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Chapter 2 States, Communities, and Markets: The Distributed Governance Scenario "...the creation of risks has outpaced the development of trust..." M. Horsman and A. Marshall (1994:212) Introduction According to Richard Cooper (1997), our era marks the "beginning of the end of the Westphalian state system". This conclusion echoes many other recent diagnoses of the demise of the nation state (Kaplan 1994; Drucker 1994; Ohmae 1995; Huntington 1996). What is particularly interesting in Cooper's analysis is his ruthless use of Ockham's razor. He focuses on three rather simple factors that are, in his estimation, sufficient to explain the erosion of this dominant jurisdiction. The first two (population pressure and higher standards of living) explain the growing demand pressures put on the state as an echo of the expectations of this larger and richer population. The third factor (the greater mobility of the factors ofproduction) underpins the state's considerably weaker capacity to extract from footloose factors ofproduction any additional resources atthe very moment when the nation state requires them to meet the growing demands for public goods. This is not the first time that the nation-state has been pronounced dead or dying. Even some twenty years ago, many observers had already declared that it had become too small to deal effectively with important transnational issues, and too large to deal effectively with smallish local issues (Bell 1976). But this argument is persuasive only if one focuses on the state component of the nation state. 39 The New Gee-Governance It is easy to show that demographic movements and technology, financial and communication flows have transformed the borders of the national state into rather porous boundaries, and that the political territory of the national state is becoming less and less congruent with meaningful contemporary economic realities. This is the case even though the borders of the national state would still appear to be significant and to matter (The Economist 1990; McCallum 1995). One may explain this residual meaningfulness by the fact that the socioeconomic outcomes are still mediated to a certain extent by the national state context (i.e., by resilient modes of regulation that remain national in scope, and engender principles of cooperation and competition shaped by national regimes) (Ettlinger 1994). But this insistence on national state structures leaves too much out of the equation: the central concern is not structures but the process of governance (Paquet 1994b). Consequently, even though one might go along with the thrust of Cooper's argument about the traditional state, there is much to be gained from developing a heuristically more robust alternative problematique, based on governance. It should be capable of providing not only an explanation for the faltering of the national state, but also some sense of what governance system is emerging in its place. In the next sections, I first suggest an analytical framework to examine the process of governance. Then I show that governance has evolved away from state-centred, bureaucratic and hierarchical regimes toward a more distributed| pattern ofauthority dispersed over economy, society, andpolity. This leads,in I section 3, to an exploration of the consequences of this defacto decoupling of I nation and state on the emerging governance system. In conclusion, I suggest that I the new distributed governance will generate not only a more diffused pattern \ of power, but that it will also tend to vest communities, networks, and meso I innovation systems with new and greater valence. 5 The governanceproblematique \ Governance is about guiding: it is the process through which an organization j is steered, through which effective coordination is engineered when power, resources, and information are widely distributed. (a) From a Newtonian to a Quantum world Fifty years ago, in Canada, governance was debated in the language of management science. It was presumed that public, private and social organizations were strongly directed by leaders who had a good understanding of their environment, of the future trends in the environment if nothing were done to modify it, of the inexorable rules of the game they had to put up with, 40 States, Communities, and Markets and of the goals pursued by their own organization. Those were the days when the social sciences were still Newtonian: a world of deterministic,well-behaved mechanical processes, where causality was simple because the whole was the sum of the parts. The challenge was relatively simple: building on the welldefined goals of the organization to design the control mechanisms likely to get the organization where it wanted to...


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