in particular at their justifiability to those affected by their decisions, at their representativeness and, finally, at their contribution to political accountability. The first two parts of our argument will raise a number of questions regarding the way in which the new modes of governance meet the test of democratic legitimacy, suggesting that in order to pass such a test they need to be nested in more traditional structures of democratic governance, acting in the ‘shadow of hierarchy’. In the concluding section of the chapter, we advance the hypothesis that it is possible to think of the ways in which new modes of governance contribute to governance legitimacy in a more positive way, in so far as they are part of a process of political accountability that involves the furthering of public reason as well as responsiveness to citizens through elections.

2

Legitimacy, trustworthiness and compliance

When and why, if at all, do citizens and their national authorities have a moral duty to obey the regulations that arise from new modes of governance? This section sketches an account of this issue of normative legitimacy and the multifarious roles of institutions that help give assurance and render authorities trustworthy in this regard. We must distinguish between the normative legitimacy of a political order or regime, which is a question of whether the rules and practices satisfy certain standards of legitimacy, and the more demanding conditions for when citizens have a political obligation or a normative duty to comply with such rules and commands. Political obligation requires more than normative legitimacy of the rules, since citizens

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have a political obligation only if such rules are also generally complied with. The sense of legitimacy of primary concern here is the normative assessment of regimes, particular institutions, officials’ actions or policies. At issue is whether these regulations, institutions, authorities and their actions are justifiable to those affected by them and particularly towards those required to uphold them. If the regulations are so justifiable, those subject to them – for instance citizens – may have a moral obligation to obey these institutions or officials. They are said to have a ‘political obligation’, at least when others comply. More specifically, general support for the EU requires that citizens can trust in the general compliance of others, both citizens and officials, based on a shared acceptance of the legality and normative legitimacy of the regime. Such trustworthiness in institutions and fellow citizens seems necessary for the long-term support of the multi-level political order and for authorities’ ability to govern. Trust and trustworthiness have become increasingly important among Europeans, due to the growing interdependence characterizing European societies and the shifts from unanimity to qualified majority voting in many policy fields. The unanimity rule protected citizens of one member state against policies contrary to their own interests, and from risks that others would not do their share of complex cooperative ventures. But such ‘veto points’ led to stagnation, preventing common action even when required. A series of treaties gradually reduced the scope of unanimity, until the Lisbon Treaty established qualified majority in the Council, and co-decision by the European Parliament and the Council, as the default legislative procedure. Indeed, as already suggested, the OMC and other new modes of governance may also have emerged in response to the difficulty of achieving unanimity among the member states. Institutions can contribute in many ways towards building and maintaining the requisite trust and normative legitimacy of a political order such as the EU. Their multiple roles are particularly complex in settings where actors are ‘contingent compliers’ in the sense familiar from game-theoretical discussions of Assurance Games (Taylor 1987; Levi 1997; Kydd 2005). Contingent compliers are prepared to, and prefer to, comply with common, fair rules as long as they believe that most others do so as well. Acting from such a sense of justice does not entail that they are not also motivated by self-

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oriented interests but that these interests are constrained. They may, for instance, be motivated by what John Rawls called a duty of justice: ‘that they will comply with fair practices that exist and apply to them when they believe that the relevant others likewise do their part’ (Rawls 1971: 336; see also Scanlon 1998: 339). Institutions can bolster expectations concerning others’ actions, so as to address the complex assurance problems that face contingent compliers. Recent empirical and normative contributions in the theory of games and experimental economics enhance our understanding of how institutions can provide the requisite forms of assurance. Social institutions can promote trust and trustworthiness in various ways (Loury 1977; Ostrom 1990; Scharpf 1997; Putnam 1993). They can reduce the likelihood that others default by adjusting their incentives by means of sanctions. They can reduce the costs of failed trust, for instance by restrictions on the scope of legal political decisions by human rights that protect against abuse of majority power. And institutions can provide transparency by fostering public knowledge that Union citizens and public authorities are indeed contingent compliers, also because they have been socialized into a shared European identity. Consider some of the ways in which institutions operate for the assurance of contingent compliers. First, contingent compliers must believe that institutions and authorities’ commands are normatively legitimate. This requires the following to apply: 1. A plausible public philosophy supporting the legitimacy of the political orders (Olsen 2004) 2. Institutions must be simple and transparent, at least sufficiently so that citizens can comprehend and assess them by the relevant normative requirements. 3. Institutions must be seen by citizens and authorities to be effective and efficient. Secondly, if contingent compliers are to believe that most other actors will comply, they need to hold firm beliefs about the future compliance of others. This requires the following: 4. Institutions need to monitor or facilitate the monitoring of others’ actual compliance.

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5. Institutions need to either include or support trustworthy mechanisms for monitoring whether policy-makers actually solve the problems they are meant to address. 6. institutions may provide sanctions that modify citizens’ incentives. 7. Finally, institutions provide mechanisms for socialization. Institutions that render institutional rules, citizens and authorities more trustworthy in some of these ways contribute to satisfying the two main conditions for contingent compliers. As a result, they serve to give citizens a political obligation to comply – in so far as these institutions are normatively legitimate. With this in mind, we can assess the extent to which new modes of governance provide the requisite forms of assurance for contingent compliers and, hence, legitimacy, even in the absence of standard democratic mechanisms of electoral accountability. With regard to simplicity and transparency, multi-level arrangements such as those operating at European level are necessarily complex. Moreover, new modes of governance are typically issue- or sectorspecific, something that creates several additional problems, such as who should be considered as the affected parties and therefore included as stakeholders; or how to identify and adjudicate conflicts between the various and overlapping regulatory regimes. With regard to the identification of the appropriate objectives and standards, it might be thought that they are likely to emerge on the basis of constructive debate among the participants. However, it is less clear where the rightful authority resides and how to guard against skewed bargaining powers and cooptation, so that the agreements actually reflect and balance all affected interests against one another. New modes of governance may secure efficacious solutions in a speedier and less costly manner. Networks and private actors often have more expertise and may respond more speedily than when public actors seek to act alone. But, in the absence of transparency and oversight, citizens may have little reason to trust that this is in fact the case. New modes of governance may also help socialize participants and, hence, to foster solidarity and mutual concern among them. This may be one desired effect of deliberation. Yet this may be less

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attractive; for agents in new modes of governance may not represent all affected parties, and deliberations are not always open to public scrutiny. These factors increase the risk that externalities at best will be ignored and possibly callously planned and imposed on the rest of the community. Do new modes of governance monitor problem-solving? It is not clear how these arrangements can determine whether their results are indeed effective, in ways that can credibly convince the public. Similarly, it is unclear whether new modes of governance can be trustworthy monitors of compliance, since there are risks of cooptation and collusion with other interested parties. Finally, with regard to sanctions, new modes of governance may be able to provide them in the form of shaming or by threatening noncompliers with their exclusion from the networks. Such sanctions may well suffice in several cases. The picture painted so far of the way in which new modes of governance make compliance possible and reassure contingent compliers that others do indeed comply is a mixed one. We now turn to consider whether reinforcing the democratic dimension of new modes of governance would increase their legitimacy, in particular by reducing the fragmentation of decision-making and the possibility of externalities. For instance, careful nesting of new modes of governance within democratic procedures might allow more creative and informed problem-solving by non-accountable bodies if their membership were decided by democratic authorities with the view to creating a more ‘balanced’ set of participants. The decisions emerging from the new modes of governance would ultimately be decided by accountable authorities, who would also have to address conflicts and spill-overs among different new modes of governance proposals. These processes would presumably be subject to more public scrutiny by the media and political parties than is the case at present. The deliberations within these ‘nested’ new modes of governance would neither replace nor sideline public debates, democratic deliberation and contestation, but rather enhance these processes. When new modes of governance are nested within institutions that are democratically accountable, the new modes of governance are thus less likely to lead to fragmentation and unintended externalities. However, when new modes of governance are thus embedded within, and regulated by, institutions that secure democratic and

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legal accountability, it is an open question whether these ‘new modes of governance’ are really new, or really modes of ‘governance’. To subcontract or delegate some elements of government in such ways is a traditional mode of coping with complexity by means of expertise and partial insulation. Some might argue that new modes of governance dominated by the European Parliament, or a directly elected Commission, might drastically diminish the benefits of efficiency and credible commitments that are associated with new modes of governance. If the regulatory authorities are no longer independent of politically accountable bodies, this may lead to a politicization of regulatory policy-making. This politicization may in turn challenge the efficiency of new modes of governance, in so far as they are forced to search for redistributive rather than Pareto-efficient outcomes. And they may not be able to withstand pressure by the politicians, thus sacrificing credibility. This might in turn undermine rather than increase the legitimacy of the EU (Majone 1998, 2000, 2002a, 2002b; cf. Dehousse 1995). The argument that Pareto improvements become unavailable when new modes of governance are hampered by democratic accountability has at least three flaws. First, many regulatory decisions are not Pareto improvements but impose burdens on some for the collective good somehow understood. Second, even when there are Pareto gains, the policy choice will have distributive implications in so far as several options are available along the Pareto frontier. The division of benefits is thus a matter of some normative concern – which many would hold should be decided by democratically accountable representatives. Third, even though credibility towards other parties is important, the account of normative legitimacy sketched above also insists that citizens must be assured that policy-makers are indeed seeking to promote the best interests of all, with fair division of benefits and burdens. Even if, ex hypothesis, new modes of governance were to make such policy and regulatory choices that secure Pareto improvements, this is not enough: citizens must also have reason to believe that new modes of governance regularly do so. As we have seen, the way to ensure this condition is to nest new modes of governance within democratically accountable structures that first provide transparency and the opportunities for public debate about the choices made by new modes of governance, and second that provide the possibility of sanctions.

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3 Representation One possible line of argument against the doubts raised in the previous section on the capacity of new modes of governance for offering assurance to contingent compliers by engendering, of their own accord, trust in citizens and trustworthiness in institutions, is to suggest that new modes of governance satisfy, albeit in unconventional ways, some of the criteria traditionally associated with democratic government. Such claims rest on the argument that delegated bodies and new modes of governance provide the means to ‘represent’ social actors, general interests or even an overarching ‘European interest’ that the conventional democratic channels of political parties, electoral majorities and parliamentary representatives fail to register. Their alleged superiority in achieving better democratic ‘outputs’ largely assumes these representative ‘inputs’. It is to such claims that we now wish to turn. The representative claims made in support of new modes of governance involve two main modalities of representation, which we shall call functional and societal. Societal representation by civil-society organizations has two rationales within European governance. The first is to provide one of the preconditions for political representativeness by constructing a ‘social constituency’ for the European polity in formation (Fossum and Trenz 2006; see also Kohler-Koch 2009a). It offers a social point of reference for a political system whose links with European citizens are tenuous at best. Kohler-Koch (2009b) calls this process an exercise in ‘imaginary representation’ and considers it a ‘category that is supposed to help understand the formation of a “political system” and not to assess the democratic functioning of the EU’. The second rationale for societal representation is linked to a conception of participatory governance, whereby policies are said to be more responsive and more likely to be regarded as legitimate through involving those affected in making them. Both these rationales risk subsuming the European public as a whole into the plethora of civil and social interest-based organizations that EU institutions choose to consult. Within the context of the community method, the Commission plays a mediatory and filtering role that aims to provide some unity to the variety of concerns expressed by different autonomous forms of social organization. It seeks to reconcile different interests and in various ways to

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synthesize them so as to express an overarching European interest. However, within new modes of governance, the representation of social interests and particular concerns takes place through the direct participation in the decision-making process of private interest organizations, stakeholders and general advocacy groups. As a result, it threatens to become partial and arbitrary in its representativeness of civil society as a whole. In fact, the participation of stakeholders and the organizations of affected parties in new modes of governance is usually justified less on the grounds that they give access to more groups and hence are more representative per se, but more because they are thought to produce better decision-making in a specific sector or activity, i.e. expertise. Little consideration is given to evaluating the sector’s impact on social interests not directly relevant to its operations or its relative importance compared to other sectors. In this respect, societal representation merges into the functional modality of representation. As we noted in the first section, the main features of new modes of governance are said to lie in their offering a heterarchical structure of authority, greater flexibility and enhanced problem-solving capacity. These qualities supposedly produce a more deliberative decision-making process aimed at achieving consensus on the best policy rather than bargaining to reconcile competing interests, while nevertheless remaining attuned to the diversity and multi-level nature of the EU. By bringing together state and nonstate actors, experts and social representatives in a forum orientated towards the sharing of knowledge, mechanisms such as the OMC and network governance are held to foster ‘a reasoned discourse between expert and lay people’ (Kohler-Koch 2009b) that overcomes a ‘deficit of mutual awareness between civil society and public authorities’ (Lebessis and Paterson 2000: 27). Strategies such as benchmarking and peer review supposedly encourage those involved to adopt better rather than convenient or self-serving practices, while respecting relevant and legitimate differences stemming from the autonomy and distinctiveness of the member states (Citi and Rhodes 2007: 468–72). However, one can just as easily imagine these structural constraints having precisely the opposite effect – of producing only mutually advantageous, Pareto-optimal improvements that benefit those already privileged within the status quo by leaving existing inequities and inefficiencies intact. Fair and equitable policies will only emerge from this process if the representation is itself fair

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and equitable between the main concerns that need to be aired or if the representatives see themselves as serving public rather than sectional interests. Yet, few if any criteria exist to ensure that representation fulfils the requisite standards of either fairness or publicness. It might be argued that, when dealing with the largely technical questions that form the bulk of the EU’s business, both can be met through appointing national experts. However, not only can experts often disagree on technicalities, but also most technical questions have broader social and economic effects. Such policy spill-overs may go unaddressed without fair representation of non-technical parties from both within and, as we noted above, outside the sector. Health-and-safety standards for food produce, for example, will have implications for a whole range of actors and policy areas – affecting the viability of different kinds of farming practice, consumer choice, regional development, environmental policies and so on. Quite how all these might be appropriately factored into the deliberative process to ensure all receive their due weighting within the discussion remains obscure. The claim that new modes of governance represent the European public interest appears more rhetorical than real. This problem gets exacerbated by the fragmented and partial way in which social interests are represented. But the main issue is whether there are clear mechanisms for ensuring that political representation occurs. This involves both a conceptual and normative assessment of their representativeness, to which we now turn. Following Pitkin (1967), one can distinguish formal from substantive concepts of representation. Formal understandings contain two key elements, though different theories may focus more on one or the other: namely, authorization and accountability. These provide the formal processes through which representation takes place. From a formal perspective, representation consists in X authorizing Y (with regard to Z), and, at the same time, X being accountable to Y (with regard to Z). By contrast, substantive understandings concern the way in which the representative relationship works. Pitkin suggests that, broadly speaking, substantive concepts view representation as a way of either ‘standing for’ or ‘acting for’ someone or something else. ‘Standing for’ suggests a somewhat passive way of taking someone’s place and ‘acting for’ a more independent way of doing so. However,

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such a sharp distinction would be overdrawn. Representatives who ‘stand for’ others may be obliged to act in a way that reflects their principals’ preferences or spirit; but they rarely have a precise imperative mandate from them detailing how they should act on all occasions. Thus, ‘standing for’, which can take descriptive or symbolic forms, allows representatives some leeway for interpreting their role and a degree of independence in how they perform it. Nevertheless, the idea of ‘standing for’ sees representation as involving some kind of proximity between representatives and represented. Such a proximity can take two forms: either a correspondence of interests and views between the representative and those represented; or a mirroring or reflection of the represented in the representatives, who, for example, may share a given quality of the represented, such as gender or colour. By contrast, ‘acting for’ focuses on the substance of the activity performed by the representative. As Pitkin says, ‘we are now interested in the nature of the activity itself, what goes on during representing, the substance or content of acting for others, as distinct from its external and formal trappings’ (1967: 114). Nevertheless, there is a range of ways of ‘acting for’ another person: be it as a substitute, a trustee, a deputed agent, a fiduciary or an expert. As we shall see below, each of these ways of ‘acting for’ involves a different view of the relationship between the representative and the represented. Whereas some ways come close to the ‘standing for’ model, whereby an agent acts as their principals could be expected to, had they the ability or standing to do so; other ways involve agents acting for the benefit of their principals, even if their view of what would most benefit them conflicts with their principals’ own reading of their best interests. However, all these cases differ from the ‘standing for’ model in involving some weaker or stronger sense in which representatives exercise their own judgement as to what is necessary to secure the best outcome for the represented, be that a view or knowledge of the most appropriate means, or, in the strongest case, of what the better outcome would be. Analysing the representative claims of the new modes of governance through Pitkin’s grid, it is clear that they emphasize the substantive over the formal aspects of representation. At most, their claims resemble those made by traditional structures of bureaucratic representation, whose representativeness in terms of authorization

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and accountability is nested within a more general structure of political and democratic representation involving some appeal to the electorate and public opinion more broadly. However, in the European case, these appeals are extremely tenuous, because the chain between the general public and those who make decisions is such a long one. Indeed, the delegated representatives in regulatory and other non-majoritarian bodies tend to be ‘authorized’ by governments or the Commission whose own formal authorization by, and accountability to, a European public is rather thin. Moreover, they then enjoy considerable discretion in view of their role as either experts or credible agents. Their credibility is often held to depend on criteria not only external but also deliberately insulated from any need to reflect or be accountable to the declared preferences of those they represent. The representative claims of European governance are therefore mainly based on the substantive understandings of representation. What we termed the ‘societal’ modality of representation gestures towards the ‘standing for’ conception. As we saw, civil-society organizations are treated as reflecting the diversity of European society at large. But in the absence of systematic formal mechanisms of authorization and accountability, such claims are more symbolic than descriptive. Whereas elections give all voters the opportunity to express their views on a range of policies on an equal basis, with majority voting in the context of a system of competing parties offering a fair means for aggregating their different preference schedules in a way that packages them so as to roughly reflect the preference schedule of the electorate, no equivalent mechanisms exist to ensure that consultations with civil society fairly describe the balance of social views overall (Weale 2005: 134–5, 140–2). Instead, there is a real danger that this system will overly respond to those with the organizational resources and commitment to gain access. In practice, civil-society representatives no less than functional representatives end up making their representative claims on the grounds that they ‘act for’ a European society that has yet to develop the capacity to represent itself. As Pitkin (1967: 112–43) observed, the ‘acting for’ conception poses two main problems. The first is the conceptual problem of whether we can have representation without formal authorization and accountability – how can we know that such a person is truly

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acting as a representative? The second is the normative problem of whether any independent purely substantive criteria exist that can enable us to ascertain what it means to act for the good of someone else (or, in our case, in the public interest). The conceptual problem arises because ‘substantive acting for others’, as Pitkin puts it, takes many different forms, not all of which can be categorized clearly as a form of representation. Pitkin (1967: 121) distinguishes five major forms, which we list here in descending order, from the weakest, which require a stricter adherence to the instructions of the represented, to the strongest, which give considerable autonomy to the person who acts: 1. those forms that refer to ‘acting for’ as the act of someone who is sent or delegated to do something specific (an ambassador, for instance); 2. those forms that refer to ‘acting for’ as a kind of ‘substitution’ (an attorney or someone acting in a vicarious way); 3. those forms that refer to ‘acting for’ as the action of an agent, who can, however, be considered as a ‘mere’ agent, or as a ‘free’ agent (this ambiguity is typical of the role played by elected representatives, even though Pitkin emphasizes that an important distinction remains between an ‘agent’ and a ‘representative’, a point to which we return); 4. those forms that refer to ‘acting for’ in the sense of taking care, or ‘acting in the interests’ of someone (a trustee and a guardian are the most common examples) ; 5. and those forms associated with the idea that experts and professionals are acting in the interest of others (a physician, for instance). These five forms cover a semantic field according to which we can interpret ‘acting for’ in the two polar senses of either acting ‘instead of’ (mainly forms 1 and 2), or acting ‘to the benefit of’ (forms 4 and 5), with form 3 nicely poised in the middle, since it can be interpreted in either sense. For Pitkin (1967: 126), this ambiguity applies more generally to the activity of representation. But looking at these different forms within the context of our discussion of European governance, we can confidently assert that the various institutional instruments of new modes of governance are closest to the strongest

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forms 3 to 5. The implication is that their role as ‘representatives’ is mainly a function of their actions and decisions being beneficial to the European public, rather than expressing the public. As Pitkin notes, it’s unclear in what sense these latter claims are representative claims at all. What these strong senses of ‘acting for’ lack is the idea, central in political representation, that the represented is present (hence also responsible) in the action of their representatives. Pitkin (1967: 125) distinguishes between a ‘representative’ and an ‘agent’. The latter ‘does the actual work’ for someone else, so is a kind of tool or instrument; while the former is not a simple instrument, because he or she acts as if they were that person. The ‘presence’ of the represented in the action of the representative can only be understood if we take the substantive aspect of the idea of representation (‘acting for’ or ‘standing for’) in conjunction with the formal aspects of authorization and accountability. But, as we have seen, these formal aspects are lacking in the new forms of European governance, and this weakens the sense in which we can say that they represent the European public. The suspicion arises that they merely represent their own view of what a European public would want. Yet such a public may not exist – it could be entirely ‘imagined’. The normative problem enters here. For their own view need not reflect their own self-interest. It may represent a correct view of the interests of those they ‘act for’. The difficulty is how can we know whether this is the case or not? Formal mechanisms of authorization and accountability seem necessary. These exist for physicians and lawyers, say. There are professional standards that they have to meet, and bodies that authorize that they have met them and to whom they are accountable for continuing to do so. As a result, one can at least say they are agents qualified to act for others in pursuance of a given task. From the perspective of democratic legitimacy, though, it is unclear whether anything similar exists for political representatives other than a democratic process. However, it is true that in complex and plural societies it is difficult even for the democratic process to produce a unified account of the public interest, or at least to specify what the public interest requires in every sphere. Other forms of governance may here play a role. Embedding new modes of governance in standard democratic practices to enhance their credibility and representativeness need not detract from the distinctive role that they can play as a separate, but not self-sufficient, way of

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decision-making to which a set of democratic criteria apply that relate to aspects of democracy as a system of public reasoning that electoral systems do not necessarily capture that well, or not exclusively so. In this respect, new modes of governance may play some role in the broader system of public accountability that legitimate modern democratic regimes. It is this possibility that the final section of our chapter addresses.

4

Political accountability

In its broadest sense, political accountability means that those exercising political authority have to give reasons for the public action they undertake. Accountability is usually thought of as comprising two elements: explanation and sanction. It has been expressed as follows: ‘accountability is a relationship between an actor and a forum, in which the actor has an obligation to explain and justify his or her conduct, the forum can pose questions and pass judgment, and the actor may face consequences’ (Bovens 2007a: 450; for similar accounts, see Rehfeld 2005: 189; Bovens 2007b; and Castiglione 2007). Thus, the first element of accountability is that those who hold the reins of political power in a society have to give an account – to explain and justify – their use of that power in terms that are, in principle, acceptable to the members of society or their representatives. Within a democracy, the political authorities cannot appeal for their legitimacy just to their having decided a policy. They have to act in ways and for purposes that can be publicly defended. To be sure, these defences may well be controversial, but that is simply because the condition of politics – the need for common action under conditions of political disagreement – means that no policy will receive unanimous consent. There is, nonetheless, a difference between the use of political authority with no attempt to be accountable and a use of political authority that involves explaining and justifying what is done. This leads to the second element of political accountability, namely the opportunity for sanction if the explanation is judged by the forum to be inadequate. The most obvious example of such sanctions within democracies is elections. Democratic institutions tie those wielding power to the need to secure a winning share of the vote, or at least a share of the vote that potentially makes elected

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representatives eligible for public office and the exercise of political power. This protective function of the electoral connection, theorized by James Mill (1822: chapter vii), is supposed to have a number of consequences. It provides an incentive for those seeking office to explain what they will do with political power if they succeed in achieving it. It provides an incentive for those who have held office to explain their use of political power. And, in setting up a competition between those seeking office, it forces rival candidates to campaign against one another. How might new modes of governance fit into these institutional arrangements? One obvious possibility, as already discussed in the preceding sections, is that the authority given to actors in policy networks and independent regulatory agencies should be seen as a form of delegated authority. Parliaments stand in a relationship of accountability to the electorate, and actors in new modes of governance stand in a relationship of accountability to parliaments. The policy task then is to ensure that the accountability of actors in new modes of governance to parliament is rendered transparent and effective. New modes of governance become politically legitimate to the extent to which they are nested in institutions underwritten by the democratic authority of parliaments. If parliaments were able to exercise greater control over the decisions that emerge from new modes of governance, those decisions would have enhanced political legitimacy by virtue of the fact that elected representatives were themselves subject to requirements of political accountability in elections. However, this line of accountability from actors in new governance to parliaments to the electorate looks more persuasive on paper than it is in practice. One problem is that accountability induces blame-shifting and blame-avoidance behaviour by office-holders, so that it may be impossible for even well-informed members of the electorate to know how well or badly a particular group of actors has performed. Elections are necessarily general in scope. To the extent to which the electoral connection secures accountability it does it through a judgement on the overall performance of governments and political parties. The problem that accountability as electoral competition neglects is the role of evidence, argument and persuasion in the policy process (Majone 1989), which is necessarily sector-specific. Unbundling political accountability in respect of

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the rationale of public decisions may require a notion of political accountability in terms of public reason and reasoning, and such a conception may have a role for new modes of governance. Indeed, in its broadest sense, accountability means that the political authorities have to give reasons for their public action and that there is a difference between the use of political authority with no attempt to be accountable and a use of political authority that involves explaining and justifying what is done. Political accountability thus involves some form of reasoning. As reasoning about public action, it can be described as public reasoning and its conduct is an exercise in public reason. Notions of public reason and public reasoning are rather controversial. The terms are here used to identify the practices that are associated with those in authority offering explanations and justifications for the way in which political power is used. On this account, political accountability emerges from practical reasoning, where practical reasoning is distinguished by its being action-guiding rather than an inference to a credible belief about how things are. Whereas a theoretical use of inference yields a conclusion from a body of evidence, a practical use of reason yields a determination to a particular course of action. Political accountability is therefore the task of laying out the chain of reasoning intended to lead from the recognition of a policy problem to a collective course of action. In this sense, political accountability involves the use of public reason, understood as reasoning in the public domain about the actions the polity is to undertake. This definition is descriptive. Issues about how well or badly public reasoning is conducted is a matter for evaluation in the light of explicit standards. Regarded purely descriptively, public reasoning of this sort need bear no intrinsic relationship to any particular set of political values. One could imagine an elite in society immune from any serious political contestation publicly setting out an account of how government policy would bolster their own privileged position, addressing their account to their political clients, with the publicity merely being a way of adding insult to injury for the rest of the population. However, the point of institutionalizing public reasoning in a form accountable to the vast bulk of the population is to place constraints on the specification of interests that can be acceptably advanced as relevant to political decision-making. From this point of view, public

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reasoning is reasoning from a public point of view, in the sense that it involves the good or interest of the public. Thus, the democratic component of public reasoning is to be found in the claim that the protection and advancement of common interests is itself a constitutive ideal of democracy. Political accountability as public reasoning yields two standards of evaluation for a political order or mode of governance. The first is a standard of political understanding. According to this standard, public reasoning needs to be conducted in such a way that the reasoning can be tested as to its intellectual robustness. This in turn requires a public examination of the evidence that is used in forming decision premises, the inferences derived from that evidence and the way in which relevant considerations are balanced. The second standard is one that relates to the public orientation of a decision process. Are interests being weighed in a form that is consistent with a defensible conception of the public good or are private interests being allowed to usurp public purposes? How far are relevant opinions and values allowed a say in the process of governance? With these two tests in place, we can now return to the institutional and policy issues raised by new modes of governance. In order to address the institutional and policy questions, consider a hypothetical democratic debate about new modes of governance. Let us assume that the parties to the debate are well informed and public-spirited, as well as being aware of the general circumstances of politics (Weale 2007: 12–18), in particular that any society is a mixture of cooperation and conflict where differences of viewpoint have to be resolved under conditions of bounded rationality and constrained generosity. What arguments could validly be offered in such a debate for permitting decision-making on important areas of public policy by private actors, voluntary agreements or independent agencies? In many ways the answer to this question is simple. The reasons that could be offered in such a debate are just the reasons that have been offered for adopting new modes of governance in the policy debate in general. New governance may enable problems to be dealt with more quickly than legislation, particularly in political systems that are characterized by a joint-decision trap or multiple veto players. Voluntary cooperation by the bulk of relevant agents is in any case a necessary condition of successful legislation, because the imposition

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of standards and norms of behaviour on citizens and corporate actors requires their cooperation given the asymmetry of information between rule-makers and those subject to the rules. And, in a democratic society, in which consent is an important value, there should in any case be a preference for voluntary and decentralized measures, in line with the principle of subsidiarity, over the centralized use of authority. The difficulty, then, is not stating the arguments in favour of voluntary modes of governance; rather, the problem is that the members of the democratic assembly require assurance that these benefits will be secured and that the conditions under which voluntary governance will operate do not create a departure from the public interest. Since democratic citizens can be conceived as conditional compliers (as discussed in the second section), it makes sense to consider what are the conditions that would secure reasonable consent to the delegation of political authority by such citizens. Two particular conditions are relevant here: replicability and openness. The test of justified public reasoning by non-elected actors can be partly met if it can be shown that their policy reasoning is both replicable and open to relevant consideration and points of view (compare Tsakatika 2008). One test of public reason is given by the following question: for any putative piece of public reasoning, how likely it is that any member of the public with sufficient skill and time could follow the train of reasoning that led to a practical policy conclusion without finding logical fault, as distinct from differing in assumptions? The key thought here is that any case of public reasoning ought to be replicable, and in a democracy anyone in principle ought to be able to replicate it. The test is not that someone following the train of reasoning should find it acceptable. That would be a strong test, and the Rawlsian claim of the inherent plurality of viewpoints that obtains under conditions of the burdens of judgement means that it cannot in general be met. Given the inherent plurality entailed by human reasoning, we should not expect any particular piece of reasoning to secure widespread consensus. Different individuals may still follow the train of reasoning, without agreeing on it. What is necessary is that they should be able to follow it as a train of reasoning. That is, they ought to be able to say: given those premises and that body of evidence, I

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can see how someone might come to this conclusion (even though it is not necessarily the conclusion I would come to myself). In this respect, the pluralism of a democracy and the distinction between explanation and sanction are closely linked. Pluralism enables citizens to say that they appreciate that there is a train of reasoning, which they can follow in the sense that they can see how, given a certain set of assumptions, there is an argument that leads from those assumptions to a particular practical determination. However, citizens who think in this way are not committed to the view that any chain of reasoning the logic of which they can appreciate is, in fact, a chain of reasoning to which they should assent. The sanctioning element of accountability then turns on how close in practice citizens are to a promulgated set of arguments for a political position. One’s political opponents may make sense in their own terms, even if they do not make sense in yours. The test of replicability embodies a weak form of the principle of political equality, understood as the claim that no one person’s judgement in a democracy should be disregarded merely because of who that person is. However, it does not follow from this approach that any citizen can in fact follow the train of reasoning. The political division of labour, the economic division of labour bestowing different skills on different people and the inevitably time-consuming nature of public reasoning all mean that the vast majority of people in a democracy are dependent upon specialist public officials and others, such as civil-society organizations, to undertake their public reasoning on their behalf. In these circumstances, the test of replicability becomes a test of assurance. What assurance could I have, as a citizen, that the train of reasoning that is being followed is one that I could trace if I had the time? One traditional answer in a democracy is that one could have this assurance, provided that the representatives you elected were sufficiently vigilant of your interests and sufficiently adept at following processes of public reasoning. There are perhaps a number of reasons why in a post-industrial society a role for representatives in substituting for citizens in respect of public reason is not enough. The alternative traditional answer is some form of Madisonian republicanism, in which the system of checks and balances serves to protect public reasoning from partial and one-sided interests. In other words, we do not look to agents representing us in public reason but we look to the

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whole system of institutionalized and informal debate for the processes of accountability. This leads to the second test of democratic public reason, namely openness. New modes of governance involve processes of interest-group discussion and bargaining similar to functional representation in nation-states. The clearest example of institutionalized functional representation is that of the representation of labour and capital in corporatist institutions. In their ideal-typical form, corporatist institutions allowed representatives of labour and capital to bargain with one another about investment, wage restraint and more general priorities for the economy. Corporatism can also be understood in a wider sense of the representatives of corporate interests, most notably business and agriculture, being given special status and rights of consultation on matters that concern them explicitly. We should remember that corporatism, even at the level of the nation-state, always attracted criticism from those concerned with democratic values. In particular, there were those who asserted that its institutions usurped the role of parliaments in determining the national interest and excluded certain political interests – most notably those concerned with environmental protection – that should have been properly included. Looking at new modes of governance in the light of this discussion, their problem is not that functional representation cannot conform to requirements of public reasoning. It is rather that those who are not parties to the bargain find it difficult to have assurance that their legitimate interests and point of view are being sufficiently taken into account. The issue is not whether new modes of governance allow interested parties to bargain with one another to mutual advantage; it is whether this bargained advantage is bought at the expense of the public interest. We can see the way that these issues have been played out in discussions on governance in the EU. One example of this discursive turn can be seen in the Commission white paper, European Governance, whose central goal was to put more effective and transparent consultation at the heart of policy-making by reinforcing a culture of consultation and social dialogue. How well do the initiatives put in place by the Commission for more open consultation meet the standards that would be implied by political accountability viewed as a process of public reasoning? The answer is that the measures do better on the

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test of openness that on the test of replicability. To be sure, the publicly available documents on consultation show the positions that different civil-society groups have adopted, but they do not impose any obligations, or contain any procedure, by which the reasonableness of submissions could be evaluated. An improvement in public reasoning would require more demanding tests on the submissions and arguments that could be advanced not to prevent arguments being put but to provide some indication of the weight of evidence they were supposed to bear. Even when considering such an improvement, the test of replicability may not be that easy to meet as the discussion about trustworthiness and representativeness in the previous sections has illustrated. Admittedly, and following from our discussion, new modes of governance may have an important role to play in filling out the details of goals that are specified in abstract and general terms by the democratic process. The sectorally specific procedures and practices of new modes of governance need, however, to respect the constraints of the public interest, meant here as a limit rather than a goal. Such a view is consistent with the key democratic values of political equality and the protection of common goods provided those practices and procedures are sufficiently robust in terms of their intellectual justification and openness to the pluralism of viewpoints that is an inherent, and desirable, feature of any democratic society. In order for this to happen, it may be important to consider the way in which some form of indirect, but more definite, accountability can be established between new modes of governance and the democratic process itself, by, for example, making sure that those responsible for choosing setting up the membership and tasks of the new modes of governance are subject to electoral sanctions.

5 Conclusion: New modes of governance in the ‘shadow’ of democratic legitimacy The argument we have developed in this chapter can be summarized by suggesting that, though the emergence and evolution of new modes of governance as part of European governance is in no small measure due to the democratic deficit of European governance itself, the democratic legitimacy of new modes of governance in Europe cannot be established by looking exclusively at their internal scope and operations.

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As we noted at the start, their emergence and diffusion is a function of the complex nature of modern governance, which operates in an environment where public and private sectors interact to a considerable degree, and requires a high degree of sectoral specificity for precise policy objectives to be elaborated and effective procedures developed in order to achieve them. The main characteristics attributed to new modes of governance, such as a plurality of decisionmakers, flexibility and an emphasis on deliberation, go some way towards recommending them in point of efficiency and credibility, which form part of their general legitimacy as modes of decisionmaking in complex societies. In the European context, new modes of governance have also been recommended as a corrective to the democratic deficit by involving citizens in decision-making through social dialogue and various forms of consultation with civil-society organizations. But, as our chapter argues, such forms of involvement fall short of a number of normative requirements normally associated with democratic legitimacy. On the one hand, they do not meet the more stringent standards of democratic representativeness; while, on the other, they fail to provide citizens with enough assurance for general compliance, or that the externalities of decision-making will be fully considered without penalizing the interests of those not directly involved in the decision-making process. As we have argued, new modes of governance can make an important contribution to practical deliberation in many areas of collective decision-making by providing more specific goals for a given policy area than democratic politics can ever establish. In this role, new modes of governance can also contribute to the political accountability of democratic decision-making by reinforcing its giving-reason element, even in absence of direct sanctioning. In the European context, this function has been most successful in terms of the openness of the decision-making process, rather than in its replicability, whereby ordinary citizens might be able to replicate the process of public reasoning taking place in decision-making. Though we suggested there are ways in which both openness and replicability can be strengthened in new modes of governance, these do not ultimately guarantee their democratic accountability if they are completely detached from the rest of the democratic and electoral process. In spite of the many ways in which new modes of governance contribute to more flexible, efficient and credible decision-making,

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they cannot generate their own democratic legitimacy. In order to function legitimately, they need to operate under the ‘shadow’ of the more democratic accountability provided by and through other political institutions. In Europe, the problem of democraticizing these institutions, and indirectly new modes of governance, still needs to be solved.

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Conclusion New Modes of Governance: Emergence, Execution, Evolution and Evaluation Adrienne Héritier and Martin Rhodes

1 Introduction New modes of governance – as this book has shown – come in various guises, aim at various objectives, are based on numerous different instruments and are linked in varying ways to governmental action. Diverse as they are, they all strive to increase the effectiveness and efficiency of public policy-making, mostly by using soft instruments. By building on extra-governmental venues of policymaking and public–private collaboration they offer new policy options, building on the resources and expertise of private actors and independent experts. Yet the shadow of hierarchy still looms large over these new modes of governance. As we have discovered, the credible threat of legislation or governmental intervention usually prompts their emergence as alternatives to traditional forms of decision-making. Once instituted, as we have also found, due to their flexibility and open-endedness, and weakness as ‘compliance devices’ (Rhodes and Visser, this volume), they are prone to reneging on the achievement of objectives unless subject to governmental monitoring. In case of failure they may be entirely replaced by governmental action. The emergence and diffusion of new modes of governance on the wide scale presented in this book means that they are changing the overall institutional architecture of policy-making in Europe. Their principal consequence is to separate functional, expert policy-making from broad democratic decision-making processes and to shift power from representative government to private actors and executive actors. Nonetheless, 163

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although their democratic credentials remain problematic (as argued by Bellamy, Castiglione, Follesdal and Weale, this volume), new modes also offer new potential for ‘democratic’ control by involving stakeholders in policy-making and by mobilizing their commitment to specific policies, thereby increasing output legitimacy. In the following, we highlight and compare the most important findings in this book. We summarize them under the four analytic themes of emergence, execution, evolution and evaluation set out in the preface.

2 Definition New modes of governance, and governance as such, are defined in different, inconsistent or in all-too-encompassing ways in the literature and in practical policy-making. In view of this inconclusive debate, this volume employs the working definition outlined in the introduction by Bartolini. Governance is defined as a system of coproduction of norms and public goods where the co-producers are different kinds of actors. Under this general umbrella definition, the individual chapters in this book base their analysis on the following more specific definitions of new modes of governance: Héritier and Lehmkuhl define new modes of governance as (1) public policy-making with the inclusion of private actors, and/or (2) public policy-making outside traditional democratic-representative governmental arenas. Diedrichs, Reiners and Wessels concur with the first component of this definition when they define new modes of governance as innovative modes of policymaking outside the Treaty. Börzel uses a definition that is premised on the second component of Héritier’s and Lehmkuhl’s definition, i.e. the involvement of non-state actors (firms and non-governmental organizations [NGOs]) in the formulation and implementation of public policy. Börzel adds a further component by underlining the type of decision-rule used, i.e. the use of non-hierarchical modes of decision-making allowing for the vetoing of a decision. Rhodes and Visser similarly emphasize the feature of negotiation and cooperation in decision-making and underline the type of instrument used, i.e. soft vs. hard instruments; moreover, they also base their definition on the dimension of private actor engagement in public policymaking.

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3

Variety

The new modes of governance discussed in the chapters cover a wide variety of types. At a more general level they include the delegation of regulatory tasks to independent authorities, self-regulation by private actors (Héritier and Lehmkuhl), tripartite decision-making and negotiated contracting, cooperative regulation and international monitoring in socio-economic governance (Rhodes and Visser), nonhierarchical coordination, tripartite decision-making and consultation (Börzel) and soft modes of decision-making (Diedrichs, Reiners and Wessels). The application of these new modes is discussed with respect to a wide range of policies under all pillars, such as financial-market regulation, telecommunications regulation, energy policy, environmental policy, social policy and regional policy, biotechnology policy, tax policy, competition policy, economic policy, monetary policy, Justice and Home Affairs, Common Foreign and Security Policy; as well as corporate governance and regional producer networks. The goals pursued by these policy measures are as diverse as market creation and market regulation, the correction of the negative external effects of markets, economic growth and development, higher employment, social inclusion, competitiveness and wage moderation. One goal that goes beyond substantive policy concerns, and is of a political and social process nature, is the inclusion of stakeholders – not just to gain expertise and support but also to depoliticize the policy area and reduce conflict and to develop new forms of accountability and legitimacy (Bellamy, Castiglione, Follesdal and Weale).

4

Emergence

When analysing the causes of the emergence of the new modes of governance, the research results presented in this book differentiate between a number of more distant and more proximate causes. The more general and distant causes are economic liberalization and deregulation, the ensuing greater international economic competition and the integration of the European economy. The increased competitive pressures from outside and within Europe triggered a wealth of innovative measures seeking to deal with these pressures

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such as recourse to self-regulation by industry; attempts by firms to signal their quality by adopting stricter corporate governance rules; the development of new cooperative relationships between governments and industry; the consultation of civil-society organizations and the delegation of regulatory tasks to independent authorities (Rhodes and Visser; Héritier and Lehmkuhl). Another more distant factor prompting new innovative policy modes outside traditional arenas and the search for new strategic capacities in the face of uncertainty and constrained public resources are external shocks, such as a security crisis (Diedrichs, Reiners and Wessels). And a final more distant political factor is the continuing enlargement of the European Union that renders decision-making processes more cumbersome and confronts acceding states with the staggering policy load of the acquis communautaire. In both cases, new modes of governance offer the potential of swifter decision-making outside the classical political decision-making arena and of implementing the acquis by new innovative means (Börzel) and therefore also present an opportunity for more effective and efficient policy-making. Beyond these more distant factors lying at the roots of the development of new modes of governance, a number of more proximate causes are also described in the chapters. They differ as to whether they refer to substantive policy aspects and/or to aspects relating to institutional interests of the actors involved. Among the substantive policy-related factors, the need for expertise due to the growing complexity of policy issues to be decided on and the lack of resources available to governments play an important role; public actors increasingly resort to private (industry) actors and delegate policy-making to independent experts to guarantee the required input of knowledge behind, and to improve, the formulation and implementation of public polices (Héritier and Lehmkuhl; Rhodes and Visser). Private actors offer professional expertise not just in devising policy measures but also in administering them. They may also be able to create support and consensus in the target populations of the policy measures in question (Rhodes and Visser). Another immediate cause of the emergence of a new mode may be the failure of existing public policies or the identification of existing policy gaps (Diedrichs, Reiners and Wessels). Coordination failure in the case of negative competition (e.g. tax policy; Justice and Home Affairs) may encourage resort to new modes such as voluntary

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coordination by invoking best practices and codes of conduct (Rhodes and Visser; Diedrichs and Wessels). Among the institutional interests driving the application of the new modes, three stand out: the attempt of private actors to thwart legislation, the use of new modes as a default option for actors seeking greater EU integration and the desire of less integrationist member-state actors to pre-empt the uploading of competences to the European level. In other words, the ‘shadow of hierarchy’, i.e. the credible threat of legislation or of governmental intervention at various levels plays an important role in the emergence of new modes (Héritier and Lehmkuhl; Diedrichs and Wessels). Functional interest governance as in social and employment policy provide the European Commission with an entry point for exerting influence in national policy arenas (Rhodes and Visser), or, vice versa, member governments reluctant to Europeanize national policy competences – in the face of a particular problem load – may well settle for a new mode of governance as a second-best option. New modes may allow member states to solve particular public-policy problems without having to give up political competencies (Diedrichs and Wessels). For accession and neighbourhood states it appears that the EU oscillates between applying pressure for the development of new modes of governance and a hesitancy to apply them, often resorting instead to direct governmental intervention after all. Given these different push factors, one should bear in mind that the existing preconditions in member states also play an important role when accounting for the emergence of the new modes of governance. This becomes very clear when the absence of such factors is identified in accession and neighbourhood states (Börzel). Some member states in the most recent accession round and, even more so, neighbourhood states lack these preconditions. Börzel shows that while there is pressure from the Commission in the form of conditionality, financial incentives and twinning measures to develop new modes, especially in the form of tripartite decision-making and voluntary cooperation, specific national factors may seriously impair their emergence. The most important missing preconditions appear to be a lack of administrative capacity, such as deficient personnel, horizontal coordination experience and the political skills required to develop inclusive modes of governance, as well as the weakness of national

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associations and non-governmental organizations. Export-oriented industries – by contrast – appear to be a driving factor in the development of self-regulation as a new mode of governance. The sheer order of the policy load to be taken on board and its abrupt imposition in the accession process appears to have hindered a step-bystep involvement of non-state actors in policy-making. However, the ‘low capacity trap’ in which accession and neighbourhood states find themselves may – under certain conditions – be alleviated by EU pressure if the latter is of a consistent nature (Börzel). Evidently, the existence of vested institutional interests that oppose new modes of governance for fear of losing power (e.g. political parties) can hinder the development of new modes. What is more, when governmental actors are unable to cast a shadow of hierarchy (because they change so frequently) that itself may prompt the development of a new mode. Moreover, governmental actors may be wary of engaging non-state actors in public-policy-making lest they are suspected of clientelism and corruption. Civil-society organizations for their part may be reluctant to cooperate with the state because they still define themselves primarily as being the opponents of a formerly authoritarian government (Börzel). Altogether, in accession and neighbourhood countries, the involvement of non-governmental actors in policy-making has been rather modest. Rather, non-governmental organizations tend to act as watchdogs over governmental policy-making (Börzel).

5 Execution In the execution of new modes of governance, the chapters of this volume reveal a wide variety of instruments and public–private actor combinations. As regards instruments, it is mostly the less stringent instruments that are employed, i.e. incentivization, bargaining, persuasion, information provision, monitoring and model function and naming and shaming prevail whilst command and control appears to play a minor role. New modes leave much room for self-regulation and mutual monitoring within commonly agreed frameworks, which are linked, for example, to indicators for best-practice learning, common goals and a framework plus timetable. However, these soft instruments frequently operate under the shadow of hierarchy (see below).

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First of all, when these instruments are employed, their application is often based on the combined activities of private and public actors ranging from a marginal role on the part of the latter to full cooperation between them. Conceived as a continuum, we may imagine 1. a form of self-regulation by private actors in which public actors play no or only a marginal role; 2. a form under which public actors define the overall framework conditions or objectives of policy-making that are subsequently specified by private or non-governmental actors; 3. and finally a form of cooperation whereby public and private actors jointly produce regulation. Second, the role of the shadow of hierarchy – i.e. the credible threat of governmental intervention – plays, as described in the section above on emergence, a very important role in bringing the new modes about. It not only prompts the emergence of new modes in order to eschew legislation but also serves as a credible threat to secure their effectiveness during implementation (Héritier and Lehmkuhl). The shadow of hierarchy – in contrast to its negative connotations – can take a variety of forms with varying combinations of threat and inducement. In the ‘threatening’ case, the credible announcement of public intervention may motivate private actors or member states that are reluctant to accept European legislation to engage in self-regulation or voluntary coordination. At a later stage of policy-making, this threat may be sustained (by announcing pecuniary sanctions) in order to obtain a satisfactory policy performance. In its more inducing form, the shadow of hierarchy may function by granting recognition or withholding recognition; via the offering (by the state) of privileged access to the policy process in order to shape policies; and through the selective distribution of resources to non-state actors for devising and implementing policies (Rhodes and Visser). It is frequently crucial for governmental actors to deploy the appropriate commitment devices (Rhodes and Visser) in order to induce non-governmental actors to collaborate in achieving public-policy objectives and in developing and combining tools for cooperation and coordination. It is frequently also necessary to blend in some elements of hierarchy in order to create favourable conditions for cooperation in a form of ‘governance-cum-government’ (Rhodes

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and Visser). While we therefore find a variety of types of governance in which government intervention and new modes of governance complement each other, there is also considerable evidence of their parallel existence.

6 Evolution The evolution of new modes of governance, as discussed in the chapters of this book, is viewed from two different perspectives: the first takes an overall view of different new modes of governance and asks whether their development over time is characterized by an increasing similarity or dissimilarity; the second focuses on one specific new mode of governance and asks how it develops over time, and, in particular, whether the link to government changes. Taking an overall view of diverse new modes of governance operating simultaneously in a member state and/or at the European level, the question arises whether over time the new modes become more similar in terms of their core characteristics or whether they are subject to processes of divergence or convergence. Given that the new modes of governance under scrutiny are as diverse as the open method of coordination, self-regulation by industry and tripartite decision-making in social and employment policy, the likelihood that they would converge seems rather small. What is much more plausible is that there may be a process of diffusion within one type of new mode of governance as it is applied in different sectors and in different countries. And, indeed, the evidence produced in our chapters reveals that the open method of coordination has spread across sectors, although in slightly different forms regarding the strictness of defined policy goals and monitoring of national action plans (see also de Ruiter 2007). The same holds for corporate self-regulation in the environmental and health-and-safety domains which has seen a rapid process of diffusion. This may be fuelled by firms’ competition with respect to one and the same reference market, the observation of rules of appropriate behaviour, a reputation mechanism or concessions to political pressure from non-governmental organizations. After observing the development of one specific new mode over time, the empirical evidence collected in this book points to two contrary developments: we distinguish a shift from old forms of

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government to new forms of governance and vice versa. If a new mode has failed successfully to produce policy decisions, old forms of government may provide a fallback option. But new modes of governance and governmental activities may also operate alongside each other, totally separately or with indirect mutual influence in the sense of a possibility of choice between one and the other. What appears to be relatively rare is the case in which a new mode entirely replaces an old form of governmental intervention without a link with some kind of governmental action being sustained (see above regarding the different shades of hierarchy) (Rhodes and Visser). The overall increase in the use of formal governmental instruments such as regulations, decisions and directives has not been reduced by the emergence of new modes (Diedrichs and Wessels). The opposite appears more likely to occur when, for instance, self-regulation by industry in environmental policy is substituted by legislation, or when, as in European social and employment policy, traditional instruments under the Community Method continue to proliferate alongside new modes, providing a menu of different choices for the European Commission and other actors to mix and choose from (Rhodes 2010), providing in some cases distinct opportunities for venue-shopping (Baumgartner and Jones 1993). Moreover, we also identify instances whereby different instruments are layered upon one another (Héritier and Lehmkuhl). The factors driving the development of a new mode (and its relationship with older modes) over time include processes of instrumental learning and contests over both the distribution of the costs and benefits of the new mode and over the locus of decision-making power.

7 Evaluation In evaluating the new modes of governance, we first examine to what extent the new modes of governance investigated here were effective, in the sense of achieving the policy objectives they set out to achieve. We secondly address the question of the structural impact of the application of new modes of governance, the possible resulting shifts of power between governmental and private actors and the implications of such shifts in power for democratic control. We take a limited view of policy effectiveness as the effectiveness of an individual policy measure as measured by its outputs (decisions).

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There appears to be some evidence of successful decision-making under new modes. In some cases, such as self-regulation by industry, however, a close link to the shadow of hierarchy seems to be important for producing this effect (Héritier and Lehmkuhl). In the area of justice and home affairs and common foreign and security policy the declared goals are rarely found to be met (Diedrichs, Reiners and Wessels). In the case of accession and neighbourhood countries, if they emerge at all, new modes are effective only if there is a credible shadow of hierarchy (Börzel), a condition which rarely exists. When a policy of deregulation and liberalization threatens to fail, a government with weak capacities is not able to deploy a credible shadow of hierarchy. Therefore, there are mixed results as regards the implementation of the EU’s acquis communautaire in these countries. There do appear to be some beneficial experiences when using the expertise of NGOs, scientists and business in public-policymaking and mobilizing cooperation with non-state actors at the local level. It also appears that in accession and neighbouring states the Commission tends to oscillate between applying pressure for the development of new modes and hesitation to apply them, resorting instead to more direct governmental intervention, a practice that obviously tends to undermine the effectiveness of policy-making under new modes. For accession countries, new modes are only to a limited extent able to alleviate the policy burden resulting from the acquis communautaire (Börzel). In the realm of socio-economic governance, policy innovations based on new modes show that it is possible to mobilize a wide array of societal resources and to link them in support of governmental actions behind public policy goals, thereby overcoming the limitations of traditional public-sector resources and offering an added measure of legitimacy to public action (Rhodes and Visser). The application of multiple new modes of governance as defined above have brought about changes in the overall architecture of the European and national polities and a shift of power between actors. The most important feature of change that becomes apparent from the studies in this book are an increasing functional seclusion of policy-making by delegation to independent authorities, tripartite decision-making bodies and self-regulation by industry (Héritier and Lehmkuhl; Rhodes and Visser). A second key feature of change is the fact that the role of the state has changed to the extent that it is no longer the unique decision-maker

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(Rhodes and Visser). Rather, there are parallel policy-making arenas governed by private actors, or by a mix of public and private actors, alongside the main governmental decision-making arenas. This has repercussions for the relative power of governmental actors that, on balance, tend to strengthen executive – at the European level, the Commission vis-à-vis the Parliament, and within governments the fiscally minded ministries over other ministries (Rhodes and Visser). In the accession and neighbourhood states the new modes of governance, on balance, appear to sustain older forms of governmental intervention (Börzel). These shifts, in turn, have implications for the democratic accountability of policy-making in Europe and its member states. Functional interest-group partnership, for example, has often gained influence against and in contest with more conventional forms of representation (Rhodes and Visser). If the new modes are separated from the main democratically legitimated governmental arena of policy-making and are focusing instead on delimited sectoral areas, this raises specific problems for democratic government. Democratic accountability in the strict sense can only be guaranteed if the decision-making output of new modes is subject to the control of democratically elected governmental actors (Bellamy, Castiglione, Follesdal and Weale). Stakeholder democracy, a form of functional democratic control, allows the interests of those immediately affected by a policy measure to take be taken into account under a new functional mode of governance. A new form of democratic support and social acceptance for these measures may thereby be created (Börzel; Rhodes and Visser). However, they have one disadvantage: they do not allow for the control of the negative external effects of the functionally limited new modes on other policy-making arenas. They address ‘special audiences’ (Diedrichs and Wessels; Bellamy, Castiglione, Follesdal and Weale). Only if linked to a classic territorially defined democratic political arena can these negative external effects be taken into account. A third form of democratic control – the critique of the public and the media – would provide information about the performance of the new modes but does not allow action to be taken if the performance of the new mode of governance should be found wanting (Héritier and Lehmkuhl). In conclusion, the research described in this book shows that the overall trend of international economic competition, of liberalization

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and deregulation, and the related strains imposed on European policy-making institutions – exacerbated by successive rounds of enlargement – have given rise to a variety of new modes of governance as means of arriving at effective and efficient policy problem solutions, outside the traditional venues of democratic parliamentary decision-making. As such they rely critically on private actors engaging in public-policy formulation on the basis of self-regulation, in cooperation with public actors or at least within a loose framework defined by the latter. The development of new modes is driven not only by the growing complexity of policy-making problems but also by the institutional interests of different actors, creating new, additional European policy-making arenas without necessarily forcing member states to yield their formal decision-making competencies to supranational authorities. However, the new modes are seldom to be found in a ‘pure’ form; rather, they are more often than not still linked to governmental action, the latter fulfilling an arm’s-length controlling or promoting role. A subtle balance has to be struck in order to induce rather than coerce private and non-governmental actors to commitment, agreement and compliance. Since both policy formulation and implementation under the new modes are costly, there is always the temptation to renege on the commitments made. Therefore, the link to government remains important. By focusing their activities on limited functional areas and mobilizing limited circles of expert and/or functional interest actors, the new modes of governance tend to isolate themselves from mainstream democratic decision-making arenas. At the same time, by involving stakeholders and publicizing or benchmarking policy performance, they may also allow for a new type of control of policy-arena input and output that was previously unavailable.

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Index accession countries civil society in, 100 effectiveness of new modes of governance in, 93–9 emergence of new modes of governance in, 79–90 evolution of new governance in, 90–3 execution of new governance in, 90–3 new modes of governance and, 75–103 structural impact of new modes of governance on, 99–102 accountability, 68–71, 111, 118, 153–60 acquis communautaire, 75–6, 80, 82, 102, 166, 172 activation, 120 actors see also private actors cooperation among, 7 instrumental learning by, 63–4 Amsterdam Treaty, 31, 32, 40–1 Assurance Games, 141 asylum policy, 30 aviation security, 82 bargaining process, 64 benchmarking, 56–8 binding policy instruments, 37–40 biotechnology regulation, 71 bounded rationality, 108 CEER, see Committee of European Energy Regulators (CEER) Central and Eastern European (CEE) candidate countries, 77 see also accession countries economies, 115–16 governance, 80

CFSP, see Common Foreign and Security Policy (CFSP) civil society, 3, 69–71, 77, 79, 88, 99, 100 civil-society organizations (CSOs), 71, 77, 80–1, 84, 86, 88, 91, 131, 135 coercion, 5, 9, 10, 24, 112 coexistence, 127 collaborative network governance, 120 comitology, 51–2 command-and-control instruments, 57–8, 59, 80, 91–2 commitment, 109, 119 commitment devices, 110–11, 119–20, 126–7, 130–1, 169–70 Committee of European Energy Regulators (CEER), 51 Committee of European Securities Regulators (CESR), 67 Common Foreign and Security Policy (CFSP), 30, 31, 32, 34 communitarization, 29, 30, 33–4, 40–2 community government model, 6, 7 Community Method, 8, 19, 23, 29, 30, 33, 35–42, 45, 47, 78, 97, 130, 136–7, 138 competition, 10, 127 competition policy, 31, 52, 64, 116–17 compliance, 140–5 compliance devices, 163 concepts, 6 consensual decision-making, 6 cooperative regulation, 105, 109 coordination processes, 39–40, 116–17 Copenhagen criteria, 75 co-production, of norms, 7–13 187

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188

Index

co-regulation, 59–61 corporate governance, 2, 108, 113, 117, 121, 125, 165, 166 credibility, 135–6 decision-making centralized, 29 distribution of, 64 EU, 5, 28, 33–5, 37, 39–40, 45, 49 hierarchical, 78–9 innovative methods of, 22 non-hierarchical, 78–9, 102 supranational, 33 Third Pillar, 31, 40–1 default option, new modes of governance as, 56–7 Defence Agency, 40 delegation, 30 democracy, 70, 73, 78, 80, 119, 124, 153, 157–8, 173 democratic accountability, 68–71 democratic control, 171 deregulation, 48, 52, 54, 71, 94, 165 disintegration, 23 EC Treaty, 29 employment policy, 39–40 energy regulation, 55–6, 67–8 environmental organizations, 83, 89 environmental policy, 34, 37–9, 80, 90, 95 accession countries and, 85–6 self-regulation and, 64 environmental regulation, 52, 55–6, 60–1, 70–1 Estonia, 86 EU institutions, 64–5 EU integration, 14, 44–7, 114 European Agency for Safety and Health at Work (EU-OSHA), 34 European Centre for Development of Vocational Training (CEDEFOP), 34 European Commission, 87, 92, 97, 137, 145

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European Competition Network, 64 European Council, 26, 27, 29, 36, 39 European Court of Justice, 39, 92 European Employment Strategy, 130 European Foundation for the Improvement of Living and Working Conditions (Eurofound), 34 European Parliament, 36, 47, 145 European Security and Defence Policy (ESDP), 30, 40 European Social Dialogue, 52–3, 56–7, 60 European Union (EU), 39–40 decision-making in, 5, 28, 33–5, 39–40, 45, 49 emergence of new modes of governance in, 25–31 evaluation of new modes of governance in, 42–4 evolution of governance in, 35–42 execution of new modes of governance in, 31–5 expansion of, 49 governance in, 5–6, 14–15 legal architecture of, 28, 36, 40 neighbourhood countries and, 75–7, 87–8 new modes of governance in, 19–24, 136–40 EU Treaty Law, 87, 93, 96–7 expertise, 54–5 external relations, 31 external shocks, 26, 30–1 financial regulation, 67, 70 ‘frame concept’, governance as, 6–12 Framework Agreement on Telework, 60 Framework Agreement on WorkRelated Stress, 60 fusion, 127 genetically modified organisms (GMO), 68 globalization, 4–5, 15

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Index 189

governance, 5–6 see also new governance Community Method, 136–7 concept of, 2, 19–20 co-production of norms and, 7–12, 13 corporate, 2, 108, 113, 117, 121, 125, 165, 166 definition of, 6–7 EU, 5–6, 14–15 as ‘frame concept’, 6–12 institutional context of, 11 mode of implementation, 11 old vs. new, 12–15 study of, 2–3 three dimensions of change in, 20–1 governance theory, 1–6 government new modes of governance and, 61–2 role of, in governance, 7–8 Greece, 80, 86

information society, 38–9 institutional context, of governance, 11 institutional development, 23 institutions, 64–5, 141–5 instrumental learning, 63–4, 66 instruments bargaining, 57–8 binding, 38–41 command and control, 57–9, 80, 91–2 incentivization, 58–9 soft, 110, 129–30 Integrated Pollution Prevention and Control Directive, 85, 86, 90 intergovernmental coordination, 40 intergovernmentalism, 29, 30–1, 41 international monitoring, 109 Ireland, 129 Italy, 115

Hague Programme, 27, 42 harmful tax competition, 116–17, 124 health-and-safety regulation, 60 hierarchical decision-making, 78–9 hierarchical ordering, 120, 123–8 hierarchy, 8, 17, 34, 50, 55–6, 59, 62, 66–8, 72, 75–7, 82, 85, 87–8, 90–3, 97, 100, 105, 108, 112–16, 121–33, 140, 163, 169 horizontal regulatory learning, 82 Hungary, 86, 95

Lamfalussy procedure, 52, 65, 67 layering, 65, 92 legal acts, 31–3 legal architecture, 40 legal instruments in environmental policy, 37–8, 39 in social policy, 37–8 legal system, 28, 36 soft law and, 32 legislation, pre-empting, 55–6, 59 legitimacy, 28, 43, 96, 108, 111, 118, 135, 137, 140–5, 160–2, 164 liberalization, 48 Lisbon Process, 27, 39–40, 120 Lisbon Treaty, 21, 40, 141 Lithuania, 86 local partnerships, 122–3 loyalty, 119

incentivization, 58–9 indicators, 58 industry pre-empting of legislation by, 55–6, 59 self-regulation by, 52, 55–6, 59–61, 64, 68 information private actors and, 112 provision of, 58

9780230_243408_10_ind.indd 189

Justice and Home Affairs, 30, 34, 42

Maastricht Treaty, 31, 32, 33, 36 management, 118 market correction, 57 market integration, 49, 57

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190

Index

Markets in Financial Instruments Directives (MiFID), 67 member states, sovereignty reflex of, 27 migration policy, 29 modulation, 120 mutual recognition, 91, 92, 94–5, 97 ‘naming and shaming’, 5, 58 national government model, 6 nation-states, 4, 5–6 negotiated contracting, 105, 109 neighbourhood countries, 75–7, 87–8 see also accession countries neo-corporatism, 128 new governance accession and, 75–103 as default option, 56–7 definition of, 23, 49–50, 78–9, 164 effectiveness of, 93–9 emergence of, 21–2, 25–31, 50–7, 79–90, 113–18, 165–8 in EU, 19–24, 136–40 evaluation of, 42–4, 66–71, 93–102, 126–30, 171–4 evolution of, 35–42, 62–6, 90–3, 126–30, 170–1 execution of, 31–5, 57–61, 90–3, 118–26, 168–70 goals of, 53–4 government and, 61–2 hierarchy and, 163 implementation, 57 legitimacy, trustworthiness and compliance, 140–5 legitimacy and, 160–2, 164 literature on, 1 vs. old governance, 12–15 political accountability and, 153–60 private actors and, 24, 34–5, 59–61 in regulation, 48–74 representation and, 146–53 socio-economic, 104–34 structural impact of, 68–71, 99–102, 171 varieties of modes of, 165

9780230_243408_10_ind.indd 190

NEWGOV project, 1, 6, 16 non-binding acts, 31, 39–41, 52 non-governmental organizations (NGOs), 55–6, 80 non-hierarchical decision-making, 78–9, 102 non-state actors, see private actors normative legitimacy, 140 norms, production of, 7–13 Open Method of Coordination (OMC), 10, 19, 27, 28, 33–4, 36, 39, 43, 44, 57, 65, 120, 138 orchestration, 120 Pan-European Regulatory Forum, 94 paper industry, 61–2 party government, 4 pension reform, 33, 38 persuasion, 58 persuasion instruments, 57–8 Poland, 85, 86, 115 policy effectiveness, 66–8 policy failures, 27 policy implementation, 112–13 policy instruments, 23, 65–6 policy-making, EU, 5 policy-related objectives, 27 political accountability, 153–60 political institutions, decline in confidence in, 3–4 political obligation, 140–1 political parties, 4 polity-building, 114 Portugal, 80 power shifts, 171 structure and allocation of, 130–3 pre-empting legislation, 55–6, 59 private actors in accession countries, 86 co-production of norms and, 7 delegation of regulator issues to, 49, 51–2 information and, 112 involvement of, in new governance, 24, 34–5, 59–61

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Index

private actors – continued policy implementation and, 112–13 private self-regulation, 6 public authorities, 112 co-production of norms and, 7–8 involvement of, in new governance, 34–5, 59–61 PVC industry, 61–2, 68 Qualified Majority Voting (QMV), 35 ranking, 58 reciprocity, 128 regional policy, 81–2, 94, 100 regulatory authorities, 51 regulatory governance cooperative, 105, 109 delegation of, 51–2 delegation of, to private actors, 49 emergence of new modes of, 50–7 evaluation of new modes of, 66–71 evolution of, 62–6 execution of new modes of, 57–61 new modes of, 48–74 non-binding acts and, 52 private actors and, 59–61 structural impact of new modes on, 68–71 regulatory learning, 82 regulatory networks, 58, 63–4, 90, 96 regulatory policy, 31 replacement, 127 representation, 146–53 research policy, 38–9 Romania, 86–7 sanctions, 5, 10–11, 110, 112, 137 sedimentation, 65 self-government, 122, 137 self-regulation, 49, 64–5 by industry, 52, 55–6, 59–61, 64, 68 September 11, 2001, 30 service regulation, 83–4

9780230_243408_10_ind.indd 191

191

Seville Process, 90 shadow of hierarchy, 8, 34, 48–73, 75–7, 85, 87, 92, 97, 100, 112–16, 121–33, 140, 163, 169 single-issue parties, 4 social dialogue, 52–3, 56–7, 60, 86, 96 social pacts, 125, 132 social policy, 34, 38, 81 societal representation, 146–53 socio-economic governance emergence of new modes of, 113–18 evaluation of new modes of, 126–30, 172–3 evolution of new modes of, 126–30 execution of new modes of, 118–26 new modes of, 104–34 structure and allocation of power in, 130–3 varieties of modes of, 106–7, 110–13 soft law, 24, 32–3, 36, 38–9, 91–3, 105, 110, 129–30 Southern European member states, 77 see also accession countries governance in, 80 Southern Mediterranean, 76 sovereignty reflex, 27 Spain, 80, 86–7 Stability and Growth Pact (SGP), 112, 121, 124, 129 stakeholder democracy, 70, 73, 173 stakeholder ownership, 119–20 state aid control, 83 supranational decision-making, 33–4 target-setting, 42, 52 tax competition, 116–17, 124 tax regulation, 129–30 theory of governance, see governance theory

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192

Index

Third Pillar decision-making, 32, 41–2 trade in services, 83–4 trade unions, 4, 116 transgovernmentalism, 82 transparency, 28, 46, 96, 111, 143 Treaty Law, 87, 93, 96–7

9780230_243408_10_ind.indd 192

Treaty of Amsterdam, 29 Treaty reform, 28, 36–7 trustworthiness, 140–5 Ukraine, 76 Water Framework Directive, 85 White Paper on Governance, 14

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