The intelligent person's guide to good governance

The Intelligent Person’s Guide to

Good Governance

The Intelligent Person’s Guide to Good Governance

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The Intelligent Person’s Guide to

Good Governance

SURENDRA MUNSHI BIJU PAUL ABRAHAM SOMA CHAUDHURI

Copyright © Surendra Munshi, Biju Paul Abraham and Soma Chaudhuri, 2009

All rights reserved. No part of this book may be reproduced or utilised in any form or by any means, electronic or mechanical, including photocopying, recording or by any information storage or retrieval system, without permission in writing from the publisher.

First published in 2009 by

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The SAGE Team: Reema Singhal, P.K. Jayanthan, Rajib Chatterjee and Trinankur Banerjee

Contents

Preface vii

Chapter 1: The Concept of Good Governance 1 Organisational Views Critical Perspectives Analytical Issues

Chapter 2: The Role of the State 26 In Western Political Thought Historical Characteristics of the State Recent Challenges The Indian State since Independence The Future of the State

Chapter 3: The Third Way 51 The Third Way in the First World Criticism of the Third Way Relevance of the Third Way to India

Chapter 4: The Idea of Civil Society 80 Civil Society in Different Societal Contexts The Nature of Civil Society Is Civil Society Relevant?


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Chapter 5: Beyond National Boundaries 104 The Global Setting Global Institutions Reforming Global Governance

Chapter 6: The Issue of Democracy 132 What is Wrong with Democracy? Are There Alternatives? The Way to Democracy The Democratic Option

Appendix: Is India Ungovernable? 156Bibliography 169Index 189About the Authors 194

Preface

The term good governance has been in discussion for quite some time now. It could well be expected that the vast literature that exists on the subject would have proved helpful in sorting out key issues by now. This has sadly not happened. Indeed, there seems to be an inverse re-lationship between the volume of literature on the subject and the clarity that has been achieved on it. The term has nevertheless found a wide acceptance even outside the circles of experts and institutions which are professionally concerned with developmental issues. In India, for example, it is not all that uncommon to hear these days that a particular election was fought on the issue of good governance. Politicians, journalists and common citi-zens do not feel uncomfortable in using the term. No-body denies that good governance is needed, though it is a different matter whether this need is met beyond rhet-orical assertions. Yet another problem that any person who engages with the subject faces is the problem of fi nding a text that considers different relevant issues at one place. The issue of good governance is clearly connected with other issues that are important in our public life, such as, the role of the state or the idea of civil society.


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Though much valuable literature exists on these issues, it is not often that they are discussed in a connected manner. For any person who is interested in the subject this involves preparing a list of relevant writings, collecting and then reading them systematically.

Can you suggest just one book that I can read on good governance to form a basic idea on the subject? This book is written with this question in mind. It is written for all those who may be interested in exploring the subject for academic or practical purposes. Surprisingly, in the vast literature that exists on good governance, it is hard to fi nd such books. It is left to the readers of this book to decide whether it achieves the clarity that is required. One thing may be claimed though with some confi dence. In putting a book on good governance in the hands of the readers interested in forming a basic idea of the subject, this book may make the task of such readers easier. It puts the wisdom of several studies at their disposal. It puts also the outcome of our own thinking in writing of the book at their disposal. The bibliography given at the end of the book may be useful for the readers in pursuing their interests further.

In writing this book on good governance, relevant ex-periences and authors have been drawn from different parts of the world. This will become clear by a quick look at the table of contents and the bibliography that ac-companies this book. If the United States and Britain feature in the discussion on the Third Way, Poland fi nds a place of pride in the discussion on civil society. It was interesting to watch Bill Clinton and Tony Blair shape their Third Way, just as it was exciting to watch Lech Walesa carry out his struggle in the Gdansk shipyards.

Preface

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It is also to be admitted that, within the context of this broad coverage, India has been given a special treatment not only in discussing whether India is ungovernable but also in different chapters. This is done intentionally, for the Indian experience may be interesting not only to Indian readers but also to others who may fi nd, in this ex-perience, something useful. The largest democracy in the world does throw up large questions that have a broader relevance.

What are the conclusions that can be drawn on the basis of this study? As an answer to this question, among several that are possible, I wish to emphasise that we seem to be moving towards a paradoxical situation. As good governance becomes more and more important with societies all over adjusting to the reality of the emer-ging world, the good governance discourse seems to be exhausting itself. While good governance is needed in poor societies devastated by wars or internal dissensions, it is also needed in the affl uent societies of the West where, as has been observed by Yves Meny (1997), the insulation of the people from politics has perhaps gone too far except in the ritualistic sense of periodic elections. It is, therefore, important to rebuild a democratic polity that is adapted to the present time. Rulers, democratically elected or autocratically self-appointed, are seen as not caring for the real problems of the people, and dissatisfaction with them appears to be widespread all over the world. This appears to be happening ironically at a time when more people are living under democratic arrangements than ever before in the world. This is our opportunity. Concern with good governance opens the possibility of rethinking the issues of governance that are relevant


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for our times. It helps us to go beyond the state and to think of different modes of partnerships that need to be worked out. It opens the possibility of reconsidering important issues concerning the purpose and principles of governance. Indeed, we have the possibility of asking ourselves fundamental questions of collective social life when much can be learned from each other. This can be done if the discussion on good governance goes beyond its self-infl icted narrow perspective. What is needed is to recognise that one perspective fashionable in one part of the world at a particular time may not offer to humanity all the answers that it seeks. We need to go beyond the wisdom of insulated experts and open the discussion to those whose lives are affected. The history of humanity has not ended: we may well be on the threshold of a new era.

It is my pleasant task now to thank Biju (Paul Abraham) and Soma (Chaudhuri) for all their support in writing this book. Biju proved helpful as a collaborator in all possible ways. Soma was helpful in the bibliographical work and related activities. It needs to be noted here that the views expressed in this book are not meant in any way to represent the views of the institutions with which we are associated in different ways at present. I shall fail in my duty if I do not acknowledge the support of Anupama (Muhuri) who also helped with the bibliographical work. I am grateful to Sugata Ghosh of Sage India for his con-fi dence and patience and to the members of his team for seeing this book through so well.

Surendra Munshi

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The Concept of Good Governance

Governance as a term has gained prominence in public debates around the world in recent times. It is often used with the adjective good as if to suggest that what is under discussion is governance evaluated positively. To use the term in such a manner, contrary to the general impression, is not new. While the Oxford English Dictionary defi nes governance as ‘the action or manner of governing’, it also includes in its defi nition ‘good order’, especially in ‘to set in governance’. Quotations provided in support of the de-fi nition are interesting. Two of them may be mentioned here. Going back in time, ‘in good reule and in good governaunce’ appeared c1400 and ‘to remember and se to the good gouernaunce of his people’ by Earl Rivers in 1477. Even the present distinction between government and governance seems to be anticipated. A quotation going back to 1656 is relevant, ‘Wise Princes ought not to be admired for their Government, but Governance.’ The distinction that is drawn at present briefl y runs as


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follows: While government refers to actions carried out within a formal legal setting, governance involves all ac-tivities of government along with informal activities even outside a formal governmental setting that are meant to achieve common goals. James Rosenau (1992: 4) de-fi nes as government those ‘activities that are backed by formal authority, by police powers to ensure the imple-mentation of duly constituted policies’, whereas govern-ance according to him ‘refers to activities backed by shared goals that may or may not derive from legal and formally prescribed responsibilities and that do not necessarily rely on police powers to overcome defi ance and attain compliance’.

Organisational Views

Good governance has been in discussion primarily be-cause of the importance given to it by many international organisations, including the World Bank, International Monetary Fund (IMF), Organization for Economic Co-operation and Development (OECD), Asian Development Bank (ADB), Department for International Development (DFID) and Canadian International Development Agency (CIDA). The European Union, a major international alli-ance of European nations has put good governance on its agenda. The United Nations and some of its specialised agencies have tried to promote good governance. However, even though the importance of good governance has been stressed by all of them, their approaches have dif-fered signifi cantly. While the World Bank and the IMF,


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for example, have tried to put up good governance as what is commonly known as a conditionality for aid, the United Nations has sought to support member-states in their efforts to implement good governance reforms. Em-phasising good governance in bilateral and multilateral forums, the European Union has also sought to ensure good governance in its own functioning. These differ-ences in their approaches are worth noting, since criti-cisms of prescriptions for achieving good governance are often criticisms of the approaches that underlie these prescriptions rather than criticisms of the prescriptions themselves.

Good governance became important as an issue for developing countries from the late 1980s onwards when two international funding organisations began to em-phasise it. The World Bank and the IMF started paying attention to policy processes in states for which funding was being considered. This emphasis on these processes has been traced back by some analysts to this period when two important governments for these organisations, the Republican administration of President Ronald Reagan in the United States and the Conservative government of Prime Minister Margaret Thatcher in the United Kingdom, promoted neo-liberal market-friendly policies for their own countries and also for others around the world. However, it has also been suggested that the World Bank and the IMF arrived at similar conclusions independ-ently in response to a series of crises faced in different parts of the world. Their dominant view seemed to be that these crises were brought about not by external economic events or natural calamities but by the failure of domestic governments to adopt right policies.


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The region that has attracted the greatest attention is Sub-Saharan Africa. In a study, Sub-Saharan Africa: From Crisis to Sustainable Growth (1989), the continuing economic crisis in the region is raised as an issue. It is argued that Sub-Saharan economies faced with falling per capita incomes need to grow by at least 4–5 per cent annually. Not just an enabling environment consisting of sound macroeconomic policies and an effi cient infra-structure but also the building of capacities in Africa is needed to achieve it. ‘A root cause of weak economic performance in the past,’ wrote Barber B. Conable, the then President of the World Bank, in his ‘Foreword’ to the book, ‘has been the failure of public institutions. Private sector initiative and market mechanisms are important, but they must go hand-in-hand with good governance––a public service that is effi cient, a judicial system that is reliable, and an administration that is accountable to its public’ (World Bank 1989: xii). Thus, structural economic reforms are necessary along with policy reforms. External aid, the study warns, will not be forthcoming unless there is an improvement of governance in Africa.

In its fi rst report written expressly on the topic of gov-ernance, Governance and Development (1992), the World Bank reiterates its belief that good governance must go along with sound economic policies. The World Bank provides us with the defi nition of governance: ‘governance is defi ned as the manner in which power is exercised in the management of the country’s economic and social resources for development’. It added: ‘Good governance, for the World Bank, is synonymous with sound develop-ment management’ (World Bank 1992: 1). The concern


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with sound development management includes public sector management as well as the formation of rules and institutions that enable the conduct of business in a predictable manner and the promotion of accountability for economic and fi nancial performance. Public sector management includes public expenditure management, civil society reforms, and the restructuring of the sector of public enterprise. Poor governance is readily recognisable. Some of its major symptoms are, the diversion of public resources for private gains, absence of law or arbitrariness in its application, excessive rules which impede the functioning of markets, allocation of resources in a manner that is inconsistent with the priorities of development, and a decision-making process that is not transparent. It is once again warned that there is an inevitable impact on the nature and extent of Bank support for countries where commitment to sound management development is in doubt and where a dialogue with the Bank does not lead to the desired change in policy. In a later publication, the World Bank describes good governance in the following manner:

... good governance is epitomized by predictable, open, and enlightened policy making (that is, transparent processes); a bureaucracy imbued with a professional ethos; an executive arm of government accountable for its actions; and a strong civil society participating in public affairs; and all behaving under the rule of law. (World Bank 1994: vii)

The following dimensions or sub-headings are again emphasised: public sector management, accountability, legal framework for development, and transparency and information.


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In a speech at Transparency International delivered on 21 January 1998, Michel Camdessus, the then managing director of the IMF, spoke on the IMF and good governance. The text of the speech makes for an interesting reading. He notes that governance reforms have moved to the forefront of discussions at the IMF. This has happened because of the awareness that governance problems have a direct bearing on economic performance. Referring to the document, Declaration on Partnership for Sustainable Growth, adopted in September 1996 (IMF 1996), he notes that the objective is to promote good governance in all its aspects, including enforcing the rule of law, the effi ciency and accountability of the public sector, and taking care of corruption.

The IMF goes about promoting good governance by ensuring that public resources are managed well and such systems are created that regulate private sector activity in a stable and transparent manner. It is after all necessary for the IMF to ensure that the funds provided are put to good use. The need for a regulatory environment for the private sector is felt in response to the Asian crisis and the need to create confi dence for private capital infl ows. It is important, Camdessus emphasises, to work together with other multilateral organisations, especially the World Bank (Camdessus 1998).

Let us now consider briefl y the positions of other organisations on the issue of good governance. Good governance, for the OECD, is needed in view of the growing recognition that world fi nancial crises stem from weaknesses in the institutions of governance. Key factors of good governance include technical and managerial


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competence of civil servants, capacity of government organisations, reliability, predictability, the rule of law, ac-countability, transparency and open information systems, and participation. Participation is linked with democratic processes in the belief that governments that involve the public are in a better position to take good decisions which in turn enjoy better support once they are taken (OECD 1997). In a report on participatory development and good governance, it is clearly emphasised that for promoting developmental goals the emergence of more participatory societies is essential. Such societies ensure transparency and accountability (OECD 1997). The OECD has put emphasis at the same time, it has been pointed out, on the decentralisation of authority in governmental structures and the devolution of responsibility. There has been a demand for downsizing the public service and for the privatisation of many government activities (Lewis 1998). The ADB sees good governance as ‘sound development management’. Governance affects economic growth and development. It has to do with institutional environment which has impact on the economic policies that are adopted by a government. What needs to be ensured is that a government does actually deliver to its citizens what it promises to deliver. The ADB has identifi ed four elements of good governance, accountability, participation, predictability and transparency (ADB 1995). The DFID similarly looks upon governance in the context of the role of governments in promoting economic growth through the management of economy in such a manner that makes it possible for private sector and entrepreneurial developments to fl ourish. In its White Paper on making


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governance work for the poor, the DFID policy on gov-ernance is stated clearly. Whether the states are effective in helping business grow and delivering services to their citizens depend on whether good governance is in place. Good governance requires capabilities of getting things done, responsiveness and accountability (DFID 2006). Finally, CIDA’s defi nition is as follows:

By governance we mean the manner in which power is exercised by governments in the management of a country’s social and economic resources. ‘Good’ governance is the exercise of power by various levels of government that is effective, honest, equit-able, transparent, and accountable.

In a document prepared for CIDA, the following charac-teristics are added, ‘being informative and ensuring gender equality’ (CIDA 1997: 1, 5).

The European Union has been active in promoting good governance in countries to which it provides aid and technical assistance. As early as 1991, several European Council resolutions stated the belief that the presence of political institutions which enjoy democratic legitimacy provides the right basis for equitable development in de-veloping countries. It is noted

The Council stresses the importance of good governance. While sovereign States have the right to institute their own admin-istrative structures and establish their own constitutional ar-rangements, equitable development can only effectively and sustainably be achieved if a number of general principles are adhered to: sensible economic and social policies, democratic decision-making, adequate governmental transparency and fi nancial accountability, creation of a market-friendly envir-onment for development, measures to combat corruption, as


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well as respect for the rule of law, human rights, and freedom of the press and expression. (European Council 1991)

The Council and its member-states will support, it is affi rmed, the efforts of developing countries to advance good governance. In the Cotonou Agreement, signed be-tween the European Union and a number of ACP (African, Caribbean and Pacifi c) states in 2000, good governance has been recognised as ‘a fundamental and positive element’ of the partnership. It needs to be noted here that the European Union has also been quite active in improving its internal governance procedures. The European Union White Paper on good governance has stressed many of the reforms that it has been prescribing for other nations. The concern here is to address the democratic defi cit that is perceived in the activities of the European Union. Unlike other democratic states or organisations where directly elected representatives legislate policies and laws, most decisions in the European Union are taken by the European Commission which is responsible to member-states but not directly to the people. The only directly-elected body, the European Parliament, has very little power to make or reject new European Union laws and policies and exercises only limited control over the executive (Bignami 1999; Liberatore 2004).

Finally, we need to consider the United Nations. Un-like pressures in the interest of market-friendly policies applied by the World Bank and the IMF, the efforts of the United Nations and one of its specialised agencies, the United Nations Development Programme (UNDP), have been directed towards supporting the efforts of member-states to move towards greater democracy and


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participation. It is this support of efforts towards greater democracy which has kept United Nations out of con-troversy. In Governance for Sustainable Human Devel-opment, a UNDP policy document, it is clearly stated that the UNDP believes in building the capacity for govern-ance for sustainable human development. Good gov-ernance and sustainable human development are seen as indivisible, for one cannot be achieved without the other. ‘UNDP defi nes governance as the exercise of poli-tical, economic and administrative authority in the man-agement of a country’s affairs at all levels. Governance comprises the complex mechanisms, processes and in-stitutions through which citizens and groups articulate their interests, mediate their differences, and exercise their legal rights and obligations’ (UNDP 1997: iv). Good governance has many attributes: participatory, trans-parent, accountable and equitable. It promotes the rule of law and effectively makes the best use of resources. Governance has no doubt to do with the state but it does not leave out the private sector and civil society, both of which have signifi cant roles to play. Speaking at the fi rst global conference on governance for sustainable growth and equity held at New York in 1997, Kofi Annan, the then Secretary-General of the United Nations chose to highlight the insight of the United Nations drawn from all the efforts made by it from Africa to Asia to Latin America in the following words: ‘Good governance and sustainable development are indivisible.’ He went on to say: ‘Without good governance––without the rule of law, predictable administration, legitimate power, and responsive regulation––no amount of funding, no


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amount of charity will set us on the path to prosperity’ (Annan 1997). He reported that the expertise of the United Nations had expanded and its programmes now touched virtually all the elements of good governance. The United Nations has emphasised building partnerships at different levels as essential to governance. The word ‘gov-ernance’ highlights the fact that a government does not act alone but in partnerships with all sections of society (United Nations 2000).

It should be recognised that not all initiatives to im-prove governance have been prompted by international agencies. Recognising the negative economic and social consequences of poor governance, states and regions have taken initiatives to improve governance on their own. The New Partnership for Africa’s Development (NEPAD) adopted in 2001 by the Organization of African Unity (OAU) which renamed itself the African Union (AU) in 2002, needs to be noted in this context. It explicitly identifi es poor governance as a major cause for the ills of Africa. Historical underdevelopment, it is admitted, is compounded by an inability to ensure sustained economic growth. The consequence is ‘the entrenchment of a vicious cycle, in which economic decline, reduced capacity, and poor governance reinforce each other, thereby confi rm-ing Africa’s peripheral role in the world economy’ (OAU 2001: 6). The NEPAD initiative has two major compon-ents: the Democracy and Political Governance Initiative (DPGI) and the Economic and Corporate Governance Initiative (ECGI). The DPGI aims to reform political and administrative structures in member states and puts emphasis on democracy, transparency, accountability,


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integrity, respect for human rights and the rule of law. States are required to ensure minimum standards of good governance and democracy and support each other in such efforts. The NEPAD initiative also includes a mechanism for peer review. The ECGI stipulates reforms in economic policy and public fi nance to ensure effective investments and the promotion of corporate governance.

Critical Perspectives

Critics have pointed out that the World Bank put forward the agenda of good governance to cover up the failure of its own programmes in Africa. The idea that the problems of governance were responsible for the continuing crisis, especially in Sub-Saharan Africa, provided the World Bank with an easy way out of owning its responsibility. A less uncharitable view is that the World Bank recognised the need for a fresh look at what was going wrong. In his ‘Foreword’ to the study Sub-Saharan Africa (World Bank 1989), Barber B. Conable did admit that there was a need to learn from past experiences and mistakes. Later, in Governance and Development (World Bank 1992) it is claimed that, while the projects the World Bank fi nances may be technically sound, they fail to deliver due to the quality of governance. Efforts to encourage market-led growth do not succeed in an environment where investors are uncertain about future government actions. This is an admission of the failure of the belief that eco-nomic actions alone can solve developmental problems.

The issue is not just of practical lessons. In an article on uses and abuses of the concept of governance, Cynthia


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Hewitt de Alcantara (1998) points out that by giving the concept of governance an important place, international lending institutions could escape from the intellectual and practical dead-end that they were faced with by their extreme reliance on free market ideals which had de-generated into economism. Demands were made upon borrowing countries crippled with debts and in need of capital to progressively liberalise their internal markets and to remove barriers to free trade. It was believed that the market would solve all problems once it was freed from political distortions.

When this did not happen, the need arose to look at public institutions. The concept of governance proved use-ful at this point for internal fi nancial institutions and the donor community in general. It allowed for the retreat from economism and for the consideration of important social and political issues relevant for economic development. Moreover, it allowed for such a consideration in a rather technical manner. This was important to ensure because organisations such as the World Bank and the IMF have no mandate to involve themselves with political issues. It was also important to avoid giving the impression that they were intervening in internal political affairs of sovereign states. The discovery of institutional elements in market reforms led to a concern for good governance to make the neo-liberal economic programme more effi cient. A close look at the programmes supported by the World Bank under the heading ‘good governance’ shows that they are meant to shrink the state and make it more effi cient and at the same time shift the balance of power in favour of private individuals and groups.


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One of the criticisms that this has led to is that the World Bank suffers from the technicist fallacy in believing that management of development is essentially a technical matter. Development cannot be conceived independent of politics, nor can good governance be defi ned simply in administrative or managerial terms. To do so is to have a naïve understanding of a complex process (Leftwich 1993). Further, it has been argued that, while the notion of governance allows for the possibility of connecting the spheres of politics and administration, the manner in which funding organisations use the term involves a certain ‘depoliticisation of political processes’ (Doornbos 2001: 95).

Others have seen more than naivety in the approach of the World Bank. In a strong critique of the approach of the World Bank, D. Bandopadhayay (1996) sees the manner in which good governance has been presented by donor agencies to seek changes in the systems of governance in the Third World as nothing short of recolonialisation. He fi nds fault with the way in which forms of government are overlooked to clear the way for funding strategic allies and authoritarian regimes. He also fi nds fault with the manner in which transnational corporations are left out of the effort to bring goodness in their governance. To talk about good governance, he argues, means to bring about goodness in all the three sectors that are involved, government, civil society, and the corporate sector, including transnational corporations.

Specifi cally, he is against liberalisation that opens the economy of a Third World nation to the avarice of trans-national corporations. This critique is taken forward by


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Guhan (1998). He argues that the World Bank is less inter-ested in an open polity than in an open economy. Liberal democracy in the approach of the World Bank has an instrumental and not intrinsic value. The criticism then ofthe World Bank is that it has not chosen to take a clear stand in favour of democratic societies against authoritarian regimes. Of primary importance for the World Bank is the extent to which a government facilitates the functioning of the market. Specifi cally, the World Bank is criticised for a conception of good governance that is ‘narrowly techno-economic’. The World Bank deludes itself and others by considering that its conception of the state is ‘politics-free’, for the type of the state that it advocates is as much a matter of politics as of economics. Second, it is not clear how useful the prescriptions of the World Bank for liberalisation and related issues are in reality, as the evidence that has accumulated on the effi cacy of the prescriptions of the World Bank are far from conclusive. Third, it needs to be kept in mind that the World Bank is not a neutral player. Apart from persuasion, it enjoys considerable leverage through its lending operations. Fourth, its expectation from the state is riddled with paradox in so far as a state that is expected to match its role to its capabilities is also expected to improve its capabilities for reinvigorating public institutions. In short, concludes Guhan, there is a real danger that the debate on governance will be marginalised due to the narrow and prejudiced framework set for it by the World Bank.

We need to consider now a criticism that is concerned with the manner in which the World Bank and the IMF function. It has been pointed out that these organisations


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need to apply to themselves the standards of transparency, accountability and participation that they prescribe to others. They have undertaken some reforms in this re-spect, but they need to change further. One of the areas of concern is the voting structure of these organisations. They need to ask themselves how far they are able to give genuine stakes to all members, including developing countries. Apart from the voting structure, there are other reforms that are likely to improve their governance, in-cluding with respect to the role of the Executive Board and the diversity of approaches represented in their staff. It has been noted that their research directions and results have not been immune to the infl uence of large share-holders. Thus, there are good reasons, practical as well as related to principles, for these organisations to attend to their governance for the sake of improving their credibility in a changing world (Woods 2000).

The critique of the World Bank and the IMF that has received the greatest attention has been that developed by Joseph E. Stiglitz (2002). In his Globalization and Its Discontents, he has criticized the World Bank, the World Trade Organization (WTO), and particularly the IMF, for some of the problems of globalisation and suggested that for managing globalisation well these international institutions need to be reformed. They have as of now served industrialised countries––rather some particular interests within these countries, than the interests of the developing world. In a chapter devoted to the East Asia crisis, he pointedly blames the policies of the IMF for the problems in that part of the world and indeed for bringing the world to the verge of a global meltdown. In comparing


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the performance of China and Poland with that of Russia, he argues that the success of these countries as against the failure of Russia can be attributed to their not following IMF prescriptions. One attribute of the successful cases is that there was no ‘cookie-cutter’ approach, lacking in adaptability, that was followed.

Regarding the United Nations, Thomas G. Weiss (2000) has argued that the contribution of the world body has been to correct the euphoria associated with the Washington Consensus and unquestioning faith in the normative principles of neo-liberalism. It has tried tomove the debate from dismantling the state and jettisoning state institutions to improving and reforming demo-cratic institutions. The UNDP in particular has shown that we need to move away from traditional public sector management and address issues of democracy and human rights. Concretely, through the annual Human Development Report (HDR) an attempt has been made to show how the people of the world, especially poor, live. The contribution of the human development index (HDI) has been to point out that human progress cannot be measured just in terms of per capita income.

Analytical Issues

Why has the term ‘governance’ become popular even outside the donor community? Alcantara’s (1998) answer to the question deserves to be noted. She writes that the term governance serves different people in different ways. Thus, those who want to see a reduced role for the state


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fi nd it convenient to shift from government to governance. The reform of the state can thus be argued in a rather technical manner without giving the impression that a few basic political questions are being asked. On the other hand, those who are not interested in such an agenda fi nd the term useful to highlight the role that other agencies can play in areas where the state cannot play a leading role. In this perspective, voluntary organisations can play a leading role in many areas, including in improving the social base of democracy. In short, the concept of gov-ernance, like other concepts in the debate on development, serves different and at times contradictory ends. Martin Doornbos (2001) has pointed out that the term is elastic, rich in vagueness, and is more likely to serve as a ‘fl exible carrier’ to convey varying combinations of messages.

Indeed, this has happened already. A study of Malaysia and Singapore by Surain Subramaniam (2001) is instructive here. In Singapore, it has been shown, the debate is con-trolled and promoted by the government which sees its achievement in the fi eld of good governance as a justi-fi cation for the continuance of a strong government with authoritarian characteristics and for resisting demands for more democratic reforms. The government highlights the following elements of good governance: (a) an accountable and transparent government, (b) a government that takes decisions that will benefi t the country and its people over the long term and (c) social justice which provides for equal opportunities for all, irrespective of race and religion. Rather than confronting critics directly the gov-ernment changes the defi nition of governance to suit its political preferences.


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The good governance debate in Malaysia, on the other hand, is important only in the context of the pressure on the government to introduce democratic reforms. The formulation of policies concerning good governance by the Malaysian government has been a response to the pressure from the opposition. It has also responded to the criticism of its semi-authoritarian political system from outside. The Malaysian government has responded to criticism in three ways: (a) by trying to reduce the sting of criticism and adopting good governance as an objective of its offi cial policy, (b) by trying to argue that indicators of good governance in Malaysia are much better than those cited by its critics, and fi nally (c) when it becomes clear that criticism cannot be defl ected by the fi rst two methods, by actually trying to address the relevant issues and improving governance. Even then, the author concludes, it is still too premature to presume that in Malaysia there will be sustained democratic reforms. The prospect of change towards a more liberal democratic system in Singapore seems even less.

If the term governance is elastic and that explains its popularity, this elasticity itself is likely to lead to its de-creased importance. Doornbos (2001) already sees its decline, for he thinks the notion of governance is getting reduced to being just a fi gure of speech that has no im-portance. Several commentators have pointed out how diffi cult it is to defi ne the concept precisely.

One of the diffi culties that needs to be faced clearly is the manner in which the concept of governance has come to carry an important evaluating feature. If it meant just the action or manner of governing, then it would suffi ce to describe how the task of governance was carried out in a


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society or by any other social group. But this is clearly not expected, for we are concerned with governance that can be evaluated as good. Even the World Bank defi nition is not free from evaluation, for it brings into consideration the management of the resources of a country for devel-opment. Now, development as a goal itself carries with it an evaluative aspect. It is thus important to know what constitutes or does not constitute development and whether it is desired at all. Second, even if consensus is achieved on these points, it remains open to decide what will qualify as sound development management. This is not just a matter of choosing the right means for achieving the stated objective. All the means at our disposal carry their own costs. It is important to know what costs are acceptable or not to a society or any other social group under discussion. Though it may not be uncommon to assert that a person needs an object at any cost, a close look at the situation is likely to show that what is meant is a range of costs, not all conceivable costs. The World Bank has chosen to defi ne the problem in managerial terms, but this does not take away the task of evaluation. If governance or good governance is supposed to serve a particular purpose, then we need to be clear about that purpose. For the World Bank, it is development. It has already been seen how the UNDP discussion has shown that human progress cannot be measured just in terms of per capita income. The concept of ‘humane’ governance associated with the name of Mahbub ul Haq is relevant here. For him, the critical test of every action is the manner in which it meets the genuine aspirations of the people (Haq 1999: 29). This brings to mind Gandhi’s simple principle. ‘Whenever you are in doubt’, said Gandhi, ‘ask


21

yourself whether the step you are about to take is going to be of any use to the poorest man you have seen’ (Iyer 1993: 418).

Thus, there are evaluations involved in any discussion of good governance. These evaluations, as Mohit Bhattacharya (1998) has shown, take us towards many shades of poli-tical philosophy that have concerned themselves with the question of what constitutes good government. The question of what constitutes good government is a poli-tical question in its broadest sense. In failing to raise this question, the World Bank does not succeed in de-politicising political processes but creates a nebulous domain of what may be called here politics without poli-tics, a domain made immune from the examination of critical assumptions. One implication of unexamined as-sumptions is that it becomes possible to present a par-ticular approach based on certain evaluations, even if they are made implicitly, as of universal signifi cance. Tim Plumptre and John Graham (1999) indicate the problem of applying attributes of good governance to different situations. Different societies value outcomes differently. Thus, if Western cultures value effi ciency, other cultures may value harmony more. While individual rights may be important in some cultures, others may emphasise communal obligations. Similarly, some cultures may seek economic development as their primary goal in contrast to others who may give greater importance to cultural richness. Who can claim that to seek effi ciency is better than to seek harmony?

The matter does not rest with values but involves means as well. What may work or be desired in one society may not work in others. Their situations may be very different.


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There are many examples of how prescriptions given by an agency such as the World Bank have not produced the right results. Alcantara (1998) has reported that in many Latin American countries burdened with pro-blems of recurring economic crises the demand for good governance has been expressed by many persons re-presenting civil society in terms of political participation, reactivation of local economies, and the protection of dis-advantaged groups. This runs counter to the immediate requirement of economic stability as defi ned by private investors and offi cial donors. In view of these confl icting pressures, a more limited task of public sector reforms has been attempted. Latin American bureaucracies have as a result been subjected to rounds of restructuring in many ways. While some successes have taken place, there have been reports of reforms having weakened effi ciency and morale. This makes it diffi cult at least in the short run for governments to carry on with the routine task of administration. A case in point is a study of government reform in Thailand. Bidhya Bowornwathana (2000) exam-ines it and concludes that it has not been of much benefi t for the Thai people. This is for many reasons. Two of the important reasons are that (a) reformers assume that they can take over ready reform packages and use them for the Thai public sector and (b) they look upon reform as a managerial task rather than a political one. In the meetings of the reform commission, for example, there is much discussion on how to carry out a particular reform rather than who stands to gain or lose when it is carried out. The managerial perspective makes it easy to overlook the complex realities of the country.


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If evaluations are involved and if good governance, like good life, does not lend itself to a normatively neutral treatment, how are these evaluations to be made? Gandhi’s principle, though clear, is not easy to apply. A less chal-lenging approach, called ‘refl ective evaluation’, has been suggested by Surendra Munshi (2004: 48). Refl ective evaluation is ‘the principle of thinking through one’s value position and practice as a social actor’. It should pro-vide the middle ground between subjective evaluations and excessive objectivism. While conventional evaluation brings in the criteria of evaluation from outside, it is the consensus of those directly involved that is important for refl ective evaluation. This consensus, to be genuine, should be arrived at freely, independent of an imposition such as the will of a dictator.

Munshi considers the issue of good governance in the context of democracy, bureaucracy and industry. Thinking through democracy, it becomes clear that the indirect mode of democracy gives rise to politicians who are expected to represent the people and to govern in the name of the people. Modern democracies operate with bureaucracies which require bureaucrats to function in accordance with specifi c rules. Thus, representatives are expected to represent the people and bureaucrats are expected to function in a bureaucracy bound by rules. When representatives do not represent the people and bureaucrats operate outside rules, deviations take place. Looking similarly at industry, it plainly refers to diligence, useful work, and different branches of trade or manufacture taken as a whole. Useful work is supposed to contribute to the material welfare of society. A new society


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has come into existence after the Industrial Revolution that marked the introduction of mass production based on technological innovations. This new society, known as industrial society, has seen in the recent past the emergence of powerful multinational corporations. Critical questions can be asked about our present situation. We may ask whether democracies as they are practised today operate according to the principle of representation. We may also ask whether industrial society as it exists today has run up against the limit of development. Further, we may ask whether democracy and industrial society in their present forms go together. These questions may make the issue of choice diffi cult. Yet, for those who choose a social for-mation that is both industrial and democratic, the values embedded in their choice and the implications of the choice can be shown by refl ective evaluation. Broadly, it may be argued that this choice signifi es the material welfare of society along with individual rights, and the public interest.

Based on these considerations and with the full aware-ness that a set of different considerations may lead to a different result, Munshi provides a defi nition of good gov-ernance. He prefers to arrive at it after an analysis rather than begin with it in the form of a subjective declaration of preference.

Good governance signifi es a participative manner of governing that functions in a responsible, accountable, and transparent manner based on the principles of effi ciency, legitimacy, and consensus for the purpose of promoting the rights of individual citizens and the public interest, thus indicating the existence


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of political will for ensuring the material welfare of society and sustainable development with social justice. (Munshi 2004: 51–52)

It is to be noted that good governance involves con-siderations of process, persons, principles and purpose. All of these considerations have to be taken care of in order to arrive at an acceptable defi nition of good governance.

2

The Role of the State

The debate on good governance inevitably leads to ques-tions about the role of the state. It has been argued that the state is in crisis today and its future is uncertain. Is there going to be a place for the state as we know in the emerging world? Is the state going to wither away in a scenario very different from the one visualised by radical theory earlier? These are critical questions. Much depends on how the state is able to face the challenges confronting it. While it is wrong to overlook these challenges, it is also wrong to ignore the resilience of the state and the purpose it serves in social life. This chapter opens with a brief con-sideration of the state in Western political thought, for it is useful to see the present debate in the context of a long tradition that is often overlooked. If it is true that the history of humanity has not ended, it is true too that the need for learning from history has also not ended.


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In Western Political Thought

Aristotle writes in his Politics that all communities are established for seeking good but none more than the state––the highest of them all, which aims at seeking the highest good. This highest good is sought through the administration of justice which is the principle of order in a state. Such an administration of justice is needed because man perfected is the best of animals, but man separated from justice is the worst of all. Aristotle’s state was the Greek polis, city-state, which for the Greeks living with the reality of rival cities promised the fulfi lment of man’s nature. This promise was held up to the citizens of a city, for the membership of this community was restricted. The pursuit of the highest good in a community bound by common aim, Aristotle tells us, was the justifi cation for the state. For the Romans, on the other hand, importance shifted to the partnership in law that went beyond the boundaries of a city. For the Romans adherence to the rules of a community formed a people into a state. Thus, two critical ideas about the state found their expressions: the idea of a community bound by the common aim of seeking the highest good and the idea of a community adhering to a shared law.

From these early beginnings, the idea of the state found newer expressions in the history of Western political thought. It is generally believed that Niccolo Machiavelli, a man who lived his life through the brutal politics of his times and who was not known for an idealist view of


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human beings, gave in his The Prince (1513) a meaning to the term ‘state’ that appears modern. The state’s capacity to use force is the decisive consideration for him. It was left to Jean Bodin to bring in through the legal route the consideration of sovereignty in the discussion. Sovereignty for him is the distinguishing mark of the state. A state has sovereignty so long as it retains the right to make and change laws. Later, Thomas Hobbes gave full expression to the idea of sovereignty in Leviathan (1651). No power on earth, for Hobbes, compares with the sovereignty that the state exercises over its territory. Given his under-standing of the nature of man, his justifi cation for the obedience to the sovereignty of the state is that only through it individual human beings can live together in a peaceful manner. John Locke made the state less severe. He sees the state serving the purpose of the public good. If the government fails to promote the public good then it loses any claim to the consent of the ruled. Jean-Jacques Rousseau had a different view of the state of nature in comparison with that of Hobbes. For him, man who was born free could regain his freedom if united by a general will. The rights that he would gain by his social contract would be enforced by the collective force of all. Man could, according to Rousseau, be forced to be free. The idea of social contract that Hobbes, Locke and Rousseau shared in some ways could lead due to differences among them to different outcomes, from the support of absolutism as in Hobbes to the idea of an ideal republic as in Rousseau. It was Immanuel Kant who extended the idea of republic in his argument. The idea of republic is necessary for Kant in his quest for perpetual peace as his cosmopolitan ideal.


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Closer to the reality of his times, the idea of the state in the service of all found its critique in Karl Marx. For Marx, the state is an instrument of class exploitation, an instrument based on the use of force in the interest of the ruling class of capitalists, though not without manufacturing consent through ideology. For Max Weber, the state successfully claims ‘the monopoly of the legitimate use of physical force’ within a territory. The legitimacy of modern society, according to Weber, is provided by following adopted legal norms.

The use of force though vital has to be seen in its con-text. Even in Machiavelli’s text, it has been pointed out, there are expressions which show that human beings willingly become subservient to the state due to many reasons, including patriotism. This patriotism assumed great importance with the rise of the nation-state. Weber’s emphasis on force has to be understood in the context of the importance he assigns to legitimacy. As to the purpose served by the state, there seems to be a broad point of convergence on this point. From seeking the highest good as in Greek thought to making it possible to live socially as in Hobbes, the emphasis has been on the possibility of collective social life. If through this collective social life the public good is not served or if the general will of all is not honoured, then the state loses at least in principle its claim of consent and is reduced for survival to the use of just coercive means. This can be precarious. An important issue here is the extent to which the public good is served in reality. Do powerful particular interests signifi cantly subvert general interests in a state? If they do, how do they affect the concerned state? What are the options in such a situation for the state or for that matter against it?


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In concluding this brief overview of the role of the state in Western political thought, it may be said that the concerns expressed from the times of Aristotle and later the Romans to the times of Marx and Weber have recurred in the discussion on the state with each historical period throwing up issues that are relevant to it.

Historical Characteristics of the State

Eric J. Hobsbawm (1996) has drawn attention to histor-ically specifi c characteristics of the state that we experience. This state may be called the sovereign territorial state or the ‘nation-state’. These characteristics differ from the characteristics of older forms of political organisation in Western societies.

First of all, this political entity consists of a territory that is demarcated so that it is clear where the authority of one state ends and where the authority of another state begins. A continuous territory, as against the broken territory, gives the advantage of exercising the authority of a state without any possible interference from another state.

Second, within this territory the sovereignty is exer-cised which means no state other than the concerned state is recognised for the purpose. When a state imposes its authority on another state against its will, as in the case of military conquest, this brings the sovereignty of the conquered state to an end, at least till it is restored or recovered.

Third, within its territory, the state has the monopoly of making or enforcing laws as well as of exercising coercion.


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The exception being situations where a particular state willingly parts with its authority of making or enforcing laws as in the case of the European Union where member-states accept for specifi c purposes the laws of the Union. Similarly, the condition of exercising its authority over all those present on its territory allows for exceptions. A state makes a distinction between its citizens or subjects and citizens or subjects of some other states residing on its territory. The state has the authority of preventing any citizen or subject from leaving its territory, or a person belonging to any other state from entering it.

Fourth, the state exercises its authority over its citizens or subjects directly. When functional differentiations exist, regional or local governments do not replace the authority of the central government. They can only supplement it. Thus, state law has primacy over regional or local law.

Fifth, this direct rule, as against indirect rule, implies certain uniformity in the treatment of the inhabitants. There is in principle no limit to which this uniformity may be imposed, though there are variations in actual practice.

Finally, while it is possible to visualise a state composed of people without political rights, due to the revolutionary experience in the history of the West, most states, at least in principle, were turned into citizen states. This suggests the representative nature of the state with the people providing the source of sovereignty. The defi nition of the people entitled to take part in a form of public participation such as elections expanded over time with the march of democracy. Citizen status means, especially with respect to the treatment by the law, the equality of all citizens.


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From the late 18th to the mid-20th century, Hobsbawm notes, states changed in signifi cant ways. An important development was the extension of their capacities. These were much greater than enjoyed by pre-revolutionary absolute monarchies. Postal services and police forces, for example, could reach all corners of the state territory. With the disarming of the inhabitants, the state monopoly of the use of force was made effective. The functions of the state expanded to include education and social security. And with the requirements of the war, the state played a greater role in the management of national economies. The march of democracy was not without its price. With the democratisation of politics, a new element was introduced. This was the assumption that citizens con-stituted a community united by ethnicity and culture. Each nation, distinct from others, was entitled to form a separate state. Thus, a concept of nation-state arose that went against the idea of ethnic and cultural heterogeneity among inhabitants. The attempt to form homogeneous territories created its own compulsions, ranging from the transfer of populations to genocide.

Recent Challenges

It is interesting to consider the challenges faced by the state that demanded both an active role and its retreat in a changed situation. Joseph E. Stiglitz (2002) recalls that both the World Bank and the International Monetary Fund (IMF) owe their origin to the United Nations Mon-etary and Financial Conference that took place at Bretton


33

Woods, New Hampshire, in 1944. The effort was directed towards establishing a monetary order that could save the world from future economic depressions. The Great Depression of the 1930s was much on the minds of those who assembled at the Conference. The Depression had, among other things, led to a high rate of unemployment. John Maynard Keynes who was later to take active part at Bretton Woods had suggested earlier that, since lack of aggregate demand was responsible for the crisis, the government of a country could stimulate such a demand by its policies. Keynes was concerned about correcting a market failure by a collective action. Since he believed that the fortunes of national economies were linked, he saw the need for global collective action. Stiglitz points out that Keynes, ‘the intellectual godfather of the IMF’, saw the role of the IMF as facilitating the maintenance of global aggregate demand, particularly by putting pres-sures on governments of different countries to maintain full employment. It is ironical that, created with such economic thinking, the IMF is dominated today by ‘market fundamentalists’ who believe in markets, not in governments carrying out corrective actions (p. 196). The dramatic change of the World Bank and the IMF took place in the 1980s when Ronald Reagan and Margaret Thatcher preached free market ideology and these institutions became their ‘missionary institutions’ (p. 13).

Indeed, the IMF is not unaware of this background. In a Working Paper of the IMF, Vito Tanzi (1997) takes a historical view of the economic role of the state. He notes that between 1913 and 1980 there was considerable in-crease in public spending in industrial countries and


34

much expansion in the economic role of governments in all countries. One of the reasons for this was the manner in which Keynesian thinking was used to justify it. The goal was to maximise public employment so that the economy was less prone to market fl uctuations. The other infl uence drew from Marxian thinking. The appearance of the Soviet Union and other socialist states and the manner in which central planning was seen by many intellectuals in the rest of the world created the demand for a ‘mixed’ economy which called for a large government role. In-come redistribution was seen as an important policy objective with demand for public spending on health and education.

There were other infl uences at work as well. The concept of ‘public good’, made popular by Paul Samuelson and Richard Musgrave, required the government of a country to provide many such goods, for it was believed that without government effort there would be an inadequate supply of these goods. Further, the recognition that in the production of some goods positive or negative ‘externalities’ might be created which did not get expressed in the price of these goods meant that this was yet another case of market failure which required government intervention. The government was expected to regulate the price in such a manner that, while the price of producing goods that had desirable externalities could be reduced, the price of producing goods that had undesirable externalities could be increased. The argument about externalities was used for expanding the role of the public sector in diverse areas, especially health and education. In de-veloping countries, moreover, it was believed in the 1950s


35

and 1960s that the government knew best what essential or necessary goods were. While high protection was pro-vided to the domestic production of these goods, other goods, especially those considered luxury goods, were viewed unfavourably. These paternalistic policies are still to be seen. Thus, writes Tanzi, the state moved over the years from supporting the market to replacing it. This led to the realisation in recent years that the growth of state intervention in the market had meant that the state had neglected its own core activities. This neglect in turn had negative impact on the market, for the market required that the state carried out its core activities well. What are these core activities? Tanzi lists the following as core activities: law and order, administration of justice, honest governmental functioning, basic health care and elementary education. There is now a realisation that the state should play a smaller role in the economy. Rather than replacing the market in its allocative role, the state should take actions to make the market function better.

The story of the changing role of the state has to be seen in the context of the idea of the welfare state. Even though there are early indications of welfare measures in Europe, the idea became important after the Great Depression. Not restricted to just welfare measures for the needy, welfare came to be associated with broader social goals, especially of full productive employment. Infl uenced by the writings of Keynes, it was recognised that employment played a key role. While high employment would make funds available through a larger tax base for welfare, it would at the same time reduce the number of persons in need of special provisions of welfare. Against many arguments


36

that have been put forward in favour of welfare, including economic arguments, there has been a general criticism that through welfare measures what is taken away from those who are productive is given away to those who are not similarly productive. This reduces the incentive for productive work. Yet another criticism has been of the manner in which public institutions assigned the task of providing welfare provisions have functioned. If the welfare state meant a more active state which was promoted in Britain by the Labour government that came to power through the dramatic General Elections of 1945, it was also in Britain that the iron hand of Thatcherism upturned the consensus of the post-War Britain in favour of the free market economy. The crisis of the welfare state is often presented as a fi nancial or economic crisis. While this is true and Thatcher used it for her purpose, it also refers, as has been pointed out, to the relations between state and society and includes such relations as between state, society and individual, and also between public, social and private. These are political questions that raise moral issues that need to be reconsidered (Parry 1985).

Faced with the challenge posed by the free market econ-omy that found its ideological expression in Thatcherism, the state fi nds itself in a situation of retreat. Hobsbawm (1996) has identifi ed general trends which affect even the most stable states. One of them is the emergence of supranational forces. They weaken the state in different ways. The creation of an economy dominated by these forces makes it diffi cult for the state to direct its national economy. International competition which makes it dif-fi cult to follow Keynesian policies at the national level


37

reduces the power of the state to regulate employment or wages. The appearance of international banking insti-tutions also undermines states, especially those that are not in a position to negotiate freely, for they pay by having to accept restrictive conditions for securing loans. Moreover, technological changes concerning transport and communication reduce the importance of territorial borders. This means the distinction between permanent and seasonal migration largely loses its relevance. It is possible for individuals to live or work in more than one state and be at the same time in contact with different parts of the world. The other trend that undermines the state has to do with the emergence of what has been called ‘infranational’ forces. The disintegration of socialist states has to be seen in this light. Secessionist movements undermine traditional state powers. Yet another trend that goes against the state is the manner in which inhabitants withdraw citizenship. This is, on the one hand, due to the decline of mobilisation by political parties or labour unions and, on the other hand, due to the rise of the values of ‘consumer individualism’. Since this individualism re-cognises only consumption or advantage at the individual level, the state is not identifi ed with the common good. The state is actually criticised when it appears to curtail the freedom of individuals in the pursuit of what they wish for themselves.

Several authors have drawn attention to the fact that the state is getting weakened. Two parallel developments are to be noted here. The increasing domination of the global economy by transnational corporations, some of which have become larger than many nation-states in


38

terms of their reach and fi nancial capacity, is a reality. These corporations are in a position to dictate terms and for countries that need investments to extract the most favourable terms of investment. The threat that is used in negotiations is that if such favourable terms are not offered and a particular state is not in a position to make available investor-friendly policies then the investment will not be made or once made will be moved elsewhere. Given the ease of capital mobility that globalisation makes possible, such threats are not empty. Added to this problem for the state is the problem that, while the nation-state is bound by its territory, these transnational corporations are not. They operate in multiple locations and as a result are in a position to make their strategic plans beyond the boundaries of a nation-state; indeed the larger ones do it globally. Thus, the nation-state operates in a changed economic environment where its capacity to make policy impact is restricted. The other development that deserves attention is the manner in which the state has failed to deliver with respect to the expectations from it. Civil society organisations have come up everywhere in such a manner that, it has been pointed out, a veritable ‘global associational revolution’ seems to be underway. They seem to have appeared as if providing a ‘middle way’ between the sole reliance on the market and that on the state for meeting the pressing demand that neither the market not the state is able to meet (Bhaduri and Nayyar 1996; Salamon and Helmut 2002).

Thus, among the challenges that the state faces, quite apart from the pressure put by lending organisations such as the World Bank and the IMF on states in the Third


39

World seeking loans, there is the challenge of an ideology such as Thatcherism which believed in letting the market alone generally free from governmental interference or at most with minimal such interference. The other challenge comes from operating in an economic environment where national boundaries are losing meaning and transnational corporations are able to operate in a manner that re-duces the capacity of the state to regulate them. While secessionist movements weaken the state, the withdrawal of the citizens from effective participation in the polity reduces its legitimacy. Civil society organisations do not replace the state but often show the extent to which the state has failed to deliver.

Is laissez-faire, as some believe, one of the ways to handle the challenges faced by the state? Hobsbawm (1996) rejects this possibility. He reminds us that laissez-faire liberalism of the 19th century did not oppose the state itself but some state activities. The market could not function without guarantees by the state regarding law and security and the functioning of contracts. Attempts to implement free market policies since 1980 have shown their limitations, just as the Soviet experiment has shown how exclusive dependence on state power do not work. Indeed, if the documents originating from the World Bank and IMF on good governance are examined closely, right from 1989 when the study of Sub-Saharan Africa was published, there has been an emphasis on public institutions. The infl uence of the United Nations and Stiglitz who acted as the chief economist of the World Bank during a critical period, as Linda Weiss (1999) has argued, is visible in the World Development Report that


40

the World Bank brought out in 1997 under the title, The State in a Changing World. The report recognises that the pre-World War II expansion of the size and scope of governments was driven among other reasons by the need to address the problems created by the Great Depression. The post-War period saw further expansion as states ex-panded their activities in the direction of the welfare state. Recent dramatic changes in the global economy demand that we rethink the role of the state. The report goes on to observe: ‘An effective state is vital for the provision of the goods and services––and the rules and institutions––that allow markets to fl ourish and people to lead healthier, happier lives. Without it, sustainable development, both economic and social, is impossible’ (World Bank 1997: 10). Some of the recommendations that are made such as bringing the state closer to the people and giving people a voice could very well have been made in a United Na-tions Development Programme (UNDP) document. The difference between Hobsbawm and the World Bank lies in the fact that, while for Hobsbawm the redistributive function of the state is critical, for the World Bank it is important to ensure that the state is effective as ‘a partner, catalyst, and facilitator’ so that markets may fl ourish.

Could the issue be of a strong state that is so to speak intervention-happy? It is instructive to read here the paper, ‘State Power and the Asian Crisis’ by Weiss (1999). Against the ‘offi cial’ view of the crisis that blames the in-terventionist state for bringing the economies down by distorting market forces, she develops the thesis that it was in general the relative weakness of state capacity in the countries involved that made their economies prone to speculative investment. When this weakness is seen


41

together with the relative strength of the state power of the United States, then we realise how the United States through its independent action as well as through the action of the IMF gave the fi nancial crisis an unusually severe and protracted form. She refers to a widely pub-licised statement of Deputy Treasury Secretary Lawrence Summers who is reported to have said in February 1998 that ‘the IMF has done more to promote America’s trade and investment agenda in Korea than 30 years of bilateral trade talks’ (Weiss 1999: 333).

Moreover, there is no reason to assume that a state that believes in intervention (a strong state in this sense) may not at the same time turn out to be a soft state. It is good to recall what Gunnar Myrdal (1968) said more than four decades ago. In his Asian Drama: An Inquiry into the Poverty of Nations, he fi nds the state of this region re-luctant to implement policies for the removal of poverty due to defi ciencies in government, social and economic inequalities and vested interests in the status quo. It is this reluctance that characterises a state as a soft state for him. Similarly, commenting on the failures of independent India, Jean Dreze and Amartya Sen (1996: 8) have argued that to put the blame on the insuffi cient development of market incentives is inadequate. The Indian state has indeed shown ‘overactivity’ in some fi elds accompanied by ‘underactivity’ in others.

Should the state be made hollow? The term, the hol-low state, has been used to refer to a situation where a government chooses as a matter of policy to contract out the delivery of public services to, non-profi t agencies or for-profi t fi rms, while retaining for itself just an inte-grative function, involving negotiating, monitoring and


42

evaluating contracts. Generally, in a less extreme form, it refers to a government agency relying on others for jointly delivering public services. This is the manner in which the state is supposed to move from bureaucratic to managerial. The problem with this approach is that, as has been pointed out, political principals can transfer tasks to their agents but they cannot transfer in the same manner legitimacy or for that matter responsibility. One does not reduce one’s responsibility by paying someone else to per-form a task. Moreover, if agents are chosen by bidding for contracts and if competition requires that bidding is done for each contract, then it is diffi cult to expect that agents will be willing to make long-term investments when they are not confi dent of reaping rewards across many contracts. This creates a situation where effi ciency is required under conditions that may make it diffi cult to achieve (Milward and Brovan 2002). The original idea goes to David Osborne and Ted Gaebler (1992) who popu-larised in their book, Reinventing Government, the idea of countering bureaucratic malaise by bringing management into government. This approach has been criticised on many counts, one of them being that the idea of gov-ernments ‘steering rather than rowing’ is not new but one that goes back to the old controversy of policy versus administration (Williams 2000).

The Indian State since Independence

Jawaharlal Nehru played a signifi cant role in Indian history not only as a nationalist leader in the freedom movement but also as the fi rst Prime Minister of independent India.


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In his famous speech, ‘Tryst with Destiny’, that he de-livered on India gaining independence, he speaks of India awaking to ‘life and freedom’ and thinks it fi tting that on this solemn occasion ‘we take the pledge of dedication to the service of India and a people and to the still larger cause of humanity’. As to the task ahead, he is clear:

To bring freedom and opportunity to the common man, to the peasants and workers of India, to fi ght and end poverty and ignorance and disease, to build up a prosperous, democratic and progressive nation, and to create social, economic and political institutions which will ensure justice and fullness of life to every man and woman. (Nehru 1947)

For the remaining part of his life till 1964 when he was the Prime Minister of India, Nehru tried to build the India of his dream. The building of the welfare state was an important aspect of this effort. In his letter to the Chief Ministers that he wrote in 1953, he reminds them that the difference between the colonial and the national government is that, while the outlook of the colonial government in social and economic affairs was a limited one, confi ned, for example, to some relief if a famine took place, the outlook of the national government is to prevent that type of catastrophic occurrence which took place previously. But to prevent people from starving is not enough. The welfare state that we are building, writes Nehru, must not just give relief when needed but also create opportunities of work. It is important to gener-ate employment, for employment will ensure that the needs of the people are met. The demand that will be created by the greater purchasing power of the people,


44

moreover, will lead to greater production. To ensure that the people have a share and a sense of participation in the welfare state it is important to take care of the problem of mass unemployment (Gopal and Iyengar 2003: 148). Nehru was convinced that major economic problems could not be solved individually. They had to be viewed jointly and located in the context of the economic struc-ture of the country (p. 38). His chosen instrument for the purpose was planning. In his letter of 1953 to the Chief Ministers he talks of the First Five-Year plan that he presented to the Parliament in 1951. He hopes in his letter that this plan will lay the foundation of all future plans. Indeed, during the period of the First Five-Year plan several visionary measures were undertaken. Major irrigation projects were initiated and the idea of setting up advanced institutes of technology formulated, with the fi rst such institute being established in 1951. It was during this time that the idea of setting up steel plants was given shape which led to their actually being set up in the Second Plan which was generally believed to be oriented towards industry.

Nehru believed in the socialist pattern of society, though, it should be noted, the term ‘socialism’ in the Preamble to the Constitution of India was inserted later by Indira Gandhi through a controversial amendment. For building such a society peacefully and democratically planning was required. He clarifi ed that for him there was no confl ict between the private and the public sectors. Both went together. But this did not mean that private en-terprises could be given full and unrestricted scope. The state had to come into the picture in a big way through the instrument of planning and regulation which included


45

all activities, public as well as private. The private sector had to play a role. The guiding principle though had to be what was good from the people’s point of view, not from the point of view of a particular individual or group. Concretely, the socialist pattern of society meant for Nehru that everyone in the country had access to the primary things of life, such as food, clothing, housing, and so on. He wanted to achieve equal opportunity for all the people of the country (p. 156).

Nehru’s legacy is variously assessed in India, though it is not denied that he wanted to build modern India with a vision. His dependence on the bureaucracy that was inherited from the colonial times was a major problem, for this bureaucracy, though successful in many ways, expanded over time and ended up creating what came to be known in India as the ‘licence, control and permit raj’. If dams, steel mills and institutes of technology were created, so were numerous rules and endless red tapes. As far as Nehru’s social agenda is concerned, if famines were prevented, the task of ending ‘poverty and ignorance and disease’ remained unaccomplished. As Dreze and Sen (1996) have shown, not only is India’s performance poor in this respect but India has also been outclassed by many other developing countries. Indeed, with respect to elementary education, India lags behind even the average performance of the poorest countries of the world (pp. 2–3). Sen (1986) has argued elsewhere that it is the lack of political will that has prevented India from performing better.

From the time of Nehru’s death in 1964 to the economic crisis of 1991, there was much that happened in India.


46

Gone was the vision of Nehru about building India. It was replaced by sectional politics where what could be extracted from the state and its patronage became more important than the collective fate of all. Populism became the rhetoric of politics. This was to extract its price later. Only two important developments may be briefl y mentioned here that had impact on the Indian state. First, in 1975, a State of Emergency was declared in India on the recommendation of Indira Gandhi, the then Prime Minister, that lasted for nearly two years. This was the greatest challenge to democracy in India. Second, it became clear during this time that, with the Congress losing its hold on the electorate, coalition politics and power sharing had come to stay in India, creating its own compulsions at different levels.

It is useful here to take note of the economic crisis of 1991. We follow here the account of the crisis given by Amit Bhaduri and Deepak Nayyar (1996). The economic crisis was an external debt crisis when India was close to failing to meet its debt obligations. Two factors pre-cipitated the crisis. Due to the reduced international con-fi dence in India, it became diffi cult to roll over short-term debts. Second, massive net outfl ow took place in the foreign exchange deposits held by non-resident Indians as the crisis became visible. Foreign exchange reserves fell to such levels in January and June 1991 that on both occasions the reserves were inadequate to take care of imports even for a fortnight. Reduced to a desperate condition, the government explored all possibilities of cri-sis management, including of using gold to raise hard currency in the foreign market. As the options for the


47

government ran out, it made arrangements with the IMF and the World Bank for loans to meet its requirements of payment and also to restore access to borrowing abroad from other sources. The arrangements that were made with the IMF and the World Bank were of a standard kind that involved ‘stabilisation’ and ‘structural adjustment’. The recommended measures under the stabilisation pro-gramme were carried out that resulted in, among other things, a substantial devaluation of the rupee in July 1991. Beginning July 1991, the government embarked on re-forms in conformity with the structural adjustment pro-gramme that involved several areas of policy change.

The crisis did not appear all of a sudden, nor was it an outcome of circumstances beyond control. The crisis, as Bhaduri and Nayyar (1996) point out, was due to the failure of policy. With the mounting internal as well as external debt over the years, it was clear that if there was no policy correction the country would run into a debt crisis. Yet, nothing was done by the government except literally at the last minute when the situation went out of control. The government (both Congress and non-Congress) pursued its policy of ‘economic populism’, unmindful of its impact. During the 1980s, resource mobilisation was inadequate as direct tax rates were reduced, while indirect taxes, already high, could not be raised further for the fear that it would prove infl ationary and put a heavy burden on the poor. Against inadequate resource mobilisation, there was substantial increase in public expenditure due to mainly ‘the competitive politics of populism’ and major defence spending. The productivity of expenditure was low, for a large proportion of it was devoted to consumption.


48

This low productivity could not sustain the interest rate at which the government borrowed. The policies in the 1970s and 1980s encouraged imports––added to these was the major import of defence equipment, particularly in the second half of the 1980s, much of which was fi nanced from foreign borrowings. Against these imports, export per-formance and foreign exchange remittances were modest, the earlier boom in such remittances having tapered off.

Economic liberalisation in India that began on a dra-matic note, according to Bhaduri and Nayyar (1996), was not based on strategic considerations. It was a crisis-driven response to a situation where there appeared to be no alternative but to accept externally imposed prescrip-tions. The government turned this necessity into virtue and soon started presenting stabilisation and adjustment programmes as if they arose from its strategy of devel-opment. Be that as it may, it seems obvious among some circles in India to argue that the economic crisis of 1991 showed the shortcomings of Nehru’s approach to devel-opment. The Indian economy is believed to be advancing after the bureaucratic stranglehold has been removed. This seems to confi rm the view that the market should be allowed to function without state intervention. That the matter cannot be resolved in a simple manner by considering the state and the market as alternatives has been shown by an important economic thinking that sees historically complex interaction between state regulation and the growth of the market. Referring to this thinking, Bhaduri and Nayyar (1996: 46) write: ‘The bravado about free market effi ciency and a minimalist State is historically illiterate and lends the wrong perspective to the problems


49

of economic liberalisation. There is no thinking, let alone clarity, about the redefi ned role of the State.’

The Future of the State

Hobsbawm (1996) sees the future of the state as uncertain. While the state has not been replaced by supranational or infranational entities, it is clear that it will have to be supplemented or replaced when it comes to global issues. This does not mean that there will be no need for the state. In so far as even an undemocratic state is more re-sponsive to political pressures than a transnational cor-poration, it can help defend its people against the impact of global forces. The sudden collapse of the state, as recent events have shown, can lead to turmoil in the lives of the people.

In conclusion, we can say that it is not clear how the state will function within its territory and beyond it. Since territorial boundaries are not as signifi cant today as they were before, the state will have to function at multiple levels. The European Union provides a possible organisational form within which for a larger unity the state gives up voluntarily some of its authority without losing its identity. Within its territory, the state will need to build different kinds of partnership. This much can be said based on our recent experiences. But we shall have to go beyond our recent experiences and think innovatively. Newer organ-isational forms will have to be considered to enable the state to function at multiple levels, from the global through the regional to the local level. Michael Zuern


50

(1999) has made one such attempt. Many such attempts will have to be made. It is clear that for functioning at multiple levels the state will need to work together with other entities. Similarly, within its territory, there will be need to think of suitable organisational forms of partner-ship which must include more and more partners and go beyond bipolar categories. It has been observed, for example, that the recent increase in public–private partner-ships all over the world is driven by a desire to bring together best practices from both government and the private sector for better delivery of public services as well as for the creation of infrastructure. Drawing from what we learn from the discussion on good governance, the state will have to function effi ciently for the purpose of sustainable development and social justice. In short, the state has to reinvent itself.

What are the best organisational forms for us in our present situation, having come a long way from the time of the Greek polis, which will ensure that human beings ful-fi l their humanity? How can the highest good be achieved in this situation? These are the questions that we need to ask ourselves. We need to return to these old questions in the context of our reality. The manner in which we answer these radical questions will determine whether the state has any future at all.

3

The Third Way

To understand the recent appearance of the Third Way in the First World, it may be helpful to take a quick view of some of the important events that took place in the last three decades of the previous century. Margaret Thatcher became the Prime Minister of the United Kingdom in 1979 and remained in that position up to 1990 when she was succeeded by John Major who held that position till 1997, giving the country thus nearly two decades of Con-servative rule. On the other side of the Atlantic, Ronald Reagan became the President of the United States in 1981, followed by George Bush in 1989 who stayed in power till 1993. This was a Republican achievement, though not as impressive as that of the Conservatives in Britain. In the European Continent, the Berlin Wall that was a symbol of the Cold War was breached in 1989. In less then a year, the two parts of Germany were unifi ed. The Soviet Union was offi cially dissolved in 1991, thus ending in failure the fi rst effort towards building a communist society that


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lasted more than half a century. With this end and with the Revolutions of 1989 that swept across the Soviet Bloc in Europe, the Second World in the sense of the Soviet Union and its European allies disappeared. The appearance of the Third Way had, as we shall see below, something to do with the disappearance of the Second World. After the end of the Cold War, globalisation became the buzzword. It has come to be associated with the integration of global markets, advances in technology, especially in the domain of communication and the spread of what has been called mass culture. In the inimitable style of Thomas Friedman (2005), the world became fl at in the fi rst instance by the fall of the Berlin Wall and the coming up of Microsoft Windows Operating System.

The Third Way in the First World

It is often claimed that the core principles of the Third Way were fi rst articulated in the New Orleans Declaration issued at the fourth annual conference of the Democratic Leadership Council (DLC) held in March 1990. Bill Clinton, the then Governor of Arkansas, assumed the chairmanship of the Council at this conference. The Council had come into existence some years earlier through the initiative of Al From and some other democrats who believed that the Democratic Party had to modernise itself, faced as it was with the popularity enjoyed by Ronald Reagan. The Declaration itself put together some of the core beliefs of the Democrats who have come to be known as New Democrats. Equal opportunity, not equal outcomes;

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politics of inclusion that assures equal rights and full citizenship to the minorities, not politics of separation; rights as well as responsibilities of citizens— these are some of the beliefs that are clearly expressed. It is further believed that the Democratic Party should expand opportunity, not government, and a growing free market that is regulated in the public interest is the best way to achieve general prosperity. The purpose of social welfare is not to create dependence but to integrate the poor into the economic mainstream of the nation. The belief in such values as, for instance, the need for faith and the importance of family which are seen as values that most Americans share is reiterated (DLC 1990).

In their book, Putting People First: How We Can All Change America, Clinton and Al Gore (1992) lament the fact that during the 1980s Washington forgot the middle class and failed to put the people fi rst.

While the rich cashed in … the forgotten middle-class worked harder for less money and paid more taxes to a government that failed to produce what we need: good jobs in a growing economy, world-class education, affordable healthcare, and safe streets and neighbourhoods. The working poor had the door of opportunity slammed in their face. (p. 5)

Their strategy to correct the situation includes initiating an ambitious economic programme that will create jobs and reward work, while at the same time creating oppor-tunities of learning at different levels, providing affordable quality health care and reforming government. The way to pay for investments and to reduce defi cit is through saving on unnecessary expenditure and making the rich pay their


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fair share of taxes. At the Democratic National Convention at New York on 16 July 1992, Clinton spelt out the kind of country that could be built. He talked of a government that was ‘leaner, not meaner’, a government that expanded ‘opportunity, not bureaucracy’, a government that offered ‘more empowerment and less entitlement’. He called his approach ‘a new covenant’, an agreement between the people and their government that involved a new choice based on old values. This choice, he said, was neither conservative nor liberal, neither Republican nor Demo-cratic (Clinton and Gore 1992: 226). He could have added that this was the Third Way. In his speech, Al Gore too criticised the Republican government for giving the country false choices (Clinton and Gore 1992: 209). The time was ripe for making the right choice.

At the DLC Retreat at Hyde Park in 1996, Clinton re-called how at New Orleans the foundation for the success of the following decade was laid. He recalled how the American people gave him an opportunity to put these ideas into action through the presidential election of 1992 and how these ideas guided him in his offi ce. The critical point, he said, was to avoid making a false choice between the economy and the environment, impoverishment and entitlement, business and labour. The Hyde Park De-claration was supposed to be a statement of principles and the policy agenda for the new century. It reconfi rmed the need for New Democrats to go beyond the old Left-Right debate. Recalling the words of Franklin D. Roosevelt that new conditions make new demands on government, the Hyde Park Declaration tried to go beyond ideological issues. It was asserted that New Democrats believed in

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the Third Way that rejected the old Left-Right debate and affi rmed America’s basic bargain: ‘opportunity for all, responsibility from all, and community of all’. Some of the suggestions that were made included expanding the economy, writing new rules for the global economy, making government functioning more effi cient and hel-ping families to move out of poverty on the basis of work and reciprocal responsibility (DLC 1996).

Across the Atlantic, Tony Blair emerged as the leader of the Labour Party within four years of the New Orleans Declaration. Till his landslide victory in the General Election in 1997 which made him the youngest British Prime Minister of the 20th century, he worked towards modernising the Labour Party and creating an identity for what he called New Labour. Within a year of his being in offi ce, Blair (1998) came out with his pamphlet, The Third Way: New Politics for the New Century. The Third Way is a way between a highly statist brand of social de-mocracy and neo-liberalism that believes in free market philosophy. While the emphasis on enterprise is right, when markets are left unregulated they create threats to social cohesion. The need for new politics, for Blair, is related with the changes that have taken place which make markets increasingly global and call for new skills suitable to new industries. There is a promise of promoting and reconciling the values of equal worth, opportunity for all, responsibility and community (pp. 3–6). Two articles that Blair wrote for The Mirror in the fi rst year of his offi ce show the manner in which the idea of the Third Way was presented to the general public. In the fi rst of these articles, Blair (1997a) refers to the manner in which the


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Party has been modernised and tells his readers that now is the time to modernise the country. There is the need to make tough choices for building the economy with a long-term perspective. Neither the belief that the government can do nothing to help industry nor the belief that it can run companies is going to be useful. Following the Third Way, the government can contribute towards building a creative economy. As far as the welfare state is concerned, it is needed as the Party continues to believe in the values of progress and justice. But these values have to be adapted to the requirements of the modern age. The welfare state of 2000, writes Blair, cannot be the same as the welfare state of 1945. In the second of these articles, Blair (1997b) is concerned with Europe and argues for the relevance of the Third Way for a People’s Europe. The Third Way is described in the following words: ‘not the Tory free-for-all nor the over burdensome regulations demanded by the Old Left. But a New Way focused on education and skills, and which takes account of the need for a fl exible labour market’ (p. 23).

Next year, Blair spoke on the Third Way in the company of Clinton at New York University School of Law. The concept of the Third Way in his view gave a defi nite ex-pression to the rebirth of progressive politics. Referring to major changes going on around the world, he said that they had an impact on the way political ideas were being reassessed. The Third Way was not about the polarities of ideology, big government against the politics of laissez-faire, but about combining progress and justice. It was about constructing ‘a different politics of community for today’s world’ which was relevant not only for Britain but also the rest of the world (Blair and Clinton 1998).

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An important document to come out of Blair’s attempt to see the Third Way in its European context was Europe: The Third Way/Die Neue Mitte that Blair and Gerhard Schroeder, the then Chancellor of Germany, jointly issued on 9 June 1999. The document begins with the familiar recognition of the need to renew the ideas of social de-mocrats while retaining their social values. The dogmas of the Left and the Right have to be left behind. The need of the time is to combine social justice with economic dynamism in a manner that adapts to the changing condition. While the government must support enterprise, it cannot be a substitute for it. Successful entrepreneurs need to be cele-brated and a positive environment needs to be created for entrepreneurial independence and initiative. Moreover, there is a need to reform the public sector by reducing its size and promoting effi ciency in performance. The idea is not to dismantle the welfare state but to modernise it. It is recognised that in much of Europe the rate of un-employment is rather high. The answer to this problem is not to think of state intervention in a manner that was considered earlier. Modern social democrats need to think of not just demand management but also of policies concerning the supply side. They need to think of fl exible labour markets combined with an active state that puts a priority on investment in human capital. ‘We support a market economy’, assert Blair and Schroeder, ‘not a market society’. It is with this perspective that renewed social democracy can create new hope for Europe (Blair and Schroeder 1999).

Several meetings were held when prominent leaders met and discussed the Third Way. On 25 April 1999, Clinton hosted a round table discussion on ‘The Third


58

Way: Progressive Governance for the 21st Century’ in which Blair, Schroeder, Wim Kok, the then Dutch Prime Minister and Massimo D’Alema, the then Italian Prime Minister, took part. A conference was held on the theme in Florence in November 1999, followed by a larger group meeting in Berlin in June 2000. Indeed, increasing media attention had already thrown up stories under headings such as ‘Three for the Third Way’ which explored the similarities between Clinton, Blair and Schroeder.

The debate on the Third Way has not been confi ned to political leaders. It has attracted academic attention as well. The academic whose name is most prominently associated with it is Anthony Giddens. He was close to Blair and his government. Through his writings and his role as a public intellectual, Giddens has tried to give co-herence to the ideas of the Third Way and also tried to popularise them. His book, The Third Way: The Renewal of Social Democracy, has received much attention. It has been translated into many languages. It is to this book that we turn our attention now. Though it has been pointed out that there are some differences in the approaches of Blair and Giddens (Westergaard 1999: 431), they need not concern us here. As Giddens (1998) makes it clear in the Preface of the book, his purpose in writing the book is to contribute to the debate about the future of social democracy. The dissolution of the ‘welfare consensus’, the failure of Marxism and the profound changes that have taken place in the world, including technological changes, have come together and made it necessary to raise the question about the future of social democracy. Giddens believes that social democracy will not only survive but

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also prosper if it is revised thoroughly. His book is a con-tribution to ‘the present-day version of the periodical rethinking that social democrats have had to carry out quite often over the past century’ (p. viii).

Giddens contrasts two distinct political philosophies, classical social democracy and neo-liberalism, even though he recognises that variations exist within each one of them. Neo-liberalism came to be associated recently with Thatcherism or Reaganism. While classical social dem-ocracy or the Old Left believed in pervasive state invol-vement in social and economic life, confi ned role for markets and the comprehensive welfare state that pro-tected citizens from cradle to grave, the New Right be-lieved in minimal government, market fundamentalism and the harmful effects of the welfare state. For classical social democracy, market economy created problems that could be reduced or overcome by an active state. For neo-liberalism, ‘big government’ was to be distrusted and the market to be allowed to function freely. It was the market that could maximise economic progress. While the old Left emphasised collectivism, the new Right believed in economic individualism.

Since social democracy has been associated with social-ism, Giddens writes that the critical question that needs to be asked is about its orientation in a world where there are no alternatives to capitalism. It is here that the Third Way becomes relevant. The phrase has been used since as early as the beginning of the last century. Though it has been popular among leftists, it was also used by right-wing groups in the 1920s. It has meant for social democrats generally a way distinct from American


60

market capitalism and Soviet communism. In its recent appropriation by Clinton and Blair, Third Way politics gives importance to wealth creation without overlooking the role of government in building infrastructure and human resource that is needed in these changing times. For Giddens, Third Way politics is about advancing a new mixed economy. While in the old notion of the mixed economy markets were subordinate to government, the new mixed economy uses the dynamism of markets for the public interest. Giddens sees the need to talk today of positive welfare which is functional for wealth creation. The state thus invests in human capital rather than pro-vides for economic maintenance.

In an interview that Giddens gave after his book was published, he clarifi ed some of the points further. We need to reform the welfare state, he says, because it leaves us with many problems and further it needs to be brought in line with the new world in which we live today. It is not going to help if people receive passively benefi ts that the welfare state offers through its safety net. Positive wel-fare on the contrary equips people to react actively to their problems and also to respond positively to their oppor-tunities. This involves a new kind of contract which recon-ciles personal responsibility and collective care (Giddens 1999). Later, in response to the invitation by Peter Wilby, Editor, New Statesman, Giddens (2004) confi rmed his faith in the ideology of New Labour even in the face of recent reversals. While the First Way, classical social democracy, is now obsolete, the Second Way, Thatcherism or free market fundamentalism, proved disastrous as an alternative. The Third Way, revisionist social democracy,

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tries to create policies that are centre-left responses to the demands made by recent changes. ‘The state’, he writes, ‘was expected earlier to intervene in cases of market failure, but we should recognise now that the state must intervene to make markets effi cient’.

The other academic who deserves space here is Joseph E. Stiglitz. He was close to Clinton and his government. If there was faith earlier in the power of the market and the capacity of the ‘invisible hand’ to solve all problems, Stiglitz (2003a) notes, there is a better awareness today about what markets can achieve and also how they can fail. At the same time, we have become more aware of the limitations of the state action. The problem of ‘red tape’ and ‘regulatory capture’, the capture of the regulator by vested interests, has been discussed. Having recognised these limitations of the market as well as of the state, the Third Way which lies between laissez-faire and socialism tries to fi nd the range of possibilities between these two extremes. Even though there is no single Third Way but rather many third ways, a consensus seems to be emerging about the need for both the market and the state. The requirement of partnership between the private sector and the public sector seems to be better appreciated now. The debate on the Third Way has thrown up issues such as social justice and democratic processes. It has also thrown up the issue of making governments more effi cient. Though extreme choices have been put away, there are differences regarding choices inside the extremes. Thus, it seems that, while for those who worry about social justice the state is important, for those who do not care much about distribution there is greater confi dence in the market.


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Criticism of the Third Way

In the second book on the topic, The Third Way and Its Critics, Giddens (2000b) provides a systematic summary of the criticism that has been brought by selected critics against the Third Way. The Third Way has been criticised on the following points: it is ‘an amorphous political project’; it lapses into a form of conservatism; it accepts the basic framework of neo-liberalism; it is essentially an Anglo-Saxon project; it has no distinctive economic policy; and it has no ecological agenda. These points can be further grouped into three essential points: clarity, conservatism and context. As to clarity, it has been pointed out that it is not clear what the Third Way politicians are against, nor is it clear what it is that they are for. Moreover, the Third Way does not lend itself to a clear statement, made worse by the fact that the term has been used in different ways in the past. To many critics, the content of the Third Way appears elusive. As to conservatism, it has been argued that the Third Way is not a centre-left political perspective but a perspective that has moved towards the Right. It is basically a right-wing philosophy that is presented in an attractive light—Mrs. Thatcher without a hand bag. This is illustrated by the manner in which the advocates of the Third Way defend family values and the market. As to the market, it is seen in the framework of neo-liberalism or worse with no distinctive economic policy. The Third Way takes globalisation as given and pays no attention to the inequality created by the global market. In accepting globalisation, no effective mechanism is suggested for the protection of the environment against big business

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that is driven by the pursuit of profi t, not environmental concerns. As to its context, the recent appropriation of the Third Way has taken place in countries with weakly developed welfare systems. To import its ideas into dif-ferent contexts, especially in societies that have better welfare provisions, will amount to regression in these societies.

To take note individually of some of the critics that Giddens considers is useful. Jeff Faux argues that in the American context New Democrats were just reacting to their failures in presidential elections and they were con-cerned with evolving tactical responses to the Republicans. As a result, the Third Way has no political philosophy at all. It is a compromise in which the Left moved closer to the Right. Stuart Hall calls the Third Way ‘the great moving nowhere show’. Since the Third Way opts for a middle course on everything, Hall argues, it practises ‘politics without adversaries’ and ends up accepting the world as it is rather than changing it radically. The individual is set free from the state to face life and the market alone. Alan Ryan questions the claim of the present Third Way to be a distinct political position. He argues that it emerged fi rst in British politics a century ago under the name New Liberalism. New Liberals believed that the state could not be allowed to play a dominant role in social and economic life, nor could the market be left to its own devices. The Third Way today, as New Liberalism earlier, has no prin-cipled answer to a question such as unemployment. In-deed, claims Ryan, the New Left is far less coherent today than New Liberalism was in its time.

Turning to the Continental response, Giddens notes the criticism of Oskar Lafontaine who is critical of the


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Blair–Schroeder paper on the New Way. In accepting modernisation, Lafontaine says, what is accepted is global free market capitalism. The concept of the ‘modern’ is thus reduced to an economic category, and no attempt is made to raise the important questions of how we should live together and what sort of society we want for ourselves. Not the market but the will of the people expressed through democratic institutions must decide on these important questions. Writing on the Third Way from a Spanish per-spective, Vicenc Navarro, who refused to write a Spanish introduction to Blair’s Third Way pamphlet, argues that the Third Way is precisely the opposite of what is needed by the European Left. In Europe, there is the diversity of social democratic politics, just as there are different forms of conservatism. Most conservative governments in Europe, for instance, have not adopted the neo-liberal approach. Actually, the Third Way, suggests Navarro, has borrowed from Christian Democracy and sprinkled it with what it has taken from the Liberal Party. Giddens pays attention next to what Ralf Dahrendorf has written on the Third Way. For Dahrendorf, the Third Way is an Anglo-Saxon project. It seeks through what he calls ‘the Giddens–Blair concept’ to develop a big idea for our times, and it fails to do so. There is no coherence in what the Third Way believes in, for it offers only an array of responses to cope with the changing world. To the big question that we are confronted with today regarding combining sustainable prosperity with social solidarity within the framework of liberty, it has no suitable answer. There is an appreciation for what the market can do but not equally for what the market fails to do, especially

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with respect to the public sphere. Moreover, Dahrendorf argues, there is an emphasis on community but not on liberty which alone can promise a decent life.

Giddens responds to the criticism against the Third Way by pointing out that it is an endeavour to respond to change. If the doctrines of the traditional Left are repeated unchanged, then they do not address the problems posed by change. ‘New Times’, writes Giddens, ‘and Old Left don’t and can’t belong together’ (2000b: 28). After 1989, there is a need to rethink Left and Right. Social Democrats cannot see any longer the market as the source of all problems. The state can also create problems. It is now further clear that a strong civil society is needed so that both the market and the state can function well. Giddens turns the argument of the critics around and asserts that it is only Third Way politics that can develop an integrated political programme and ensure that the ideas of social justice and solidarity are pursued effectively. Moreover, Third Way politics does not accept globalisation as given but responds to it in a sophisticated manner. The term ‘Third Way’ might have been brought into political discussion in the Anglo-Saxon context but that does not mean it is a distinct Anglo-Saxon project. Some of the policies that New Democrats and New Labour pursued can be rightly claimed to have been developed earlier on the Continent. There is still merit in considering that, in facing neo-liberalism in so to speak in ‘full-blooded form’ under Reagan and Thatcher, it was in the United States and Britain that the need arose to question orthodoxies. The lesson was learnt that it was necessary to undertake a thorough revision, modernising the state, including the


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welfare state, the economy and other domains of society. Modernisation means not just responding to the demand of globalisation in its economic sense but responding to the requirements of ‘a globalising information order’ (p. 32).

The idea of the market being constantly controlled by the state has become archaic now. After the fall of com-munism, it is no longer possible to argue in favour of banishing the market. Markets need to be seen positively, for their contribution goes beyond creating productive effi ciency. Once markets are established and adequately regulated, they contribute to peaceful exchange. They allow, moreover, free choices to be made by consumers, especially in situations of competition between multiple producers. Markets thus create an attitude of responsibility. The decision that an individual takes is not infl uenced by any authority in command. No rival system to the market economy is in place any longer. A major reason for the success of the market is that it allows constant adjustments between all those who are involved, producers as well as consumers. Accepting benefi cial outcomes from the market economy does not mean that neo-liberalism needs to be adopted. Markets need to be regulated, for otherwise they breed commercialism and compromise ethical standards. Markets create social costs that they are not able to meet themselves, nor are they able to nurture the human capital that they require. Unregulated markets, moreover, need to be protected from cyclical fl uctuations which can be limited by external interventions. External agencies are also needed to prevent the principle of competition being subverted by the creation of monopolies. The politics of

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‘bad guys’ that both the Left and the Right have pursued with their own separate lists of those who are considered as ‘adversaries’ has to be left behind, as indeed the idea that the sole dividing line in politics is Left/Right division. To belong to the Left means not to be against the market but to abide by the value of social justice. In this sense, Third Way politics is Left politics. This does not mean though that all political issues can be considered in Left/Right terms. To believe in transcending capitalism or in class confl ict as the principle dimensional political life does not belong to the present world.

In conclusion, Giddens sums up the fundamentals of Third Way politics in the following manner. Recognising that the opposition between Left and Right does not take care of many issues of contemporary politics and accepting the logic of ‘1989 and after’ it gives importance to the poli-tical centre. While it is necessary to have the state, the market and civil society functioning well, they need to be constrained in the interests of social solidarity and social justice. A new social contract is needed which recognises that there cannot be rights without responsibilities. And in the economic sphere, for the creation of ‘a new mixed economy’ a balance needs to be struck between regulation and deregulation. The Third Way recognises that the idea of egalitarianism of outcome needs to be replaced by the idea of maximising equality of opportunity in the interests of a diversifi ed society based upon egalitarian principles. Finally, Third Way politics takes globalisation seriously. There is a need to change existing global institutions and create new ones so that the benefi ts of globalisation may be maximised.


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How far has Giddens met the criticism that the critics of the Third Way have brought against it? Dahrendorf (1999) has pointed out that Giddens, like Blair and Ulrich Beck, manages to defl ect criticism as if wearing oilskin made of a combination of diffi dence and dogmatism. It is clear that the Third Way does not have the kind of answer that he expects regarding his big question mentioned earlier. But it can be said in fairness to the proponents of the Third Way that if they do not have the big answer, nor do others. The question has therefore to be treated as an open question to all of us. Dahrendorf’s other criticism regarding the market is also not quite fair, for, as we have seen, there is a clear awareness of the need for regulated markets right from the time of the New Orleans Declaration. The role of civil society is recognised. The criticism about the disregard of liberty is more serious. Giddens (2000b) treats it as a practical problem as when he asks: when local families are made miserable by racist groups, would a street curfew imposed after certain hours add to the sum of liberties? This question cannot be answered without reference to the agency deciding on the issue of the curfew. How do the affected families themselves see the problem and how do they wish to have the problem treated? The whole point of Dahrendorf’s criticism though is elsewhere. He is asking whether the proponents of the Third Way are in favour of open societies. He fi nds among them an authoritarianism that, combined with public apathy, may undermine liberty. Dahrendorf (1999) raises yet another point that is related to this question about open society. He reads the lesson of ‘1989 and after’ differently. For him, the lesson is that the time of systems has passed. He writes:

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In an open world, there are not just two or three ways but an indefi nite number. The question––how to create wealth and social cohesion in free societies––may be the same everywhere, since it results from largely global conditions. The answers, however, are manifold. There are many capitalisms, not just of the Chicago School of economics; there are many democracies, not just that of Westminster. Diversity is not an optional by product of high culture; it is at the very heart of the world that has abandoned the need for closed, encompassing systems. Even Third Way politics are quite varied. Nobody expects Schroeder to turn Germany into another Britain. The ‘Rhenish’ model of the Third Way will remain quite different from the ‘Anglo-Saxon’ model, and neither will necessarily be a model for others. (pp. 15–16)

Dahrendorf goes on to ask whether unlimited oppor-tunities of the post-1989 world are too diffi cult to live with for Third Way leaders. Do they crave for a certainty that they deny others in the name of taking risk?

Giddens recognises that a number of different Third Ways can be identifi ed. He refers, for instance, to the work of the Basic Values Commission of the German Social De-mocratic Party which identifi ed four different Third Ways in Europe: market-oriented approach of New Labour, market and consensus orientation of the Dutch, reformed welfare state approach in Sweden and the state-led way of the French. But he still prefers to talk about the single broad stream of the Third Way. His assigning primacy to New Democrats and New Labour on the ground of their having experienced neo-liberalism in its ‘full-blooded form’ is not convincing. It is in this context that it becomes clear why Navarro refused to write a Spanish introduction to Blair’s Third Way. The point made by Lafontaine is


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not adequately addressed as well. That the Third Way responds to change is surely not what Lafontaine wants to hear. He is more concerned about the manner in which it responds to this change. Are the changes taking place in the world seen as providing opportunities to think of a basic question such as how we should live together? Reading the critiques of Dahrendorf and Lafontaine together, we may well ask: Are unlimited opportunities provided in the world today being used to think through basic questions about our lives in an open manner? Giddens believes, as noted, that there are no alternatives to capitalism and that no rival system to the market economy is in place any longer. This is no reason why everything is to be treated as given, an invitation to have closed minds. We need to ask: Are we living in open societies with open minds? Is Giddens to be taken seriously with respect to the future of capitalism? It is interesting to read what he said in an interview on this point.

I still tend to think that capitalism has a fi nite life. That although no one can see an alternative to capitalism at the moment, to market society. No one that I know has a coherent alternative. It can’t be the peak of history; it can’t be the end of history. (Giddens 1999)

As to the issue of clarity, much confusion arises when it is believed that there is one middle, just one Third Way. Stiglitz is right to emphasise that there are choices to be made inside the extremes. Indeed much depends on the manner in which these extremes are viewed. If far Left and far Right are included as extremes, we get a different picture. To see the extremes as laissez-faire and socialism

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is different from seeing the extremes as neo-liberalism and classical social democracy, for in the fi rst case social democracy itself appears as the third choice. This is not the project of New Democrats and New Labour. The idea is to revise social democracy and, as Blair clearly saw, to distance it from the Old Left. For Giddens, it is the present version of an ongoing process of revising social democracy. In this respect, it is clear to see the manner in which the experiences in the United States and Britain provided a specifi c context to the project. Both Clinton and Blair came to power after years of political wilderness for their parties. They were faced with an ideology to which Reagan and Thatcher gave their names. If in engaging with it some of its elements were taken over it meant a good election strategy, though not an independent perspective. A move to the centre, moreover, was viewed as being suitable for the electorate which was being cultivated. Clinton clearly addressed ‘the forgotten middle class’, and Blair was seen to be concerned with ‘middle England’. Giddens (1998) has himself admitted that policy shifts became necessary in view of changes in the pattern of political support (p. 20). It goes to the credit of Clinton and Blair that they were pragmatic enough to practise what they preached and made good of their opportunities pragmatically, for, as they saw it, ‘what counts is what works’. This move to reposition their policies in the direction of the centre from the base of a traditional non-centrist party created an inherently fragile political situation which had to be handled deftly. Both Clinton and Blair did it well using all the tools of power at their disposal, including image management (Campbell and Rockman 2001: 43–44).


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Unfortunately, the tools of power are not equally useful in handling a fragile conceptual situation. If the Third Way has become all things to all people, there is an inherent political logic behind it.

It is interesting to note at this stage why the Third Way has not found any signifi cant expression in the French political debate. Ben Clift (2000) has shown that the identifi cation with the centre is not part of the French ap-proach to social democracy. A party of the Left stands to gain nothing by moving in the centrist direction, rather it stands to lose potential allies on the Left where the French Communist Party and the Greens play an important role. Thus, the political strategy has been to unite the Left. For the French, the Third Way of Blair, positioned between old social democracy and neo-liberalism, appears more likely a departure from social democracy, especially in view of its questionable commitment to the egalitarian principle. In Blair’s emphasis on ‘opportunity’ rather than ‘outcome’, what is seen is a lack of commitment to the cause of redistribution. The French Parti Socialiste sees, moreover, that Blair considers globalisation as given, leaving adaptation to it as the only available choice. Parti Socialiste does not accept what it believes to be the neo-liberal orthodoxy that ‘there is no alternative’. In the con-ference on the Third Way that was held in Berlin in June 2000, the French hand was clearly visible. Blair did not attend the Conference, and Lionel Jospin, the then French Prime Minister, made sure that the redistribution of wealth and opportunity found a suitable expression there. In fact, he seemed to have infl uenced Blair and Schroeder when they had asserted earlier that they were interested in the market economy, not market society.

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The relative merit or demerit of Jospin’s stand or that of his party need not concern us here, especially in view of the ascendance of the Union pour un Mouvement Populaire (UMP) and the large unemployment rate in France. The French example shows that the context of a political choice, especially its position in the political spectrum of a country, has an important bearing on it. In neglecting this point, more may be claimed for a particular choice than may be warranted. This has happened with the Third Way which is in the eyes of its critics, as we have noted, basically an Anglo-Saxon project. Moreover, it is seen as a response to a specifi c situation in the United States where it appeared as an electoral strategy. If this strategy worked in the United States and later in Britain because of a largely comparable situation, that does not improve its conceptual status. Nor does it mean that it can work equally well elsewhere. It is this electoral concern which gives the impression that the Third Way provides an array of responses rather than a coherent political programme, much less a political philosophy. What about its claim of going beyond the old Left-Right debate that has been made since the time of the Hyde Park Declaration? Stephen Driver and Luke Martell (2000) have convincingly shown that the Third Way of New Labour does not transcend Old Left and New Right. Left and Right remain important ‘markers’ of our political life. The Third Way does combine them though in new ways. More recently, Martell (2004) has argued that ‘in the era of globalisation and the Third Way, national differences and left and right still matter’ (p. 92).

We need to consider one more critic of the Third Way. In Against the Third Way, Alex Callinicos (2001) has developed a radical critique of it. He essentially sees


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the Third Way of Clinton and Blair not as a challenge to the logic of the market but rather an effort to extend its dominion. They continue the neo-liberal policies of their predecessors. To argue in favour of the limitation of politics in dealing with globalisation is not sustainable, for, he argues, drawing from Manuel Castells that the global economy could not have come into existence if it was not politically constituted. The foundations of globalisation were created by state policies regarding deregulation, liberalisation and privatisation. Similarly, to argue in favour of ‘knowledge economy’ being created just by private entrepreneurs is also not sustainable, for the expansion of scientifi c knowledge was the outcome of massive state investment in research. The Internet is a case in point. It was created by the Defense Advanced Research Projects Agency (DARPA), the Pentagon’s research agency, not by an innovative entrepreneur operating from his garage. Further, Callinicos counters the argument that the changes in ‘knowledge economy’ call for changes in political perspective on the ground that the pattern of ownership of the global economy has not changed in any signifi cant manner. What needs to be recognised therefore is that not globalisation but global capitalism is to be blamed for the negative consequences of globalisation. If the capital were to be effectively regulated at different levels then some of these negative consequences could be avoided. The triumph of free market ideas over Stalinist ‘economic statism’ does not mean that alternatives cannot be explored. What is required is to develop a critique of capitalism that tries to transcend it.

Without engaging with Callinicos’s ideas any further it may be safely concluded that there is scope for much

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thinking on the right way ahead. As Giddens has pointed out, the absence of a coherent alternative does not mean the end of history. The Third Way has so to speak cleared the ground. There is a better awareness today that the state and the market are needed and both can create problems or even fail. It is understood better that for the state to reinvent itself there is a need to go beyond the traditional liberal-conservative divide. There is also a better awareness today that the Third Way raises many questions as it tries to address problems. While we need to be sorting out choices between extremes, we need to think out of the box as well. The days of utopian thinking may be over but perhaps not of utopian realism. As Giddens (1999) says:

Well, I describe my view as utopian realism, because I do think you must have something to aim at. That is, you must have political values which express a desirable form of society. They’re always going to be beyond reality, and in that sense they’re going to be utopian. That’s something you should strive towards. On the other hand, there’s no good in having pure Utopias that have no relationship to reality. So, it needs to be balanced with realism, because you need to have some means of getting to these values.

Relevance of the Third Way to India

In his third book on the topic, The Global Third Way Debate, Giddens (2001) puts together some selected articles on the Third Way that have been published over the past few years and that help ‘fl esh out’ its approach and policy orientations. In his ‘Introduction’, he identifi es three


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major changes in the contemporary world as globalisation, the emergence of the knowledge economy and the rise of individualism. Third Way politics is about how centre-left parties should respond to these changes. There is a need to rethink their stand as the two ways––traditional socialist ideas, radical and reformist, and neo-liberalism or market fundamentalism––have lost their relevance. Key areas of structural reform which a Third Way approach suggests include reforming the state, not dominating either markets or civil society but regulating both, con-structing a new social contract that links the rights and responsibilities, connecting social and economic policy, working for an egalitarian society and establishing an effective framework of ‘responsible capitalism’. He con-siders in this respect a European Social Model (ESM) that would become a reality if countries such as Germany, France and Italy could ‘unfreeze’ themselves and adopt the successful policies that promote fl exible labour markets, entrepreneurialism and investment in technology. Third Way politics has relevance to other parts of the world as well, including developing societies. Parties all over the world have to recognise that the other two ways are not useful any longer.

Even though the book is about the global Third Way, it is clear that for Giddens what is important is a possible European social model that is based on the Anglo-Saxon experience. This experience has relevance for others be-cause it is successful. Compare, for example, the em-ployment ratio of Britain with those of Italy, France and Germany, and the argument becomes clear. Whether such a European social model is possible or even desirable for

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all the nations of Europe need not concern us here. We need not also consider whether such a model if at all it comes into existence will be more due to the effort of a politician such as Nicolas Sarkozy than someone like Lionel Jospin. Such European concerns are not important here. We need to examine the relevance of the Third Way to India in this section.

This issue can be turned around with the examination of the relevance of India for the Third Way. Is the Indian experience relevant in this context? This question needs to be asked because there is no evidence about it having been asked in the book under discussion here. We have already seen in considering the Indian state how for Jawaharlal Nehru it was important to have a state that not only provided relief but created opportunities. He believed in a mixed economy were both the private and the public sector went together, without overlooking the need for planning and regulation which included all activities. His objective was to achieve equal opportunities for the people of the country. This was one choice that was made between the extremes of laissez-faire and socialism. It can therefore be considered a form of Third Way that India adopted under Nehru before the term became popular in the West. In India after Nehru, as we have seen, sectional politics and populism extracted their price and led the country to an economic crisis in 1991 when it became necessary to carry out economic liberalisation under ex-ternally imposed conditions. While the legacy of Nehru and the role of the state are still being discussed in India, a sane opinion that has been forcefully expressed is:


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While the case for economic reform may take good note of the diagnosis that India has too much government interference in some fi elds, it ignores the fact that India also has insuffi cient and ineffective government activity in many other fi elds, including basic education, health care, social security, land reform and the promotion of social deprivation, economic stagnation, and the promotion of social change. This inertia, too, contributes to the persistence of widespread deprivation, economic stagnation, and social inequality. What needs curing is not just ‘too little market’ or ‘too much market’. The expansion of markets is among the instruments that can help to promote human capabilities, and, given the imperative need for rapid elimination of endemic deprivation in India, it would be irresponsible to ignore the opportunity. But much more is involved in freeing the Indian economy from the cage in which it has been confi ned, and many of the relevant tasks call for more––not less––government activity and public action. (Dreze and Sen 1996: 203)

What can this experience teach us? It may perhaps teach us, among other things, that to reduce the issue of development to the state against the market is not help-ful. It may also teach us that an overactive state may be underactive in certain areas. Much depends on political will which determines whether political rhetoric gets translated into action, just as bureaucratic red tape may frustrate the best of intentions. We also learn from the Indian experience that populism is not the best way to prosperity. There is a need for the state, especially in a country like India faced with grave problems of poverty and illiteracy, to behave responsibly and try to rise above sectional politics so that the interests of the people may be served. As far as economic liberalisation is concerned, it may be seen in retrospect as following the middle path between the controls exercised by the state over the

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economy in India in the 1960s and 1970s and the kind of liberalisation that was seen in Latin America and South-East Asia in the 1980s and 1990s.

How is the experience of the Third Way in the West relevant to India? It shows above all that the state and the market are needed, though it must be recognised that both of them can fail or create problems. The debate about the Third Way shows that it is necessary to consider carefully choices that are available and learn from mistakes, one’s own and those of others. These choices have to be made in the context of the specifi c requirement of the country. It also teaches yet again that what comes from the West as ‘global’ may be nothing more than an extrapolation of the particular experience of a nation or a group of nations.

4

The Idea of Civil Society

The idea of civil society has a big international circulation but rather limited conceptual clarity. It provides an illus-tration of the principle that conceptual clarity is needed not only for theoretical reasons but also for practical pur-poses. A concept that suffers from ambiguity can bring confusion in real life. The rediscovery of this idea in dif-ferent contexts on the other hand shows that it responds to different social needs. This makes it important to con-sider the idea of civil society, preferably in different societal contexts.

Civil Society in Different Societal Contexts

Dorota Pietrzyk (2003) considers the concept useful in the context of post-Communist European societies which have adopted the path of liberal democracy after the col-lapse of communism. With the awareness that the idea of


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civil society has deep roots in political thought, she sees the new experience of societies in Eastern and Central Europe where the idea was revived in opposition to the state in the 1980s. Civil society became a major force against state oppression. She sees civil society embracing ‘a dynamic range of assumptions, values and institutions, which are indispensable as a precondition of democracy, such as political, social and civil rights, the rule of law, a public sphere and above all a plurality of associations’ (p. 39). To this understanding she adds the idea of civility as well as the concept of political culture. The problem faced by post-Communist European societies arises from weak civil culture and indifference towards public life. While weak civil culture relates to the experience under the state that allowed no space for it, indifference towards public life relates to a selfi sh attitude in the context of the trans-formation that is taking place at present. The movement from civil society against the state to civil society in co-operation with the democratic state needs to be promoted, for, as she sees it, there is mutuality between democracy and civil society. For a country like Poland, democratic institutions call for strong civil society. Freedom from politics or ‘anti-politics’ cannot ensure freedom. Liberal democracy presupposes participation by citizens in public life. When access to political activity is available only to supporters of an authoritarian regime, freedom from politics may ensure some freedom, but this is not the case when such an activity is required by a different polity that is being built. For Pietrzyk, it is clear that civil society is actualised by a plurality of associations eng-aged in political activity that opposes or cooperates with


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the state depending on whether it is authoritarian or de-mocratic. This civil society is distinct from the market as well as the state, though their interconnections in liberal democracy should not be overlooked. Actually, she sees civil society performing the balancing act between a properly functioning market economy and an adequate state.

This makes sense if we consider the role played by Solidarity, an independent Polish trade union federation, which was formed in 1980. If the events in Central and Eastern Europe brought civil society into discussion all over the world, then it can well be argued that it was Soli-darity that caught the attention of the world the most. It represented the voice against Communist rule not only in Poland but in the entire Eastern Bloc, starting with the strike in Gdansk shipyards in August 1980 which spread quickly and led to victory within days of the start of the strike with Lech Walesa announcing at the gate of the ship-yards that the right to form free and independent trade unions had been won. Solidarity had nearly 10 million members by the time of its fi rst Congress a year later. This was far in excess of the membership that the Communist Party could claim for itself. After years of repression by the state, Solidarity had not only to be legalised but also allowed to participate in partially free elections in 1989. The manner in which the candidates of Solidarity won seats went beyond all predictions. Walesa became the President of Poland in 1990. Within months of his assuming offi ce, the fi rst division of the Red Army left Poland.

Pietrzyk refl ects well the experience of resistance, but she does not examine closely the problem of what has been called ‘the post-Communist letdown’. It is here that


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Bronislaw Geremek (1992) is useful to us. Geremek, a mediaeval historian, was one of the advisers to Walesa from the earliest days of Solidarity. Suffering during the years of repression, he later played an important role in the Polish Parliament. Geremek recognises that the idea of civil society as ‘a programme of resistance to communism’ appeared in Poland during the late 1970s and early 1980s, principally in connection with the movement led by Soli-darity. This movement confronted the powerful state ap-paratus which was outside societal control but also lacking in societal support. The idea was to isolate the apparatus and undermine its legitimacy by non-violent resistance. Suddenly, it became clear that ‘we, the people’ could come together and go beyond isolated individual dissents, forming solidarity based on common beliefs. In the negotiations of 1989, prior to the elections that were held that year, one party went by the name ‘party-governmental’ and the other simply by the name ‘societal’, thus giving recognition to the chasm between the Polish state and Polish society. From 1980 to 1989, Polish civil society was assertive, and this became a model for people living in other European countries under the Communist regime.

The euphoria of success in bringing down this regime gave way to the frustration as the reality of the transition to democracy had to be faced. Growing xenophobia, among other negative emotions, expressed the post-communist letdown. The expectation that the disintegration of com-munism will bring peace in these lands was not met. What went wrong? Geremek wonders whether the hope of creating a civil society was an illusion. He answers in the negative, for he recognises that the very idea of civil


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society was a liberating idea in the oppressive condition of the Communist system. He admits at the same time that the belief that the civil society that was being formed during the period of struggle against communism would prove after its collapse to be a strong buttress for building a democratic order turned out to be illusory. The word ‘citizen’ that was used during the days of resistance as equivalent to the word ‘civic’ refers less to the state and more to ‘one’s membership in an authentic community’, a community expressed by the term, ‘civil society’ (p. 10). The search for such a community proved effective against the totalitarian state but not after its collapse.

Is the idea of civil society to be given up for the task of building democracy? Geremek answers once again in the negative, for he believes that civil society has a role to play in the task, though its internal content has changed. He writes:

The civil society of 1980s was a projection into the future of division that rested upon an awesome emotional unity. The civil society of more than ten years later cannot and should not base itself on emotions, but on the building of carefully nurtured institutions; on the practical realization of ethical values; and on the involvement of the greatest possible numbers of people in public life. The main task now is constructing democratic mechanisms of stability, such as constitutional checks and bal-ances: civil education in the spirit of respect for law: and the encouragement of citizen activism. Civil society does not act in opposition to the democratic state, but cooperates with it. It no longer has to be a kind of ‘parallel polis’, but now can simply be part of the polis. (Geremek 1992: 12)

These words have current relevance. That more than a decade after Geremek’s article was published the need


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persists for taking care of many disturbing trends not only in Poland but also in other societies in Eastern and Central Europe is recognised (Seleny 2007).

Geremek notes at one place that civil society plays an important role in the United States, though the term itself is not popular there. Multiple activities, such as social, cultural and professional, take place in the form of such voluntary organisations as associations or neighbourhood groups which are outside the control of the state. Let us turn to the United States now, not to a movement there but to the publication of an infl uential book. Robert Putnam published Bowling Alone: The Collapse and Revival of American Community in 2000, expanding the argument of an article that he had published under the same name in 1995. Between the publication of the article and the book, he delivered a lecture at the London School of Economics in 1999 to which he gave the title, ‘Civil Disengagement in Contemporary America’. First of all it is the published version of this lecture (Putnam 2001) that we need to consider.

Central to Putnam’s argument is his understanding of social capital which he contrasts with physical and human capital. While physical capital refers to a physical object that makes a person more productive, human capital refers to the capital that one acquires in human terms for improving productivity. His chosen examples are a screwdriver for physical capital and going to school for human capital. Similarly, social capital that refers to so-cial norms and networks built on trust and reciprocity enhances a person’s productivity and at the collective


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level the capacity for effi cient collective action. His main argument is that Americans have dramatically less social capital at present than what they had even 30 years ago. Over this time, he argues, there has been a transformation in the United States: ‘Its citizens have become remarkably less civic, less politically engaged, less socially connected, less trusting and less committed to the common good. At the dawn of the millennium Americans are fast becoming a loose aggregation of disengaged observers, rather than a community of connected participants’ (p. 135). Using the metaphor of bowling, a popular sport, he shows that while the number of people engaging in bowling has increased over the last decade, bowling in teams has declined by 40 per cent. Bowling alone, thus, stands for losing social connections. This is seen in the decline of membership in all kinds of organisations and the decline in different informal social activities such as attending club meetings, going to the church, organising picnics, and so on. Matters have gone so far that it seems people are disengaging with their families. Even married people are not just bowling alone but also eating alone.

The change that has taken place in American civil soci-ety or rather the retreat of Americans from civil society is not easy to explain. A major factor in the decline of civic participation seems to be ‘generational replacement’. Other factors seem to be the growing urban sprawl that disperses locations of different activities, proliferation of two-career families, and, signifi cantly, the advent of the television. There is a powerful correlation between watching the television, especially entertainment channels, and being a ‘civic slug’, though it is not clear whether watching the television makes people less engaged or people who are


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anyway disinclined to be engaged watch the television. Putnam is unhappy about this development, for he sees costs attached to this ‘social capital defi cit’. The task before the Americans therefore is to fi gure out how to reconnect taking into account their current reality.

In his book, Bowling Alone, Putnam (2000) further explains why social capital is important along with phys-ical capital of tools and human capital of training. Social capital is related to ‘civic virtue’ which is at its best when it is embedded in ‘intense network of reciprocal social relations’ (p. 19). While social capital has a private side in the form of ‘networking’ where it benefi ts a person en-gaged in a network in different ways, it has a public side as well. A person stands to gain by living in a community that is connected well. Thus, for example, if the crime rate in a neighbourhood comes down because families living there are collectively vigilant, then all those who live in the neighbourhood stand to gain, even a family that does not actively participate in maintaining vigilance. He in-dicates an important distinction here––the distinction between bonding and bridging. While bonding networks reinforce exclusive identities (such as the membership of an exclusive club), bridging networks are outward looking and include people from diverse backgrounds (such as participation in the civil rights movement). The argument in favour of social capital in any case is an argument for connecting socially and against excessive individualism. It relates to the concern with ‘the breakdown of community’ and ends with a plea for the Americans to reconnect with each other.

In a full chapter devoted to ‘Democracy’, Putnam takes forward his argument. He sides here clearly with


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Alexis de Tocqueville who points out that, if a person sees the connection between his greatest private affair and a small public affair like a proposed road across his estate, he will understand the tie that unites private interests with general interests. Democracy, as John Dewey argues, begins at home and that home is the neighbourly commu-nity. This position, Putnam recognises, goes against an old American suspicion of voluntary associations. James Madison, for example, was critical of ‘mischiefs of faction’ because he felt organised groups could infl uence elected representatives to serve the interests of the few at the cost of the good of the whole.

Putnam’s argument needs to be followed closely. Vol-untary associations and the social network of civil society that are called social capital contribute to democracy in different ways: external, with impact on the larger polity, and internal, affecting the participants themselves. He goes back to Tocqueville on both points. Externally, as Tocqueville shows, a view represented by an association tends to take a clear shape. Diverse minds come together and are directed towards a commonly defi ned goal. In-ternally, associations help in broadening one’s perspective, for, as Tocqueville writes, the heart is enlarged by the reciprocal action of men acting together. Thus, public deliberations not only ensure clearer outcomes but also teach the virtue of public participation. Against the cri-ticism raising doubts about the usefulness of voluntary associations for democracy, Putnam argues that they are not a panacea for all that ails democracy, but, in allowing for active participation, they reduce the danger of hearing isolated opinions of people who have not engaged with


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each other. With the reduction in political participation, there is a real danger of politics becoming less moderate, for fi ndings show that, when people disengage with such participation, those who are left to take decisions are generally people with more extreme views. It is true that large membership groups, such as the American Association of Retired Persons, can represent the interests of their members, but there is a need for a broader view of politics that goes beyond mere advocacy of narrow interests. Advocacy groups, as pointed out by Theda Skocpol, replace interacting groups of the old civic America and compromise the idea of shared citizenship. Moreover, a community rich in civic culture offers the possibility of overcoming selfi shness for the sake of the common good. Thus, studies show that social capital is correlated with tax compliance or contribution to a public good such as public broadcasting. ‘Social capital,’ writes Putnam, ‘the evidence increasingly suggests, strengthens our better, more expansive selves. The performance of our democratic institutions depends in measurable ways upon social capital’ (p. 349).

In considering societal contexts within which discus-sions on civil society have been carried out in the recent past, we have considered so far Poland and the United States. It is to be noted that the decline of civic engagement took place in the United States, going by Putnam’s data, at a time when Poland was becoming alive to the possibility of going beyond individual dissents. As far as Putnam is concerned, the task here is not to subject him to a sys-tematic critique, but, in view of our having drawn from his research to the exclusion of others, it is important to


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indicate briefl y some points of criticism. Putnam equates social capital with civil society in an ambiguous manner. It is important to note that, while social capital primarily refers to socially committed persons, civil society puts primary emphasis on voluntary associations. An addition-al problem in his analysis relates to the manner in which he puts together such diverse forms of social capital as personal networks and large organisations having member-ships across the nation and then assigns primacy to community. He is looking for ‘a community of connected participants’, for he is concerned about ‘the breakdown of community’. He does not consider that the idea of shared citizenship may be impaired, not promoted, by provincial communities. The last point to be mentioned here is that by his assigning normative value to social capital he lends himself to the criticism that social capital can have positive or negative consequences depending on the manner in which it gets used in a specifi c situation. It is not enough to suggest, as he does, that bridging social capital can create broader identities. The primary issue is not whether broader or narrower identities are created. Broader identities may provide bridges not for a positive but for a negative purpose. The critical question here is under what concrete conditions can social capital serve a positive purpose.

Our last case is India. Rajni Kothari brought out in 1988 some of his published and unpublished writings relevant to the issue in a book which carried the title, State against Democracy: In Search of Humane Governance. Kothari, a political scientist, was active in opposing the State of Emer-gency in India that was declared on the recommendation


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of Indira Gandhi, the then Prime Minister, in 1975. The State of Emergency that lasted for nearly two years gave Indira Gandhi sweeping powers which brought Indian democracy to ‘a grinding halt’. This was the fi rst time in independent India that people were confronted with an open authoritarianism when democratic rights were suspended. In the context of this experience, Kothari took the initiative in cooperation with others in forming the activist organisation Lokayan which was honoured with the Right Livelihood Award in 1985. In his speech accepting the award, Kothari explained that Lokayan was an endeavour to bring together movements at the grassroots and new thinking and refl ection so that through a process of ‘dialogue of the people’ issues could be raised that went to the heart of the great divide between the two Indias defi ned by different levels of access to resources and opportunities.

As Kothari (1988) sees it, we live through a crisis of the state. While there is a growing democratic consciousness which gets expressed in major assertions of people’s rights, there is a failing ability of the state to respond to these assertions. The state is not in a position to be an instrument of security or liberation because of many reasons, principally due to confl icting pressures on it from global corporate interests on the one hand and parochial interests on the other. It is the polarisation between the state unable to function any longer in an autonomous manner and the growing demand of the people coming from diverse sources that sets the stage for the decline in moderate modes of dissent. The danger of fi nding solu-tions outside the framework of the state or for that matter


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outside the framework of civil society becomes real in such a situation. It is the awareness of this danger that brings into discussion decentralisation in plural societies like India. A perspective of decentralisation can combine the framework of the state with sensitivity about the plurality of civil society. The central idea, concludes Kothari, is ‘to civilise the state and to make governance more humane than has been the case so far’ (p. iv). Indeed, for Kothari, civil society is ‘a take-off point for humane governance’ (p. 3), concerned as it is with restoring the principle of good life in the conduct of human affairs.

One can read in Kothari a commentary on the Indian experience from the time of Jawaharlal Nehru through Indira Gandhi and her son Rajiv Gandhi to the time when Viswanath Pratap Singh became the 10th Prime Minister of India in 1989. Moving from ‘the erstwhile vision of making the State a condition for civilised existence’ to ‘the erosion of institutional space’ and then to ‘the techno-managerial response’, he covers political styles of three generations of the Nehru-Gandhi family, a family which has played a dominant political role in India. Kothari, the critic, has received his share of criticism for his views. While he has been criticised for an ahistorical view of the state in believing that it could be an instrument of liberation, he has also been criticised for overlooking the central issue of classes and class confl icts. Moreover, it is possible to view the Emergency and its aftermath in a different manner. Andre Beteille (2003) has, for instance, shown that, if the state and public institutions in general are seen as enemies of the common people as tended to be done after the Emergency, then we move in the direction


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of the populist conception of democracy. For Beteille, such a conception, unlike the constitutionalist conception of democracy, undermines legitimate authority and with it the rights of the citizen as an individual.

The Nature of Civil Society

For the Polish experience, as we have seen, a redefi nition of the role as well as the content of civil society is important, depending on whether it operates with a totalitarian or a democratic state. It has also meant a shift from establishing emotional bonds to promoting democracy. Civil society seen as ‘an authentic community’ of a ‘plurality of associa-tions’ engaged in actively resisting communism is differ-ent from civil society that differentiates between ‘citizen’ and ‘civil’ and is engaged with a state building democratic institutions. For the United States as discussed by Putnam, the point of concern is the manner in which Americans are turning into disengaged persons rather than ‘a commu-nity of connected persons’. The threat that Putnam sees is not of totalitarianism but of, among other things, impaired democracy and a reduced sense of shared citizenship. Kothari has experienced the suspension of democratic rights during the State of Emergency in India, and he has drawn his lessons. It is civil society that can help in estab-lishing humane governance.

What is civil society? Pietrzyk’s defi nition, as we have seen, is quite general as it includes values, institutions, associations, civility and political culture. These features of civil society are considered specifi cally keeping in mind


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the requirements of post-communist Poland from her point of view. She is interested in promoting democracy in Poland. Geremek is as interested in promoting democracy in Poland, but he sees more clearly the problems con-fronting Poland after 1989. He does not give us a clear defi nition of civil society. It is clear though he draws from the Enlightenment thought of civil society ‘as a community of free and equal citizens’ (p. 5), just as he relates with the writings of Antonio Gramsci based on the principle of human rights. Drawn from the Polish experience, he mentions that in the understanding of the participants themselves civil society meant not only individual dissent or small groups but also formal organisations such as the trade, farmers’ and students’ union. He also mentions the network of Citizens’ Committees that the activists of Solidarity formed during the period of resistance. Putnam is interested in democracy as well in the context of the United States, and he too operates with a general under-standing of civil society as voluntary associations and social networks. Kothari’s interest in democracy and in civil society that can promote it carries with it a broad coverage. Civil society for him includes social movements and voluntary, self-governing institutions from all walks of life.

In all these views, the idea of community appears in one form or the other. The idea of ‘an authentic community’ as in the Polish experience needs to be considered along with the idea of ‘a community of connected persons’ as in the writings of Putnam on the United States. When Kothari took the Right Livelihood Award for Lokayan, his gratitude for the award was expressed in the name of ‘the


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Lokayan community of activists, scholars and intellectuals’ and other individuals and organisations that had played a supportive role. Yet another point of convergence appears to be ‘non-political politics’. All the authors reviewed here, refl ecting on their national experiences, consider political action for promoting democracy. Even in Putnam’s treat-ment, the value of political participation is noted. It is true that political action is visualised in different ways in different contexts, but the option of ‘anti-politics’ is not favoured. The point to note here is that the idea of politics is not considered in a narrow sense. The idea is to address the common good as Putnam suggests or to restore the principle of good life as Kothari sees it. It is important to be active politically, though not in the sense of a political party, for, as Geremek (1992) notes, ‘there is no greater threat to democracy than indifference and passivity on the part of citizens’ (p. 11). Indeed, Kothari emphasises that new social movements show the need for a redefi nition of the scope of politics (Kothari 1985).

Carolyn Elliott (2003) has argued that, while Putnam looks at American society from the perspective of Tocqueville, the approach adopted in Eastern Europe and the Third World is more in the direction of the Lockean perspective (p. 13). This distinction goes back to the distinction drawn by Charles Taylor (2003) between John Locke and Charles Montesquieu. Their common point of departure is the mediaeval notion of society in the West which, unlike the ancient view, did not defi ne society in political terms (pp. 46–47). Thus, civil society could be differentiated from the state, a distinction that was not made by the ancients. While the Lockean perspective


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in simplest terms presents civil society as a source of resistance to the state, the Tocquevillean perspective going back to Montesquieu gives place to intermediate agencies which play a positive role in the polity. The argument presented by Elliott regarding differences in perspectives in different regions of the world needs to be contested. We have noted how the Polish debate has moved from resistance to cooperation. For India, Kothari has represented the view of the state as the liberator and also as an oppressor.

While the authors considered here do well to indicate the distinction between the state and civil society, they do not serve us well with respect to the distinction between the economy and civil society. The Polish resistance was sensitive to the oppression of the state, but it was not aware of the compulsions of the market economy. This was part of ‘the post-communist letdown’ that was not recognised. Putnam takes the market as given, and Kothari, it has been noted, neglects, critical as he is of economism, the role of productive forces in development (Mohanty 1991: 158). Just as society was defi ned in political terms by the an-cients, society was defi ned in economic terms with the rise of capitalism. In Buergerliche Gesellschaft, Karl Marx sees the material condition of life distinct from the state. The autonomy of this civil society is to be sought in the economic structure of society which provides the real base on which arises the legal and political super-structure, including the state. While Fredrich Hegel considers particular interests to fall within the domain of civil society and the universal interest to be the pro-vince of the state, Marx questions him on this point. For him, it is true that civil society is the battlefi eld of


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private interests, but the state is not above these interests. The state actually represents the common interests not of all but all the individuals of the ruling class. In the words of the Manifesto the Communist Party, ‘the executive of the modern state is but of a committee for managing the common affairs of the whole bourgeoisie’ (Marx 1872: 8). Marx’s idea, as Taylor (2003) has shown regarding the economy having its own laws distinct from the state can be seen in some ways as an elaboration of the basic Lockean idea of a pre-political community with its own motion of economic development. A further transformation of the idea is to be seen in the elevation of the market to a ‘paradigmatic status’, allowing for full freedom in its oper-ation even beyond what was entertained by Adam Smith (pp. 51–61).

Returning to Hegel and Marx, is there any other dif-ference between them on the question of civil society? Krishan Kumar (1993) argues, following John Keane, that Hegel’s concept was richer and more complex than Marx’s, even though Marx claimed to have drawn from Hegel. Civil society, for Hegel, is located between the family and the state. It includes the self-seeking behaviour of the market but is not confi ned to it. It is indeed an arena where modern man learns that as a member of society he must cooperate with others, even for the purpose of serving his interests. It is Marx who expands the economy to make it coterminous with society itself and then dichotomises between the state (the political order) and society (the realm of economic relations), identifying in the realm of economic relations, in the words of Fredrich Engels, ‘the decisive element’. It is in this context that a reference to Alvin Gouldner is relevant here. While being critical


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of Marx’s reductionist concept of civil society, he sees in sociology the ‘third way’ between atomisation of the market and domination of the state. Tocqueville contributed to this classical tradition in sociology in the most remarkable manner. Antonio Gramsci’s ideas can be considered along with his ideas. He too identifi es a domain between economic structure and the state, a domain which he calls civil society. It is here that hegemony is exercised through consent and direction. Unlike Tocqueville, Gramsci sees this domain as one that needs to be radically transformed for the purpose of revolutionary change. Tocqueville and Gramsci seem to show the greatest relevance for our times. Though their differences are basic, it is possible to read them in a complimentary manner. Indeed, it may not be possible to opt for one against the other. The Polish example shows that civil society needs to resist the state, just as it needs to cooperate with it, depending on the situation. If Gramsci was useful to Poland before 1989, it is Tocqueville who may be more useful now in building a democratic society.

This brief discussion on the nature of civil society has consciously taken into consideration civil society in selected societal contexts and examined some thinkers in relation to certain issues arising out of these contexts. It seemed an acceptable way to proceed with a concept that has so many layers that any attempt at a systematic treatment is made diffi cult. The concept of civil society has been used in all possible ways. Even though the dis-cussion here has not highlighted all the complexities, it has hopefully served to indicate some of these, though with an explicit purpose of reducing these as far as possible.


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To pull different strands together, a working defi nition of civil society is proposed by Surendra Munshi (2007):

Civil society refers to that autonomous public space that is between the family or household and the state, excluding the market, where citizens voluntarily associate with each other in promoting what are considered as general interests or at the least such shared interests that are not viewed as going against the interests of all. While civil refers to the behaviour suitable to good citizenship, autonomy suggests the freedom of ideas and action that is valued, especially in relation to the state and political parties concerned with political power and also the private sector that is moved by the considerations of private profi t. Depending on the manner in which the state is seen playing its role, this association may take the form of cooperation or contest or even confl ict with it. Typically, civil society includes such groups as are formally identifi ed as non-governmental or non-profi t organisations as contrasted with governmental or for-profi t organisations. (p. 15)

It should be emphasised that, in defi ning civil society in the manner, Munshi does not suggest that civil society forms an independent sphere of existence. He recognises that even its autonomy can at best be relative autonomy. As Neera Chandhoke (2003) has shown, there are compelling reasons to believe that, while we can conceptualise civil society as a site where people associate in particular ways, civil society and other spheres of social life constitute each other.

Is Civil Society Relevant?

The question refers in the fi rst instance to the concept of civil society itself. Kumar (1993) is critical of excavating


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the concept for putting it to use in current conditions. The concept has been used earlier by thinkers in different ways for different purposes. It will lead to confusion if different ways of using the concept are put together to form a supposedly scientifi c concept for sociological analysis. To retrieve an archaic concept, he warns, will prove to be an arid exercise. In reply to his critics, Kumar (1994) refers to the elasticity of the concept that he fi nds pro-blematic. Civil society has meant many things to many scholars, some of them going against our current under-standing. He once again sees problems in pursuing ‘the seductive but perhaps ultimately specious idea of civil society’ (p. 130). As if multiple layers of meaning assigned to the concept by earlier generations of thinkers was not bad enough, the popularity of the term in recent years has attracted, as Omar Encarnacion (2003) notes, diverse ‘characters’ of all persuasions who have used the term in different ways to suit their different agenda, resulting in confusion regarding even the meaning of civil society.

Apart from conceptual confusion, the question that is now being asked is whether civil society justifi es the euphoria generated about it for solving the problems of the present world, especially after the Cold War. In Kumar’s (1993) understanding, Poland after 1989 is a good example of the potential tyranny of civil society. Classical sociological thinking, especially of Marx, has taught us that ‘society could be as pathological as the state’ (p. 389). This is a lesson that needs to be kept in mind. More concretely, non-governmental organisations (NGOs) have been criticised precisely for promoting the very ills


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that they are meant to alleviate, such as authoritarianism, corruption and lack of accountability (Encarnacion 2003). Through a case study of NGOs in Northern Ghana, Giles Mohan (2002), for instance, comes to the conclusion that the real benefi ciaries of strengthening civil society through external aid had been the local elite. New institutional actors tend to get created as leaders or managers of the voluntary sector corner privileges for themselves and help in further delegitimising the Third World state. When a charitable view is taken of civil society, it is often used as a euphemism to hide deprivation. As people in troubled countries establish neighbourhood organisations or soup kitchens and as foreign aid fl ows into such activities, it will be wrong to overlook that we cannot make a virtue out of survival strategies. No prosperous society can be built upon such desperate attempts to fi ght deprivation in the absence of stable public support (Alcantara 1998). Moreover, some research fi ndings, historical as well as contemporary, raise doubts about the connection between civil society and democracy. Civil society, in short, is not as virtuous as is often assumed (Encarnacion 2003).

Critical though this picture is of civil society, we must recognise that civil society is a major presence in the world today. It is seen that support for civil society initiatives within USAID has grown over the years (Encarnacion 2003: 709). According to the Johns Hopkins Comparative Nonprofi t Sector Project, reporting data relating to 1995, the non-profi t sector, excluding religious congregations, accounted for 1.1 trillion US dollars, employing close to 19 million full-time equivalent workers in 22 countries drawn from Europe, other developed countries and Latin


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America for which the data was collected. If the non-profi t sector in these countries is visualised as a separate national economy, it would be the eighth largest economy in the world. This does not include the work of volunteers, and, if the voluntary effort is included in these countries, it will further boost the number of persons engaged in the sector, taking the number of full-time equivalent em-ployees to 29.6 million (Salamon and Helmut 2002: 335–38). The power of civil society is both enhanced and challenged by the growth of information and com-munication technologies. New technologies provide civil society groups with the tools to disseminate views and coordinate activity both within and across national bor-ders. New technologies at the same time provide increased possibilities for universal access to information as well as new mechanisms for more direct participation in decision-making processes (Amoretti 2007).

The presence of civil society in global governance has increased over time. The emerging role of NGOs, for in-stance, in the United Nations system goes beyond the modest stipulation of Article 71 that the Economic and Social Council may make arrangements for consultations with NGOs. The number on the roster of NGOs with con-sultative status has grown from 41 in 1948 to 1,350 in 1998. With a meeting of the Millennium Forum in 2000, a new landmark in governing better together was reached (Alger 2002). Speaking on the occasion, Kofi Annan, the then Secretary-General, said:

Not only do you bring to life the concept of ‘we, the people’, in whose name our United Nations Charter was written; you bring to us the promise that ‘people power’ can make the Charter work


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for all the world’s peoples in the twenty-fi rst century. In some circles of late, non-governmental organizations have acquired a bad name. Barely had the pepper fog settled over the Seattle protests before NGOs were branded as confrontational or even contrarian, disruptive or even destructive, anti-technology or even anti-progress. Those labels overlook the pioneering role of NGOs on a new range of vital issues, from human rights to the environment, from development to disarmament. We in the United Nations know that during the cycle of world conferences of last decade, it was you who set the pace on many issues. You get that through advocacy and through action; by pressuring governments and by working with governments as partners and implementers. (Annan 2000)

As shown by Annan, there is a need to evaluate civil society objectively. To think that if the state does not deliver civil society can do so lends itself to the possibility of committing a double error. The shortcomings of civil society may be overlooked and at the same time the mistake may be made of seeing the state and civil society as opposite principles. They have to be seen in a balanced manner, even though this may prove challenging, theoretically as well as practically. Civil society is relevant if the need for the balance is kept in mind. In the balance between different spheres of social life moreover depends whether good governance can be realised. Is good governance not after all a participative manner of governing where different modes of partnership are worked out for sus-tainable development with social justice?

5

Beyond National Boundaries

The landscape of governance has been dramatically trans-formed since the early 1990s by the process of glob-alisation. Moving beyond the nation-state, governance in a globalised world involves multiple actors at different levels of decision making—global, national and local. The ever increasing integration of national economies with the global economy has also considerably hastened the process of policy integration at a global level. Domestic social and economic policy no longer refl ects purely national concerns. Policy is infl uenced and in certain cases even dictated by the contours of international treaties and agreements negotiated by multilateral institutions. This globalisation of public policy has opened up numerous possibilities while creating new uncertainties for nation-states. These opportunities and uncertainties also affect individuals who are increasingly caught up in an environ-ment where their future is affected to an unprecedented extent by events and processes unfolding outside the borders of their nation-state.


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Globalisation as a concept is still very poorly understood and responses to it vary widely. Three approaches to the process can be discerned. Some downplay its importance and point to the greater signifi cance of regionalisation as an integrative process. Others argue that national and local institutions are still strong enough to resist any attempt to reform or change them to fi t global patterns. Yet another group sees globalisation not as a novel phenomenon, but as a long standing historical process (Rosamond 2003). All these three approaches allow dealing with challenges of globalisation only partly. They do not provide for responding to all the challenges that are posed by the process. While regionalisation is an important aspect of economic integration, regional institutions are not as signifi cant in the process as global ones. Deepak Nayyar (2006) argues that while national and local institutions in some states may be capable of responding to the chal-lenges of globalisation, most states, particularly those in the developing world, are unable to deal with all its con-sequences. Treating globalisation as part of a historical process of integration also ignores important differences between earlier phases of globalisation and the present one. Unless states develop the capability to meet these challenges, both at the global and the national level, mere reforms at the national level will fail to achieve the objectives of good governance.

The Global Setting

The pace of globalisation has increased because of the interaction of a number of factors. Ali Farazmand (2001)


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argues that the most important impetus to the process has been the saturation of traditional markets and the avail-ability of surplus funds for investment in the hands of large multinational fi rms. This has led them to seek greater trade and investment opportunities abroad as well as support from home governments to encourage and sometimes force through greater liberalisation in countries with re-strictive investment and trade regulations. The process of globalising capital and trade has also been helped by rapid developments on other fronts. The increase in capital fl ows has been made possible by technological changes (instant fund transfers, secure transactions), institutional changes (shift from public ownership to private and joint ownership) and political changes (most notably the col-lapse of communism in Eastern Europe) (Swank 2001). The volumes of both capital and trade fl ows have seen signifi cant increases in recent years. The volume of private capital fl ows to developing countries alone increased to about 620 billion US dollars in 2006 as compared to about 50 billion US dollars at the beginning of the 1980s (Institute of International Finance 2007). Worldwide for-eign direct investment fl ows have also increased quite dramatically, rising from about 134 billion US dollars in 1970 to 1.3 trillion US dollars in 2006 (United Nations Conference on Trade and Development 2007). The total volume of global trade in goods has increased from 579 billion US dollars in 1973 to 11.76 trillion US dollars in 2006 (WTO 2007a). If trade in services is included total world trade stood at 14.47 trillion US dollars in 2006 (WTO 2007b).

It has been argued that the greater mobility of capital and the increase in international trade have shifted the power


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balance in the relationship between private businesses and national governments. While those who owned capital needed government support for investment and profi t when capital was relatively immobile, its increased mobil-ity has meant less dependence on governments for fi nding avenues for profi table investments. Capital shifts around diverse global locations looking for profi table destinations for investment. Governments which seek to increase con-trol over their economy risk losing investments since capital would then fl ow out of their countries into alter-native, more liberal investment environments. This increases the pressure on countries to further liberalise trade and investment policies (Swank 2001).

The reduced role of national governments in eco-nomic policy has not been caused by the liberalisation of trade and capital fl ows alone. It is also a consequence of an increase in global regulation. Two of the most striking features of globalisation have been the increasing number of international agreements that impact domestic rules and regulations and the proliferation of multilateral or-ganisations that negotiate and implement such agreements. It has been noted that these are inevitable consequences of the liberalisation of trade and investment. The liberalised fl ow of trade and investment creates the need for global regulations in multiple trade and investment disciplines, both to reduce costs associated with such trade as well as to resolve disputes. In the area of trade, for example, global agreements on the binding of tariff and non-tariff barriers to trade reduce product costs in export mar-kets and provide a more stable trading environment for fi rms. Such binding of barriers also reduces uncertainties


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associated with rapid changes in trade policy (Trebilcock and Howse 2005). The increase in regulation has not been restricted to areas directly related to trade alone. Inter-national regulation has also increased in trade-related areas such as intellectual property rights (IPRs) protection standards and foreign investment rules. International IPR standards have been justifi ed with the sole objective of preventing the possibility of reduced standards in one country providing an opportunity for fi rms within the country to sell products without paying the necessary roy-alties or fees to those who were otherwise entitled to such payments (Maskus 2000). International standards for for-eign investment regulations have also been negotiated to ensure that domestic regulation did not result in regulations that gave undue protection to domestic fi rms.

There is also increasing pressure to negotiate more international agreements in areas where the negative con-sequences of increasing integration of global economies are most deeply felt. Kym Anderson (2000) has argued that such pressures are bound to increase in areas such as regulation of labour and environmental standards. As global trade and investment fl ows increase there is growing concern that this benefi ts states where the stand-ards of labour and environmental protection are low. Lower standards benefi t fi rms since it reduces cost of production and the price of products. However, it also leads to conditions under which labour is exploited or the sustainability of growth is compromised.

While global regulations are undoubtedly needed and many more are likely to be negotiated, there are major concerns regarding the consequences of these regulations


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that have emerged and which need to be addressed. First, there is increasing criticism of the process by which international agreements are negotiated and adopted. Second, there is concern that multilateral institutions which negotiate agreements that lead to increased econ-omic integration seem oblivious to their negative con-sequences for some countries and regions. Finally, it is argued that those who negotiate global agreements are not held accountable for the consequences of their actions. The legitimacy of global regulation is diminished by the fact that many agreements are negotiated by ‘diplomats, bureaucrats and functional specialists’ often under con-ditions of secrecy. Decision making processes in various international organisations do not make enough infor-mation on proposed agreements available to citizens of its member-states. Not much public debate takes place on issues before decisions are taken. This is a refl ection of the lack of a shared vision and common political culture. Global institutions can establish such processes only when there is a shared vision and a suitable culture is developed (Nanz and Steffek 2004: 317).

As the impact of global agreements on domestic re-gulations increases, questions regarding the impact of these agreements on its member-states are also being raised. Such concerns relate primarily to the fact that many do not seem to benefi t from these agreements which do not encourage sustainable development, especially in the developing world. While globalisation is a multi-dimensional process its economic impact has been the one most directly felt. Those who favour increased globalisation for its economic implications point to the increased opportunities for


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commerce and the creation of new markets for products traditionally sold within national boundaries. Increasing world trade has also brought about global economies of scale and greater global competition and this in turn has led to improvements in production effi ciency. Those who oppose globalisation, however, argue that it is precisely these economic implications of globalisation that are det-rimental to many developing countries. The concern with greater effi ciency at reduced costs sees fi rms either shifting to greater automation or transferring work abroad (outsourcing), thus creating the possibilities of social pro-blems for both developing and developed countries. Greater automation leads to the retrenchment of labour or reduced job creation, and in the case of outsourcing, jobs move to a country where wages are lower, leading to an unhealthy competition among countries to keep these costs low. A study of the impact of trade liberalisation on poverty levels shows that, while the data is ambiguous on whether increased poverty levels can be attributed to trade liberalisation alone, there is evidence to show that the poor in all countries are less able to benefi t from the opportunities created by policy reform. It also points out that, while the negative effects of liberalisation on em-ployment and wages cannot be proved unambiguously in all cases, evidence exists to show that it has happened in certain sectors in different countries. It is important to be aware of the impact of liberalisation on the domestic economy so that measures necessary to protect vulnerable groups are taken (Winters et al. 2003).

The impact of trade liberalisation on poverty levels and wages might be ambiguous, but there is a greater


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unanimity of views on its impact on the sustainability of growth. Greater effi ciency and larger markets lead to overexploitation of scarce natural resources and this very often leads to rapid depletion of natural resources. Environmental experts have argued that globalisation is encouraging exploitation of natural resources and altering the environment in a manner that is unsustainable (Rees 2002). This warning has implications for nations that depend on the export of a single or few natural resources as a link to the global economy. Depletion of resources effectively reduces their ability to benefi t from the eco-nomic consequences of globalisation. Indeed, the very pro-cess of globalisation might increase their marginalisation from the global economy.

The negative impact of global regulation also raises is-sues of accountability. Jan Scholte (2004) points out that norms of accountability followed in domestic governance systems are not applicable in an international setting. In any democracy, those who are elected to govern are accountable to those who have elected them for their actions. While successful governance is rewarded with a renewed mandate for offi ce, electoral setbacks follow failures. When the damage caused by poor governance can be attributed to individuals, penalties such as removal from offi ce or prosecution might follow. International or-ganisations, however, lack such forms of democratic ac-countability. It has been argued that nation-states that are members of such organisations need to ensure greater accountability within international organisations and also be accountable themselves for positions that they take within these organisations. Domestic accountability for


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positions taken in international organisations also becomes relevant in the context of the evidence that liberalisation has different implications for different economies. Three major challenges face governments as they try to address concerns relating to such accountability. First, they need to be accountable domestically for the positions they take on global issues, just as on national issues. Second, they have to operate in a manner that takes into account the interests of all the people who are affected by their ac-tions. Third, they need to be subject to international legal obligations just as their nations are subject to certain obli-gations under international regulations (Slaughter 2004).

Concern relating to the manner in which international organisations negotiate agreements, their lack of account-ability and the negative impact of many of these agreements inevitably raises issues concerning reform. The need for more rapid integration of national economies through in-ternational regulation has to be reconciled with the need to address concerns that have emerged within nation-states about the impact of such regulation. It is here that the role of global institutions becomes signifi cant.

Global Institutions

Global institutions have played a signifi cant role in the glob-alisation process. The impact of multilateral institutions has been felt most signifi cantly in two areas: international trade, including investments, and international fi nance. Inter-national trade and investment regulations began to have


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signifi cant impact on domestic economic policy with the creation of the World Trade Organization (WTO) in 1995. The impact of International Financial Institutions (IFIs) such as the World Bank, the International Monetary Fund (IMF) and the Bank for International Settlements (BIS) was felt most deeply by states that approached them for funding or had to adopt international fi nancial standards that they had developed.

The creation of the WTO in 1995 was a signifi cant event in the history of global institutions. Created as an organisation that would lay down the basic rules of inter-national trade, the agreements that constituted the WTO very soon came to symbolise what was good and what was problematic about international institutions taking decisions with regard to national regulation. WTO agree-ments which laid down international standards for trade regulation ensured that member-states signifi cantly re-duced both tariff and non-tariff barriers to trade between themselves, creating a domestic policy environment that was conducive for foreign trade and investments. Though WTO agreements deal only with matters related to global trade, member-states take on certain obligations with re-gard to domestic regulation in trade and trade-related areas. This is to prevent a situation where domestic policy creates conditions in which goods and services from abroad are prevented from entering domestic markets in order to protect domestic industries. Such policies are not considered to be trade creating and are therefore dis-couraged by WTO agreements. Four major concerns have arisen about WTO agreements and their impact on member-states. First, the agreements are not negotiated


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and adopted through a process where the democratic consent of those affected by the impact of such agreements is obtained. Most governments, particularly those from de-veloping countries which participate in the negotiations process, do not understand the full implications of these agreements. Domestic debate on the impact of such agree-ments is almost non-existent. Second, the agreements are implemented in a manner that negatively affects the functioning of normal democratic processes in member-states. Agreements have to be complied with, not just by national governments which negotiate and approve them but also by regional entities and local governments which may not approve of the agreements. Third, once a member-state joins the WTO it undertakes to abide by all its agreements. Even if there is a subsequent change in government the new government cannot amend its com-mitments under WTO agreements to take care of national concerns, unless such amendments are approved by the entire WTO membership. Since such approvals are often impossible to obtain the only option available for non-implementation is to leave the WTO altogether. Most countries are reluctant to do so for fear of the negative im-plications for its international trade. They are thus forced to remain committed to WTO agreements even when they feel that the agreements are not benefi cial to them. Finally, there is concern regarding the values that the WTO represents. The working of the WTO is seen to suffer from a ‘democratic defi cit’. Negotiations on agreements are conducted solely by government representatives without the participation of stakeholder groups. The process of re-solving disputes between member-states regarding trade


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policies which have important implications for various domestic stakeholder groups are also held behind closed doors (Howse 2003).

The WTO plays a signifi cant role in setting minimum standards not just for trade but, as noted earlier, for trade-related aspects of domestic policy as well. These include such areas as IPRs, investment regulations and health and safety standards. Pressure is building to bring additional areas such as labour laws and environmental regulations under WTO agreements. It has been argued that some of these standards are First World standards made mandatory for Third World countries without any consideration of their impact on or suitability for these countries. IPR and food safety standards increase the cost of products to consumers in poorer countries and those affected by such standards have very little voice in decisions taken regarding such regulation (Busch 2003).

Such concerns also exist with regard to IFIs that play a signifi cant role in the process of globalisation, namely, the IMF, the World Bank and the BIS. As seen earlier in Chapter 1, there is concern about the impact of conditionalities for loans imposed by the World Bank and the IMF on developing countries that accept them. These conditionalities very often stress liberalisation of domestic rules for both trade and investment. In both the World Bank and the IMF, decision-making is based on weighted voting where G7 countries have almost a 40 per cent share of the votes. In the case of BIS which sets international norms relating to bank lending across borders the core membership is again constituted by 10 member-states of the Organization for Economic


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Cooperation and Development (OECD) (Fratianni and Pattison 2001). Though BIS norms are not mandatory for all countries, banks in most countries are forced to accept them because of their reliance on inter-national banks and international fi nancial markets for funds and other inter-bank transactions. Concerns re-lating to IFIs are not restricted to their prescriptions but include their lack of accountability. Jospeh E. Stiglitz (2003b) refers to the inability of the IMF and the World Bank to fi x accountability even though their prescriptions have, more often than not, exacerbated rather than solved economic crises. He argues that this inability arises from the fact that the two institutions work to achieve a large number of objectives and entrust large and diverse sets of people with achieving them. In conditions of such diffused responsibility those taking decisions often favour private interests over organisational objectives. It becomes diffi cult to develop systems which allocate incentives and penalties appropriately to ensure individual accountability. Carlos Castro (2004) similarly identifi es in the developmental interventions of the World Bank an attempt to protect private interests. The prescriptions of the World Bank for economic growth and sustainable development stress secure property rights and the reduction of government subsidies to enable market forces to operate freely.

There are certain common themes that run across concerns raised regarding existing global institutions. The primary concern relates to the negative local impact of decisions taken by these institutions. Related to this point is the criticism that even when a negative impact can be discerned ex ante these institutions either ignore


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it or remain oblivious to it. Neither is the consultation process that precedes decisions comprehensive enough, nor are decision-making processes suffi ciently democratic to make it possible to recognise and address negative con-sequences of global agreements. There is also the issue of accountability. Global institutions are currently structured in a manner that allows those who are entrusted with the task of negotiating global treaties and regulations to escape penalties for not implementing agreements in good faith or for negotiating bad agreements in the fi rst place.

Reforming Global Governance

The need for improved global governance will only increase as greater economic integration introduces even greater complexities into the globalisation process. Thomas G. Weiss (2000) argues that global governance institutions will have to move away from their traditional emphasis on inter-governmental issues and evolve participatory decision-making mechanisms encompassing regional institutions, civil society groups and private business interests if they are to be effective. Any response to the challenges of globalisation will require both the reform of existing institutions as well as the creation of new ones.

Nayyar (2002) envisages a central role for the United Nations in the new global governance architecture and calls for the reform of the organisation to enable it to play a role in international economic governance. Reforming the United Nations, he argues, should start with reforming its Security Council. Its composition refl ects the post-World


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War II world rather than current economic and political realities. Nayyar also suggests independent fi nancing of the United Nations and a reduction of its fi nancial de-pendence on the United States to enable it to function more independently. He argues that the global governance architecture is incomplete for ‘missing institutions’ will need to be created to meet emerging challenges of global governance (p. 356). Moreover, he advocates the creation of three new institutions—a ‘Volunteer Peace Force’ to intervene in local confl icts and to cope with humanitarian crises; a ‘Global Peoples Assembly’, directly elected by citizens of member-states of the United Nations for en-suring that popular concerns are refl ected in the work of the United Nations and an ‘Economic Security Council’ (ESC) which could serve both as a consultative body for international economic decisions and also as a global economic regulator (p. 360). The need for an ESC was earlier stressed by Mahbub ul Haq (1995) who envisaged four roles for this counterpart to the United Nations Se-curity Council. He expected it to play a leading role in responding to global economic crises, creating a system for providing advance warning of an impending crisis, ensuring adequate availability of funds for development, and also taking over ‘policy leadership on macroeco-nomic management’ from the IMF and the World Bank (pp. 194–97). It is signifi cant that both Nayyar and Haq suggest a greater role for the United Nations in responding to the challenges of globalisation. This suggestion refl ects a belief that the institutions that currently play a major role in setting the rules and regulations that govern the process of globalisation are too closely aligned to OECD


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countries. Countervailing institutions need to be cre-ated so that developing countries play a greater role in decision-making.

Apart from the creation of new institutions there is also the challenge of ensuring that existing institutions respond to national and local needs. Any reform of ex-isting institutions involves the recognition that multiple stakeholders and multiple institutions are now critical players in the process of global governance. Global gov-ernance mechanisms need to expand in order to encompass these multiple stakeholders and institutions. Four sets of actors now play a signifi cant role in the process of global governance—international organisations, nation-states, private business and civil society institutions. For reforms it is also important to recognise that decision-making in the process of global governance involves stakeholders at global, national and local levels. As the process of in-creasing economic integration unfolds, mechanisms of global governance will have to evolve so as to ensure that the needs and concerns of stakeholders are met at all levels.

How can international organisations reform themselves so that they can meet current and future challenges? Pierre Jacquet (2007) has suggested fi ve guidelines for international organisations: clarity of mandates, political support, coordination of action, subsidiarity and soli-darity. Jacquet argues that international institutions are currently handicapped by the lack of clear mandates and this leads to one of the two possible undesirable out-comes. It tempts international organisations at times to interfere in areas where they cannot play any positive role.


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In other instances it allows them to ignore aspects of control and regulation in which they need to be heavily involved. Once mandates are clear the political support of governments and non-governmental institutions involved in domestic political processes is important for achieving greater legitimacy and acceptability. Apart from clarity of mandates and political support, international institutions also need to coordinate their actions to ensure that mul-tiple international agencies do not involve themselves in regulation of similar or related domains. Jacquet points to the global regulation of labour and environmental stand-ards as one example where coordinated action could mi-tigate some of the problems associated with increased global regulation. The inclusion of minimum standards of environment and labour regulation in the WTO could be accompanied by the strengthening of the International Labour Organization (ILO) and the creation of a new World Environment Organization (WEO) which would enable coordinated responses to emerging concerns. By advocating the creation of a new WEO Jacquet joins Nayyar and Haq in highlighting ‘missing institutions’, but it is done this time from the perspective of developed countries. Problems of globalisation in these countries are related primarily to the negative externalities of lower standards in developing countries. Jacquet also argues that the principle of subsidiarity needs to be enshrined in the institutions and processes of global governance. Rather than see regional, national or local regulation as intruding on the global domain, global institutions need to recognise that there are areas where regulation is best done at more subsidiary levels. Such decentralised


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decision making could complement rather than challenge the work of global institutions. He suggests the accept-ance of a principle that is enshrined in the working of the European Union and has ensured that the organisation does not interfere in matters which are best left to the member-states to address. Finally, Jacquet argues that the success of such institutions would also depend on the soli-darity that they demonstrate with countries that are at the margins of globalisation, both by helping them to globalise with least pain and by not requiring them to abide by global regulations that would negatively affect them.

The suggestions for reforms made by Nayyar, Haq and Jacquet, when seen individually, seem to refl ect essentially the concerns of the specifi c worlds that they inhabit indi-vidually. However, there are complementarities in terms of suggestions that refl ect an understanding of the concerns of each other. The creation of a ‘Volunteer Peace Force’ that Nayyar advocates does address the concerns that exist in the First World about man-made humanitarian disasters in the Third World. Jacquet’s advocacy of subsidiarity and solidarity refl ects concerns in the developing world re-garding undue interference by developed countries in their economic and political affairs and the marginalisation of many developing countries in a globalised world.

Responding to local and national needs addresses only one aspect of the problems caused by globalisation. The second major task that needs to be undertaken is to ensure that democratic processes that are part of decision-making in a national context are refl ected in international institu-tions as well. Three methods by which international institu-tions could ensure greater legitimacy for their decisions


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have been suggested. The fi rst is ‘deliberative decision-making’. It is argued that since a world government is not yet in sight and global elections to select negotiators for international agreements do not constitute a practical solution, greater deliberations on issues could be a viable remedy. Knowledgeable independent experts could be asked to reach a consensus on divisive issues before international organisations reach agreements that have a global impact. Here the importance of technical expertise for international negotiators is stressed. There will be greater popular acceptance, it is argued, of such agreements because of public trust in independent ex-perts who deliberate on these issues. This in turn will contribute to increasing the democratic legitimacy of global institutions. The second method that is suggested is ‘public deliberation’. Here a ‘public sphere’ is envisaged as a wide network of citizens who use modern means of communication to form opinions on divisive issues for reaching a consensus or providing considered views that can assist in the negotiation of international agreements. Such public spheres could extend across national borders. While it is true that everybody affected will not participate in such consensus the presence of the opportunity that everybody has to participate would enhance the legit-imacy of international agreements that are negotiated. The third method that is suggested is the participation of civil society groups in international deliberations. Civil society groups could act as a ‘transmission belt’ and communicate the views of citizens to international organisations. Civil society groups here could perform two roles in this respect. They could perform the more


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traditional function of representing citizens’ views before international organisations in a systemic manner. They could in addition play a more novel role of explaining the constraints on decision-making at an international level to citizens and also explain the implications of agreements in easily understandable ways. These methods can, however, succeed only if certain changes are brought about to the existing mode of functioning of both international or-ganisations and civil society groups.

International organisations need to be more transparent in their functioning and allow civil society groups access to both documents and meetings. Civil society groups, on the other hand, need to go beyond the role of advocacy groups and be willing to take on board the diverse views of different stakeholders even if they do not go with their own views. Civil society groups that are taken over by sec-tional interests or are created by sectional interests need to be identifi ed and kept away from such deliberations (Nanz and Steffek 2004).

While stressing the importance of democratising global institutions it is also necessary to address Eric J. Hobsbawm’s (2004) warning of the dangers of too much democracy in international institutions. Hobsbawm points to the European Union as an example of how dem-ocracy might actually be counterproductive in certain transnational contexts. The European Union fails in the test of democracy and is widely seen as suffering from a ‘democratic defi cit’ because of the nature of its decision making and its lack of democratic accountability. Unlike other democratic states or organisations where directly elected representatives legislate policies and laws, most


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decisions in the European Union are taken by the European Commission which is responsible to member-states, but not directly to the people. In Hobsbawm’s view, it was this ‘democratic defi cit’ that made the European Union successful in achieving complete economic integration between its member-states and developing as an effective international institution. The European Union was most successful at a time when democracy within it was restricted to member governments deciding on issues through consensus or qualifi ed voting. The problem of democratising international politics became apparent the moment the European Union sought to extend the right of decisions to the public through elections or referenda. While this is undoubtedly true, it must be borne in mind that the negative consequences of the agreements of the European Union pale in comparison with the negative con-sequences of agreements negotiated by the IMF, the World Bank or the WTO. The European Union could be criticised for not involving the European public in decision-making processes or for protecting special interest groups like, for instance, European farmers. These agreements, however, have not resulted in an increase in the levels of poverty in Europe nor in a signifi cant decline of local industry. The role played by European governments has been crucial in ensuring that this does not happen. While they may not have directly involved their citizens in decision-making processes involving crucial decisions they have been suffi ciently alert to the potential dangers of agreements and negotiated crucial amendments or ‘opt outs’ from agreements. It has been pointed out that national governments have ensured that agreements of


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the European Union are fl exible enough to allow such national concerns to be addressed in the agreements (Phillipart and Edwards 1999). The European Union pro-vides a good example of how strong nation-states could play a role in ensuring that institutions of global govern-ance work effectively to advance and protect the interests of its citizens even if institutions of international governance are not suffi ciently democratic.

A world that is becoming increasingly integrated needs strong and effective states more than ever before. The need is most acute for developing countries that have to develop both proactive and reactive capabilities to adapt to an integrated world. How can countries of the developing world respond to the process? Farazmand (2001) identifi es four types of responses that developing countries can have towards integration; inaction, resistance, adoption and innovation and adaptation with resistance. The fi rst response does not challenge the status quo and the state follows the process of globalisation, exploiting its benefi ts and accepting its costs. In the second response the state tries to resist the process of globalisation, often with limited success. The third response involves changing domestic structures to cope with the process of globalisation so that the state can adapt to it. The fourth option involves the state adapting to globalisation, while at the same time retaining the option and the ability to challenge it. Here the state develops the capability to understand the con-sequences of integration for its economy and society and develops and implements an appropriate response.

This need to explore options in terms of response is a theme that Nayyar (2000) has discussed as well.


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He recommends a strategic approach for developing coun-tries trying to cope with the process. Two options, accord-ing to him, are available to governments. The fi rst is a proactive one where a government frames public policy in a manner that ensures that the benefi ts of growth are equitably distributed. This requires countries to formu-late economic policies keeping social issues in mind. The second is a reactive approach where a government identifi es the negative impact of globalisation and tries to counteract it with national provisions. This could be done by increasing social spending on marginalised commu-nities which are not able to participate in the globalisation process. He characterises this approach as ‘correctives’, and the former as ‘interventions’ (p. 19). Nayyar argues that correctives have to be formulated and implemented carefully if they are to have any impact. The primary objective of the correctives is to create markets where none exist. This involves in many cases bringing markets, both national and global, to the marginalised people or, alternatively, connecting the marginalised people with markets through the development of infrastructure that gives them physical access. It is important to ensure that existing markets are expanded to include all those who might conceivably participate. Primary education and adult literacy could play an important role in this re-gard. It is in this context that Nayyar brings in the role of the state. By providing the correctives and formulating the interventions the state could, he argues, ensure that disadvantaged groups are not just brought into the process of globalisation but also enabled to take active part in it. This applies to ensuring a balanced regional growth as well.


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It is necessary for a more equitable distribution of employ-ment opportunities and wealth. Equitable growth could reduce some of the problems of uneven growth such as the increasing migration of people from rural to urban areas and the consequent disparities in levels of growth. This could also involve increasing the assets of the poor to enable them to enter markets with their products. Nayyar suggests land reforms for increasing the asset base of the poor. He argues that in a globalised world there is a need to approach the state-market debate not in terms of state or market control since both have their own strengths and weaknesses. Both are prone to failures and the choice need not be between one and the other. The attempt should be to reassess the role of the state and its relationship with the market. Rather than competition, he calls for complementarities, developed in a cooperative manner and capable of withstanding shifts in the balance of power between the market and the state in a dynamic way. As Nayyar says, ‘The real question is no longer about the size of the State or the degree of State intervention. The question now is about the nature of State intervention and the quality of the performance of the State’ (p. 21).

In addition to global institutions and national govern-ments, private business is important for improving global governance. Large multinational corporations (MNCs) are becoming ever more important in the global econ-omy and their impact on the nation-state has been quite considerable. However, they are still primarily gov-erned by national, not global regulation. This creates a particular problem for states that are so dependent on large MNCs for internal investment that their ability to


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regulate the behaviour of MNCs is circumscribed (Brean and Kobrak 2007). States often compete with each other to reduce domestic standards in order to attract add-itional investments. Such competition has led to the di-lution of conditions under which investments are made and allowed corporations to play-off nations against each other in order to extract maximum benefi ts for them-selves. Such evasion has been to the detriment of domestic workers, environmental sustainability and state revenue. Rapid cross-border fl ows of capital owned or controlled by large private fi nancial organisations has been a source of concern. Volatility in global fi nancial markets has led to a number of economic crises in the 1990s (Mexico, South-East Asia) and in 2000 (Argentina). There is obviously a case for regulating fi nancial fl ows to ensure that un-controlled capital movements do not lead to economic crisis (Giddens 2000a), just as there is a need for enforcing regulations meant to protect national interests.

The enforcement of international standards for global businesses, moreover, is needed to ensure that global trade and investment happens in a manner that avoids the negative effects of competition for trade and investment. It is needed to ensure that any competition for investment does not result in a dilution of standards in areas critical for sustainable development. However, the development of such global standards faces severe obstacles. It is re-sisted not just by corporations who currently benefi t from the lack of such regulations but also by states that would see the imposition of such standards as a threat to rapid economic growth. The imposition of standards that would constrain investments by global fi rms could also


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be resisted by many developing countries that may see them as thinly disguised attempts by more developed nations to stem the fl ow of trade and investment towards developing nations. This reluctance to have enforceable global standards extends to areas such as labour and environmental standards that have been suggested to protect the interests of workers and the environment in developing countries.

The importance of civil society groups which have become increasingly active in global governance is in keeping with the increasing diffusion of power, away from national governments towards both sub-state entities (regional and local government) and also supra-state en-tities. Scholte (2004) argues that civil society groups have already had a positive impact on the way global institutions make policy that affects citizens of nation-states. Global institutions have changed their operating practices to take into account the increasing activism of civil society groups. They now disseminate information on their activities through their websites and provide information to civil society groups in an effort to increase transparency in their functioning. Liaisons with civil society groups have increasingly become a standard feature of all international organisations. The process of involving civil society groups in global governance has both benefi ts and pitfalls. Though international agencies consult civil society groups, these are mostly ‘Northern, urban, elite, English speaking civil-society professionals’ (p. 216). They are also most active in areas such as environment protection, prevention of child labour and protection of human rights. Though these issues are of


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concern to developing countries, there is a suspicion that these concerns are being raised by the governments of developed countries and civil society groups to protect the interests of Western companies and their workers. There is a need to develop stronger civil society groups in developing countries who could engage with the institutions of global governance to refl ect the concerns of developing countries in areas such as agriculture and the issue of free movement of labour. The need for more coordinated global action is vividly illustrated by the twin crises of high food and energy prices that the world recently faced. Faced with high oil prices governments around the world provided high levels of subsidies to biofuels, leading to a diversion of foodgrains towards production of biofuels. The effects of such diversion combined with the increasing demand for foodgrains worldwide, drove prices even higher forcing governments to impose trade restrictions to restrain prices. The twin crises could not be solved by national governments on their own for it required coordinated action in terms of investments in appropriate agricultural technologies, re-duction of barriers to trade and reduced consumption of energy resources.

Multiple steps need to be taken to ensure that the mechanisms of global governance meet the challenges of globalisation. Existing institutional structures call for reform. New institutions need to be created to under-take tasks that cannot or should not be done by existing institutions. There is need for reforms in the governance structure of these institutions and also their decision-making process. Governance structures, moreover, will


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need to refl ect current realities by giving effective repre-sentation to developing countries. Decision making needs to be more inclusive and transparent. The challenges posed by globalisation cannot be met by global institutions alone. Nation-states need to develop the capability to understand the implications of greater economic integration and to respond in ways that protect domestic interests. Private business and civil society groups will need to play their roles as well. Involvement of a large number of actors in the process by which global regulations are framed means that the process has to be supported by democratic principles if it is to be effective. It is here that the issue of democracy becomes important.

6

The Issue of Democracy

The issue of democracy has become important in con-temporary international debates. As has been noted in the previous chapter, increasing globalisation makes it im-perative that both national governments and global organ-isations respond to national, regional and local concerns regarding the negative effects of globalisation. It is be-lieved that this can only be ensured in a democratic en-vironment where effective mechanisms for refl ecting over and responding to such concerns exist. The advantages of a democratic political system seem to be obvious. As opposed to one-party states, authoritarian governments, or military dictatorships, democracy provides a country with a government whose authority is derived from the consent of the governed. The legitimacy that free and fair elections confer on governments is unmatched. However, the free-dom to exercise choice while choosing governments alone does not confer legitimacy on governments or make the governance process democratic. What is important is that


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those who are elected to power not only function in the interests of all but also appear to do so in a responsible and transparent manner. Democratic governments appear to be failing to live up to these expectations. This failure raises many questions.

What is Wrong with Democracy?

It is often argued that the problem with democracies is that they bring into play politicians who are not to be trusted, nor amenable to the infl uence of the voters once they come to power. A deeper problem seems to be what may be called here the delivery defi cit of democracies. This defi cit has implications for the level of participation of citizens in the democratic process. We turn to these two points specifi cally in discussing what is wrong with de-mocracy.

At a time when greater democracy is being suggested as the solution to many of the problems of the world, those living in democratic political systems remain pre-occupied with its defi ciencies. One of the major attractions of a democratic government has been its ability to provide marginalised groups in society with a role in choosing governments and thereby with a say in government de-cisions relating to distribution of national wealth. Political empowerment, it was assumed, would lead to increased economic empowerment and greater distributional equal-ity. This has not happened. Income inequalities seem to be rising across as well as within countries.The recent Human Development Report 2007/2008 notes:


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The 40 percent of the world’s population living on less than US$2 a day account for 5 percent of global income. The richest 20 percent accounts for three-quarters of world income….Income inequality is also rising within countries. Income distribution infl uences the rate at which economic growth translates into poverty reduction. More than 80 percent of the world’s population lives in countries where income differentials are widening. (UNDP 2007: 25)

Democratic societies do not seem to be doing any better, or at best the verdict on this point is ambiguous, even with regard to the duration of democracy and re-duction of income inequality (Feng 2003). A study by Lane Kenworthy and Jonas Pontusson (2005), for example, found increasing inequality in household incomes in most Organisation for Economic Co-operation and Development (OECD) countries during the period from 1979 to 2000. This is in spite of the existence of welfare states in most of these countries. The situation is much worse for many developing countries. Amartya Sen (2004) refers to the frustration in India at the inability of demo-cratic governments to ensure greater distributional equal-ity. ‘The frustration that democracy has not, on its own, delivered as much as was expected has yielded some distrust and indeed some cynicism of the participatory political process’ (p. 36).

One of the important reasons for the failure of demo-cratic governments to reduce inequalities is related to major changes in the domestic and international macro-economic environment. The ability of governments to infl uence economic outcomes domestically has been severely hampered by the process of liberalisation and privatisation that has been underway since the 1970s. The increasing inequality is a refl ection of the structure


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of modern day economies where an increasing amount of capital is generated, allocated and invested by private rather than public entities. This privatisation of capital allocation has made it diffi cult if not impossible in many cases for a majority of the people to have a decisive voice in capital redistribution through a democratic process. The increased ability of private capital to decide on cap-ital allocations without reference to a government or to other democratically accountable bodies increased as gov-ernments have been reduced to assuming more and more limited roles.

In addition to domestic compulsions, international en-vironment puts constraints on the ability of democratic governments to ensure greater distributional equality. Eric J. Hobsbawm (1994) attributes the decline in democracy to globalisation and the consequent decline of the welfare state. In his book, Age of Extremes, Hobsbawm notes that the success of democracy in the United States and Europe was not just a result of people choosing their gov-ernments. The success was as much due to the fact that they were essentially welfare democracies that placed a lot of emphasis on wealth redistribution. The redistribution of wealth and the universal provision of public services were as important as the ability to exercise democratic choices in selecting governments. Hobsbawm argues that, though Western economic ideals have become the do-minant global economic paradigm today, this paradigm faces a crisis because of its inability to redistribute the fruits of economic growth equitably in a world where greater economic integration places a premium on com-petitiveness, especially with regard to wage costs. The


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emphasis on competitiveness means that democratic governments are unable to deal with the problems of overpopulation in the developing world and looming en-vironmental disasters worldwide. These threats demand a greater governmental role in ensuring equitable economic outcomes and sustainable development. The solution, according to Hobsbawm, lies both in greater democracy as well as greater public authority that could play the role of a wealth redistributor rather than a wealth creator. A return to the welfare state, he argues, is necessary if democracy is to be effective and sustainable.

That the problem arises not just due to economic reasons but also due to technological reasons has been pointed out. Kevin Cox (2004) argues that democratic governments fail to ensure distributional equity in a world that is increasingly integrated economically because of developments in technology. Whereas public allocation of funds was under democratic scrutiny and refl ected popular concerns earlier, the allocation of funds in the lib-eralised environment at present for investment is done mostly by private fi rms and individuals in a more opaque manner citing reasons of ‘commercial confi dentiality’ (p. 31). Technological changes play their part also by way of greater automation and improvements in transportation. Automation has made it possible to increase production with much less labour and thereby reduced employment opportunities. Improvements in transportation make pro-duction in low-wage zones for utilisation in high-wage zones profi table. This eventually leads to reduction in wages and adversely affects the rights of workers in high-wage zones.


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Technological changes and increasing economic in-tegration have an impact not just on rich industrial economies but also on developing countries which are predominantly agricultural. Lawrence Busch (2003) has pointed out the implications of the failure of democratic controls in regulating the process of technology devel-opment in the agricultural sector in developing countries. This is the sector that supports a vast majority of the citizens in developing countries who are in need of public support. This is also the sector that has been affected by the growth of technology in terms of production and distribution processes. Globalisation enables increasing the availability of food produced in one part of the world in another. Advances in technology and the growth of trade in agricultural products mean that issues such as prices in domestic markets, safety and quality of food, environmental protection, health and safety of workers, and sanitary requirements have to be dealt with from a global, rather than a regional or national perspective. At the same time the regulation of agricultural trade and controls over new agricultural technologies are becoming even more commercialised and are getting concentrated in private hands. While the control of technology devel-opment and distribution of inputs such as seeds and fertilisers are increasingly being concentrated in fewer fi rms, the sale of the fi nal products is being undertaken by large retail chains which increasingly serve as outlets for large agricultural fi rms. Thus, governments have reduced roles in imposing national standards and at the same time less voice in setting the global agenda. The privatisation of decision making implies that private interests play a


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dominant role and the interests of the less affl uent sections of the population are negatively affected.

Yet another issue concerning democracy is that of par-ticipation. Drawing from diverse studies relating to Western democracies and Japan, Robert Pinkney (2004) has shown that in most democracies there has been a steady decline in participation in elections since the 1950s even though educational standards have risen and people should have been increasingly better informed about political issues through the rapid spread of mass media. There has also been a steep decline in membership of political parties. Despite rapid improvements in communications technology people are less informed and often confused about issues affecting them. Part of the problem is related to the content of communication with media reports often resorting to oversimplifi cation while discussing complex issues. Repeated public opinion surveys have revealed ig-norance among a signifi cant number of voters on major issues that affect their lives. As people become less aware and concerned about events that affect their lives and as civil society institutions lack effectiveness, governments become less accountable and even more vulnerable to lobbying by special interest groups who seek to mould government policy in ways favourable to them. Such ‘re-gulatory capture’ effectively moulds regulation in favour of more infl uential interest groups and consequently further reduces public trust in governments. Pinkney refers to a vicious cycle that emerges whereby the poor, negatively affected by such public policies, become even more marginalised and ignored by governments, while the infl uential sections of society reinforce their infl uence


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with the pay-offs they receive from favourable government policies. It could be argued that democratic societies, par-liamentary or presidential, would prevent such subversion of government policy for private benefi t. However, ex-perience shows that in conditions of public apathy systems of oversight do not work effectively. In parliamentary systems the reluctance of ruling coalitions or governing party legislators to vote against their government makes lobbying of the government an effective means of infl u-encing government policy. In many countries with pre-sidential systems of government, such as the United States, both the executive and the legislature are amenable to corporate lobbying and this makes the mechanisms of accountability less effective.

What are the solutions to the problem? Some people seem to believe that globalisation can solve the problem. Viktor Vanberg (2000) argues that greater globalisation and international competition can enhance the ability of governments to respond to the needs of their citizens. He gives an interesting argument in support of his views. Globalisation, he argues, means the same to the world as liberalisation means to an internal market. Increased globalisation increases competition, just as economic lib-eralisation increases competition within the economy of a nation-state. If states are viewed as ‘territorial enterprises’ those that are democratic can be viewed as ‘cooperatives’ which are owned by their members––their citizens. The challenge of democracy in a globalising world will then be to make the political leadership (the producers) re-spond to the needs of the citizens (consumers). Consti-tutional provisions at an international level that will force


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governments to come up with responses that protect the interests of their citizens need to be devised. Such constitutional provisions, mediated by international insti-tutions, will reduce restriction on competition among these enterprises. This process, according to Vanberg, is already underway. The liberalisation of the global economy and the myriad ways in which technology is increasing the ability of consumers to choose between different enter-prises is inevitably leading to a situation where states have to respond to the needs of citizens if they are to remain effective. Once citizens realise their power of choice they can also be a party to an international rule-setting exercise to increase competition. Vanberg’s analysis for enhancing democracy through global market-based solutions lends itself to criticism. It is likely to suffer from the same fate as market-based solutions suggested for the problems of nation-states. Just as all citizens do not have the capacity to participate in markets, many states in the international system also lack the ability to engage with global markets. Similarly, choices, particularly with regard to residence are likely to be an option only for those in the developed world, or a few in the developing world, for whom barriers to movement are low. The poor in the developing world are unable to benefi t from such choice especially in view of the barriers to entry erected by developed countries. While Vanberg’s solutions might have relevance for small groups in all countries, they do not have universal applicability.

If the major problem affecting modern democracies is the inability of governments to take decisions in the larger public interest in between elections, could the requirement


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of democratic consent for all major decisions be the answer? It is here that the debate on direct democracy becomes relevant. It is argued that technological advances make it conceivable to have direct democracy in large states. Direct democracy retains some of the strengths of existing democratic systems while addressing some of its weaknesses. The major strength of democratic societies is the fact that governments are legitimised through elections in which everyone participates. Direct democracy could do the same for important government decisions. The ar-gument here is that if governments need the consent of its citizens for all major decisions that they take the problems of lobbying by special interest groups could be overcome. Governments would also be forced by popular pressure to ensure greater distributional equality. Some experiments which tried out local direct democracy appear promising. Two such experiments are the ‘peoples planning’ exercise in Kerala and a process of evolving a ‘participatory budget’ tried out in Porto Alegre in Brazil. The results of such exercises were mixed with deliberation forums designed both to generate ideas and to evolve a consensus working effectively in some districts and not in others. Gianpaolo Baiocchi (2003) argues that such systems have been most effective in areas where civil society groups were active and community participation and awareness was high. In other areas they degenerated into routine ritualistic exercises dominated by a few groups or individuals, a problem that such participatory processes were meant to solve. Direct democracy can be effectively managed and implemented at a local level, but this is a level to which there is very little devolution of effective powers and


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this dampens the enthusiasm of participants. At higher levels, where real power rests, direct democracy involves too many actors and the process is diffi cult to manage effectively.

Are There Alternatives?

The crisis that modern democracies face inevitably leads to questions about alternatives. One argument put forward in many developing countries in Asia, Africa and Latin America that have authoritarian governments or one-party rule is that democracy is not suitable for developing societies. Adrian Leftwich (1993) points out the benefi ts of a strong and effi cient ‘developmental state’ which sometimes seems more suited for developing countries than a state that is democratic in a Western sense. What is needed according to him is ‘a state whose political and bureaucratic élite has the genuine developmental deter-mination and autonomous capacity to defi ne, pursue, and implement developmental goals’ (p. 620). Democratic politics, it is argued, exacerbate divisions in society and slow down decision-making. Governments are thus pre-vented from taking tough decisions needed to bring about rapid economic growth, reduction in poverty and improvement in standards of living. China and South-East Asian countries such as Singapore are often held out as examples of non-democratic states that have delivered rapid economic growth and improved standards of living for a majority of their people. This is seen in sharp contrast to democratic countries like India which have


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seen both a persistence of mass poverty and rising income inequalities. This comparison can be misleading. Sen and Dreze (1991) have noted that, while the economic achievements of successive Chinese governments might seem commendable, they have also led to economic policies which led to famines that killed millions. They argue that such economic excesses have not happened in independent India because of a free media and the need for governments to go back to the people in order to re-tain power.

Advocates of non-democratic solutions to current-day economic problems miss another point. Economic growth and equitable distribution of wealth are not the only pro-blems that governments are supposed to be engaged with. Samuel Issacharoff (2004) argues that there is a need for democracy to ensure the stability of multi-ethnic and multi-religious states. The greatest concerns relating to governance of ethnically diverse and fractured societies have been the possible impact on ethnic, religious and racial minorities of sudden shifts in attitudes among ma-jority communities. Dictatorial governments in many fractured societies have justifi ed their rule by citing the possibility of social confl ict if a democratic majority im-poses its will on the minority. Social stability and econ-omic growth then serves as an excuse for an undemocratic government. Military dictatorships in Nigeria, Indonesia and Iraq have all used such excuses to justify their existence and rule. Issacharoff argues that it is here that constitutional democracy which places limits on governmental power by imposing restrictions on what even a majority gov-ernment can do becomes increasingly relevant. While democracy implies the ability of a majority to decide on


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the future of a democratic collective, constitutions seek to impose limits on the ability of majorities to take such decisions. India provides a good example of the ability of a democratic political system to contain ethnic confl icts and tensions. Kanti Bajpai (1997) identifi es strategies of dealing with ethnic tensions which have succeeded in India. All have a strong democratic dimension. The fi rst is a liberal constitutional system with secularism and econ-omic development as its declared goals. The second is the transfer of some powers to ethnic and regional groups within a democratic framework either through power-sharing or devolution. The use of force to quell ethnic up-risings has been used either when the earlier two options have failed or to bring about a situation where these two options can become possible.

Let us now consider the question of alternatives with respect to three specifi c case studies. Whatever the fault of democracy may be, its advantages become apparent when the experiences of countries that have tried non-democratic alternatives are considered. We consider here Pakistan, Burma and Rwanda. In Pakistan the nega-tive consequences of the lack of democracy in the early decades of independence were compounded by the failure to respect a democratic mandate in 1970. The resulting turmoil led to the break-up of Pakistan in 1971 and a chronic failure to develop strong democratic institutions. In Burma, military rule led to the growth of sub-nationalist movements which in turn contributed to an even more brutal suppression of democracy. Though the country is kept together by a military dictatorship, its failure to respect a democratic mandate has led to international


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isolation and economic sanctions. Rwanda saw one of the worst instances of genocide since World War II in 1994 when an estimated 800,000 people were killed in a confl ict caused by the failure of two major ethnic groups to implement a democratic power-sharing agreement (Othman 2005).

Ayesha Jalal (1995) traces Pakistan’s inability to develop an effective democratic political system to the failure of the central government in the initial years of independence to seek the consent of its constituent provinces before appro-priating fi nancial powers. The resources were appropriated to develop the defence capabilities of Pakistan against India with which it became involved in border disputes soon after independence. Unlike India where the central government consulted various states and arrived at a solution acceptable to both sides before it took over the fi nancial powers of the states, the fi nancial powers of the provinces were usurped unilaterally in Pakistan. The central government was dominated by politicians who had migrated from India and lacked a strong political base in the provinces of Pakistan. Rather than developing democratic processes the central government found it expedient to align itself with two other important insti-tutions of the state––the civil bureaucracy and the armed forces. Jalal notes that ‘executive ordinances replaced the process of long and hard political bargaining [and] coercion substituted consensus in relations between the Pakistani centre and the provinces’ (p. 49). The initial failure to develop democratic processes of governance and the reliance on unelected institutions to maintain power had another long-term consequence. The central


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government, increasingly dominated by politicians from the West Pakistani province of Punjab, became reluctant to embrace democracy for fear that they would have to cede power to political leaders from East Pakistan which was larger than West Pakistan in terms of population. This fear of democracy made them even more dependant on the bureaucracy and the armed forces for their power.

The lack of democratic legitimacy weakened the au-thority of successive civilian governments in Pakistan and in 1958 the military fi nally took direct control of the government. Though the military government led by General Ayub Khan was praised in its initial years for ensuring high rates of economic growth, resentment among non-Punjabi provinces of Pakistan at the lack of democratic rights could not be contained for very long. Resentment was particularly strong in East Pakistan where a majority of Pakistanis lived and it was directed at the domination exercised by West Pakistan. Rising resentment and the consequent unrest led to General Ayub’s replacement by another army general, Yahya Khan, in 1969. An attempt to respond to provincial demands for democratic rights led to an election in 1970, the fi rst in Pakistan on the basis of universal adult franchise. However, the elections were won by the Awami League, the dominant political party in East Pakistan. Reluctant to cede power to a government dominated by East Pakistani politicians, the Yahya Khan government refused to cede power and the Pakistan Army launched a brutal assault on East Pakistan in which an estimated 3 million died. The Awami League declared independence and the province broke away from Pakistan in 1971. The experience of Pakistan illustrates vividly the


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problems faced by states that use non-democratic methods of governance even as a temporary measure. Once non-democratic institutions become entrenched in power they prove diffi cult to dislodge and this often has disastrous consequences for the state. Pakistan has not succeeded in establishing a stable democratic system of governance even today, more than six decades after independence. Long periods of military rule are interspaced with shorter and shorter periods of stable civilian democratic rule which fails to establish itself in the face of well-entrenched non-democratic institutions.

Burma provides an illustration of how military dicta-torships that justify their hold on power for reasons of national unity and try to legitimise the culture of do-minant ethnic groups as national culture can actually en-courage the growth of forces that threaten this unity. The Burmese state was created as an artifi cial political entity by the British and contains within it different ethnic and linguistic minorities. As David I. Steinberg (2007) has shown, though successive Burmese constitutions have provided for the protection of the cultures of all minority groups and religions, an attempt is made to reinforce national unity in practice by suppressing local cultures. Burmese, the offi cial language, is the medium of in-struction and other local languages cannot be taught in schools as part of the offi cial syllabus. This suppression of local cultures has led to local resistance which reinforces the self-perception of the military as the sole defender of national unity and culture, further eroding the chances of a return to democratic rule. Steinberg argues that despite years of efforts this attempt to forge national consciousness


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has failed and Burma is far from becoming a nation with shared ideals and a national ethos. The suppression of democracy has isolated the military regime and led many countries to impose economic sanctions. These sanctions have caused suffering to the Burmese people and left the military government unmoved so far.

The failure of democratic processes in Rwanda led to one of the worst genocides of recent times when around 800,000 people were massacred within a space of three months. Raphael Chijioke Njoku (2005) argues that the genocide in Rwanda has to be seen in the context of a political culture of disregarding rules and annihilating op-ponents. The confl ict in Rwanda has its origins in a colo-nial past where the Tutsi tribe which comprises about 15 per cent of Rwanda’s population enjoyed power and privileges over the Hutus who comprise the remaining 85 per cent of the population. When the country gained independence from Belgium in 1962 the Hutus moved quickly to take control of the country. An attempt by the Tutsis to resist resulted in hundreds of deaths and the exile of thousands of Tutsis to neighbouring countries. Once they came to power the Hutu political leadership made no attempt to share power with the Tutsis, preferring instead to further marginalise them in Rwandan society. Njoku argues that in ‘this dynamics of political exclusion and op-pression resides the politics of intolerance in Rwanda with intra-ethnic, inter-ethnic and inter-regional dimensions’ (p. 87). After a prolonged period of instability, a power sharing agreement was reached in 1992 and a year later the two tribes reached an understanding on a transition to democratic government. However, those among the Hutu


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leadership who were against giving any share of power continued to undermine the government. In April 1994 they used the opportunity created by the assassination of President Habyarimana to unleash genocidal attacks on the Tutsis. Though the government was overthrown and the killings brought to an end in July 1994, ethnic div-isions continue to haunt the country. Njoku argues that a system that is both democratic and federal is needed to ensure the stability of Rwanda. Rwanda would need ‘to adopt electoral, representational and decision-making formulae that guarantee a stake in these processes for every competing group in the system’ (p. 89).

The Way to Democracy

We need to address the issue of improving democratic systems in existing democracies and democratising non-democratic societies. However, attempts at building demo-cracy have generated multiple problems of their own. There is an increasing realisation that building democracy involves more than setting up the basic structures and institutions of democratic government. There is a need for far more effective development of human resources and capabilities than earlier envisaged. Two methods of estab-lishing democratic systems of government in countries that were not democratic have been attempted. The fi rst method has been through advocacy and promotion. The second method has been through imposition from outside, if necessary through the use of force and removal of dictatorial governments.


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Assistance to promote democracy expanded signifi -cantly in the 1990s when a large number of new democra-cies emerged worldwide following the collapse of the Soviet Union. Such assistance included measures to popu-larise democratic principles, promote human rights, rule of law and good governance. Initiatives like the European Initiative for Democracy and Human Rights (EIDHR) of the European Union were designed to promote multiparty democracies which respected the rule of law and human rights. Operating mainly through non-governmental or-ganisations (NGOs) the initiative sought to promote civil rights and democracy with the aim of entrenching demo-cratic ideas and principles in newly emerging demo-cracies (EIDHR 2000). The task of promoting democracy turned out to be much tougher than many had imagined, requiring intervention across many more sectors of government and sections of society. Carlos Santiso (2001), among others, has argued that the time for democratic practices to take root was estimated too optimistically. A surge in democracy assistance, both in terms of capacity development and economic aid to newly emerging demo-cracies, has not made the positive impact that many had hoped for. One of the problems has been that democratic assistance has very often concentrated on helping gov-ernments rather than on building a consensus in favour of democracy across the political spectrum.

The second method that has been attempted is the imposition of democracy from outside. Ivo Daalder and James Lindsay (2003) have argued that democracy and free markets are important for global stability. Since they


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are important foreign policy objectives of the United States as well, it should take the lead in spreading demo-cracy worldwide. This is nothing new. Just as the use of American power and support in the past had fi rst lib-erated and then democratised both Japan and Western Europe, turning them into market economies as well in the process, the United States needs to democratise and integrate the ‘world’s have-nots into the globalised West’ (p. 17). While imposing democracy from outside has its proponents, the impossibility of such an enforcement has also been pointed out by several scholars. One of the most persistent critics of this idea has been Hobsbawm (2004) who calls it ‘quixotic and dangerous’ (p. 40). He points out three reasons why the imposition of democracy from outside has become popular in recent years. First, the process of globalisation conveys an impression that a ‘universal pattern’ is developing where consumer choice, attitudes and behaviour are converging. There is the temp-tation of assuming that this is true of political systems and behaviour as well. The imposition of democracy is seen as a way of hastening an inevitable outcome. Second, political instability in many parts of the world, starting in the Balkans in the 1990s and ending in Afghanistan, September 11 and Iraq in the early years of the present century, have convinced many that the only way to end such instability is to enforce order from outside. Third, the United States with its ‘combination of megalomania and messianism derived from its revolutionary origins’ and convinced of its material and moral uniqueness seeks to remake the world in its own political image (p. 40).


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Hobsbawm points to the dangers of such an enterprise. While the idea of spreading universal values by force might appear to be the right thing to do, it is also important to keep in mind that nations rarely seek to coerce other nations in the interests of universal human values. Coercion has al-ways been needed to achieve narrow national objectives and ultimately it is the furtherance of such objectives that takes precedence over the imposition of universal values. The promotion of democracy in the context of nation-states addresses only one part of the problem. It does not address the problem of democratising international institutions. Hobsbawm further points to the dangers of spreading illusions by trying to spread democracy. He argues that by spreading the idea of democracy worldwide the illusion is created in the minds of those living in non-democratic states that democracy ensures that the people have a say in deciding what their government will do. However, the experience of democracies is that decision-making very often does not refl ect the wishes of the major-ity. Referring to the decision-making that preceded the Iraq war in the United States and the United Kingdom he refers to decisions ‘taken among small groups of people in private, not very different from the way they would have been taken in non-democratic countries’ (p. 41).

The Democratic Option

The problems that democracy currently faces and the un-suitability of alternatives raises questions of where we go next. It is here that a reassessment of current models, with


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careful rather than radical overhaul or systemic changes, becomes vital. There is a need to reassess the crisis of democracy itself and the external positive infl uences on democracy that could be encouraged. The practice of demo-cracy is as important as the system of democracy. Former Indian President, K.R. Narayanan (2000) famously com-mented on 27 January 2000, at the 50th anniversary celebrations of the Indian republic: ‘Today when there is so much talk about revising the Constitution or even writing a new Constitution, we have to consider whether it is the Constitution that has failed us or whether it is we who have failed the Constitution.’ Dr Rajendra Prasad, as President of the Constituent Assembly, had pointed out: ‘If the people who are elected are capable men of character and integrity, they should be able to make the best of a defective constitution. If they are lacking in these, the Constitution cannot help the country.’

Joseph Nye (1997) has also argued that the crisis that democracy is said to be facing is not really a crisis of democracy at all but a crisis of government. The crisis has come about not because democracy itself is facing a crisis but because governments are not really acting in as democratic a manner as is desired. It is a crisis of delivery. In defence of democracy he points out that in country after country even where democracy is supposedly in crisis a large majority of the people prefer democracy to any other form of government. There have never been popular move-ments to replace a democratic government with an alter-native system of government. Nye further argues that the problem could be that democratic governments have tried


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to respond to popular pressure and have involved them-selves in far more areas than they can effectively deal with. This leads to unfulfi lled expectations. The intervention of democratic governments often has been for regulation rather than direct provision or management of services. However, the fact that a government is involved creates dissatisfaction with that government when the service is not properly provided. Poor performance is very often cited as the reason why a large majority of the people is dissatisfi ed with the performance of democratic governments.

For large developing countries like India, increasing the accountability of government also involves devolv-ing democracy to lower levels of government and deepen-ing democracy at these levels. Subrata Mitra (2001) argues that the decentralisation of government through two amendments to the Constitution in the 1990s has ‘infused new political resources into the political system of India, and enhanced the resilience and legitimacy of the state’ (p. 103). Though devolution has not been equal-ly successful in all states, it has made a major difference in those states where local elites were confi dent enough to participate in local governance institutions and where the institutions themselves were accountable to local citizens. Craig Johnson (2001) refers to another advan-tage of devolution that could enhance the legitimacy of democratic governments. It could ensure greater dis-tributional equality. There are three major advantages of devolution and deepening democracy at the grassroots which have relevance for distributional equality. First, empowerment of people at the local level signifi cantly im-proves the management of limited resources. Those who


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manage scarce resources are likely to be more aware of the importance of sustainable use. Sustainable use of local resources is likely to reduce pressure on scarce resources and also reduce the need to source additional resources from outside. Second, cooperation between government agencies and effective local government could produce ‘synergestic outcomes’ in areas such as forest, fi sheries and water resource management that might be impossible to achieve if either acted on its own. Finally, greater dem-ocracy and devolution of powers have the potential to increase the participation of the marginalised people in decision-making and also to lead to an increase in the ac-countability of governments.

We can conclude this brief consideration by noting that democratic legitimacy is important for governance all over the world. Flawed government decisions or failures to fulfi l democratic mandates do not provide suffi cient reasons for thinking of non-democratic solutions. It has to be said at the same time that while democracy might be a necessary condition for good governance, there are other aspects of government functioning, such as accountability, that are crucial for ensuring good governance. While demo-cracy by itself might not ensure good governance, a sub-stantial democratic defi cit will ensure that the goal is never attained.

Appendix:

Is India Ungovernable?

It is common for argumentative Indians to argue that a vast and varied land like India is ungovernable. When Indian politicians display unruly behaviour in the Parliament and legislative assemblies or the media comes up with unsavoury stories about some politicians or admin-istrators, it is common to conclude in popular discussions that when those who are responsible for governance behave irresponsibly there is no hope for the country. With the reports of the mob taking the law in its hands on Indian streets appearing rather frequently, there seems to be a further confi rmation of the belief that India is re-gressing into a dark age. Is Indian democracy turning into mobocracy? This is a question that is often asked with concern. Not just popular discussions but also scholarly and informed refl ections engage with the issue of governability in one form or the other. We consider here selectively some of the positions without subjecting them to a critical examination.

In 1990, Atul Kohli published a book under the title Democracy and Discontent: India’s Growing Crisis of

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Governability. Kohli’s book is an attempt to analyse pol-itical changes in India from the late 1960s to the late 1980s, based on a fi eldwork carried out in India during 1985 and 1986. The writing of the book was nearly fi nished in late 1989 when the results of the General Election held that year were made available. They raised doubts in Kohli’s mind about the continued possibility of India having stable majority governments in the coming years.

Though India was considered to be a stable democracy in the 1950s and 1960s, Kohli argues, it is now considered more and more ungovernable with ample evidence of disorder. There is increasing evidence of ‘personal rule’ both at the Centre and in constituent states. The bureaucracy is no longer considered neutral, and various sections of society have turned to violence to achieve their aims. The state is unable to deal with this situation and alternates between ignoring such violence and trying to repress it. This has made the situation worse and has led to the need to bring out the army to maintain law and order.

The period after independence was a period of hope in India when a sincere attempt was made to lay the foundation of governance. Parliamentary democracy wasadopted and an attempt was made to ensure that bureau-cracy was apolitical and armed forces kept out of politics. This could not be continued. Kohli examines the reasons that are responsible for the crisis of governability. As con-fl icts between different interests have multiplied and the ability of the Congress Party to resolve them has dim-inished, the Party has tried to retain power by projecting personalities who try to increase their infl uence by adopting populist measures. Such populism has weakened state


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institutions and made political leaders even more au-thoritarian. With the domination of personalities, the fate of a party worker depends on his loyalty to a leader, not on his contribution to the organisation. A political party thus becomes ineffective as a party in the political process. This has also meant that political leaders no longer try to be agents of confl ict resolution at the regional and local levels. This further marginalises their political role and leads to extra-constitutional behaviour. Kohli also looks at the awakening of electoral constituencies that have traditionally been dormant. Though such an awakening is good for a democracy, it can have negative implications for a democratic system that is unable to fulfi l aspirations raised by an access to political power. The confl ict be-tween different groups over the issue of reservation is an example of this type. There is also an attempt to mobilise people on religious or regional lines to increase political infl uence. The increasing power of the marginalised people is leading them to demand more for themselves, and this is leading to problems of governance. As newly empowered groups organise to demand a fair share for themselves, existing groups organise to retain their share. In the absence of a political system that can mediate and resolve confl ict between the contesting groups, this leads to even more instability and confl ict. Along with political problems there has also been the decline of civil society institutions. Democracy has empowered the marginalised and this has meant that the dominance of the higher castes that provided some stability to the system has eroded. Since no party is dominant, the system has not been able to absorb the rise of the newly empowered people and to ensure their co-option into a stable political system.

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This has meant that the response to political demands is usually a violent one that relies on the use of the army and paramilitary forces.

The crisis of governability needs to be considered in a broader perspective. A theory popular with develop-mental experts is that tensions constitute an inevitable outcome of economic growth. A Marxist explanation would point towards an unequal distribution of wealth. Kohli’s study seems to indicate that, while the problem does relate to wealth distribution, it has more to do with the failure of the Indian state to develop strong institutions needed to resolve the problems thrown up by economic growth and the social churning that is taking place. A state that treats all its citizens as equals and gives them an equal say in deciding who will govern them is diffi cult to establish in a society where there is widespread economic inequality. Though this process was initiated in Europe in the 19th century, democracy fl ourished there only when rapid economic growth ensured that there was a larger cake to share and economic inequalities did not threaten the democratic system. Such rapid economic growth has not taken place in India. Similarly, a state that intervenes heavily in economic activity should ensure that such an intervention is impartial and the process of economic decision making is not captured by special interest groups. This has also not happened in India. The fact that economic policy favours existing elites only adds to the problem of governance. The institutions that could have ensured the impartiality of decision making have been systematically destroyed by successive governments.

Yet another book, India: Problems of Governance published in 1996, by Bhabani Sen Gupta takes the argument to


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the 1990s. This book was published under the auspices of Centre for Policy Research, New Delhi. It was part of a broader study on the problems of governance in South Asia as a whole, a region seen as ‘one of the most diffi cult regions to govern’. Sen Gupta wrote the volume on India, while other volumes published were on Pakistan, Nepal, Bangladesh and Sri Lanka. Confi ning our attention to India for our present purpose, it is useful to follow Sen Gupta’s assessment.

Sen Gupta sees the problem of governance funda-mentally arising out of a cleavage between power and people. Political leaders are getting increasingly isolated from the people. The process of governance has been subverted by the politicisation of the bureaucracy and the police, and the election process is being undermined by a rapid increase in candidates with criminal backgrounds. Power has still not been transferred to the masses and while a lot is said about empowering the poor there is very little that is done to ensure that this actually happens. The failure to remove poverty is also the result of a bureau-cratic system that was structured more towards political control than economic upliftment. India has failed to fi nd an alternative to bureaucratic processes. The crisis of the India model was inherent in the nature of the Indian Republic that was created after independence. The newly independent nation was just the rebirth of the old empire in a new form. Sen Gupta calls it ‘the empire-to-nation syndrome’ (p. 89). The country was technically free but the masses were not free from the imperial administrative system. The model of parliamentary democracy that was imported from abroad is not able to give the people a free choice in terms of who will rule them. Most of the

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government rule is through the agency of the bureaucracy which remains colonial in its attitudes. The government is democratically elected but the people are ruled by an authoritarian administration.

It is unlikely that any solutions to India’s problems will come from the existing leadership. The political leader-ship is not aware of the crisis, and its getting advice on solutions from a bureaucracy that has failed does not help. Most institutions that could have brought about change are themselves in a deep crisis. The electoral process could have brought about political change. But personality cult plays an important role in the electoral process and this prevents a campaign based on real-life issues. Though a majority of parliamentarians are from the farming community, they represent the relatively well off farmers and not the landless peasants. Moreover, most of them are either old or middle aged and cannot be expected to bring about radical change. The judiciary has become increasingly activist in orientation and has intervened on a number of occasions to ensure that the rights of the people are protected. But this has happened only at higher levels of the judiciary. At lower levels the system is mired in corruption and delays.

The economic situation is only marginally better than the political scene. The traditional Nehruvian model of eco-nomic growth was a failure in many ways. It did not focus on agriculture preferring instead to concentrate on indus-try. This meant that the rural masses did not benefi t from the fruits of economic growth. Another failure arose out of an emphasis on investment rather than on productivity. Low productivity was the result of controls that were exercised over the public and private sector investments.


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A major drawback of the Nehruvian model was its em-phasis on higher education. It did not build India’s human resources in terms of increasing literacy levels. Instead, it created a large number of highly trained professionals who emigrated to the West. National institutions built at great costs did very little to help solve the problems of the country. Yet another failure was with respect to foreign investment. There was too much of emphasis on using domestic resources and capital for economic growth denying India the benefi t of foreign capital and expertise. This ensured that, while India lagged behind at low levels of investment, technology and productivity, other Asian countries, especially those in South-East Asia, forged rapidly ahead. There is also a much deeper problem at work. The elites in India do not mind that their country is mired in poverty and backwardness since it does not affect them directly. They fear that any attempt to remove it would be at their expense.

Sen Gupta is pessimistic about ‘the possibility of the quality of governance getting better in the coming years’ (p. 255). There does not seem to be ‘much chance of the ruling class reforming the decaying and degenerating political system and process’ (p. 392). Yet, as S. Guhan (1997) has noted, he has something else to say suddenly and without prior warning. Sen Gupta writes:

Perhaps in the next decade or so, if one stubbornly holds on to an optimistic view of Indian democracy, as this writer does, the house that is today in a state of despair will be built, on the architectural model of the Great Wall of China, from different sides and different blocks, all of which joined together in webs of participatory governments. (pp. 396—97)

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His optimistic vision of India is an economy free from bureaucratic control and a vast network of self-governing democratic institutions operating across the nation at all levels, spanning districts and villages. The beginning can be made, in a true Indian manner, by the appointment of aNational Commission of eminent persons who will redraw ‘the political map of India for better governance’ (p. 419).

If Sen Gupta has both a pessimistic as well as an opti-mistic view to share, Kohli has something similar to offer. In an edited book The Success of India’s Democracy that he brought out in 2001, an attempt is made to examine how a low income economy with widespread poverty and illiteracy has been successful in maintaining a democratic system. The idea is to draw lessons from this experience.

Kohli notes that India does not have many attributes of societies that are democratic. It is not an advanced industrial economy, it is ethnically diverse and it does not have the ‘civic culture’ normally associated with demo-cratic societies. The fact that India is still a democracy can be attributed to the way in which different interests in society have been able to reach an understanding on the sharing of political and economic power. This in turn can be attributed to the style of political leadership that has evolved and the nature of political institutions that have been created. The success has also been due to the fact that the Indian political system has managed to strike a balance between centrifugal and centripetal forces and also allowed political elites to maintain their dominance of the system while at the same time co-opting less dominant sections when they have challenged elite dominance. This compromise is not perfect and has created imperfections


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in Indian governance. But the fact that the system is capable of achieving this compromise, however tenuous, has en-sured that India remains democratic. Democracy could not have survived in India if it had not served the interests of dominant classes. However, the sheer size of the marginalised people meant that ignoring their interests would have serious consequences as well. The political system that evolved thus put heavy emphasis on the rhetoric of redistribution without actually implementing a radical redistribution of resources. Radical rhetoric and conservative implementation of plans has ensured that a balance is struck and this has strengthened Indian democracy. India’s success in the past in maintaining a democratic system and the continuation of this success can be ensured only by a ‘moderate democracy’ that en-sures that political accommodation is neither too much nor too little. The challenge is in knowing how to strike a balance between these two positions. Indian democracy will fail if it does not recognise and accommodate diverse interests or if it tries to be too accommodative. If diverse interests are not accommodated, disenchanted groups will try to break away from the union; in the case of too much accommodation, the lack of resources for effective redistribution will weaken the viability of the state itself.

In his earlier book, Democracy and Discontent, Kohli had written that there are tendencies within Indian politics that do not fi t in with the major argument of the book that India’s problems of governability have worsened. ‘A situation of political turmoil can always be viewed in different lights,’ he wrote, ‘much as a cup can be seen as half full, rather than half empty’ (p. 8). This tendency to

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view India pessimistically and at the same time optimis-tically or to see the cup as both half empty and half full is to be seen also in an article that Amartya Sen wrote on ‘How is India Doing?’ for The New York Review of Books in 1982 and which was later published in a book in a revised version (Sen 1986).

Sen talked in this article of the failures and achievements of India since independence. He saw in this article Indian society as a deeply troubled society with injustices heaped upon inequities. Among the failures he noted the shocking neglect of elementary education in India. He writes:

After thirty-fi ve years of Independence, only a miserable 36 percent of adult Indians are literate. In this nation with a nuclear capacity, well-developed scientifi c know-how, and a higher education ratio perhaps eight times that of China, nearly two-thirds of the citizens simply cannot read or write. (p. 35)

He reserves his greatest criticism for the persistence of malnourishment. He notes at least a third of those living in rural areas do not get adequate food. This is a particular problem of landless labourers who are dependent on work for buying food. Many of them and their families have to go hungry. The persistence of malnutrition also means that self-suffi ciency in food is not as great an achievement as it is often portrayed to be. India does not produce enough food to meet the nutritional requirements of its population. Governments have been able to overlook malnutrition because they have taken care to see that starvation deaths are avoided by the provision of minimal food. It may be added here that there have been changes in recent times but these changes have not been very


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signifi cant. The Human Development Report 2007/2008 (UNDP 2007), for example, shows that, while India’s scorein the Human Development Index has improved, rapid economic growth in India has refl ected modestly with respect to poverty reduction and malnutrition (p. 40). What are the achievements of India? Sen mentions India’s economic performance since independence which appears quite credible in the light of the performance of the economy at the time of independence. No major famine has taken place and expectation of life at birth has gone up. India has taken initiative in affi rmative action and positive discrimination. Another achievement has been that, contrary to apprehensions about the break up of the country in view of regional disparities, there has been no disintegration.

This dichotomy of failures and achievements, of weaknesses and strengths, can be seen on a broader scale. Munshi (1999) has argued that the 20th century could be seen as the Indian century, if one took into consideration the entire century. Three major achievements of India are freedom, democracy and unity. While the struggle forfreedom was the main concern during the fi rst part of the century, the struggle to establish and maintain the largest democracy in the world was the main concern of the second part. What Europe aspires to achieve has already been achieved here. The Indian Union is a living reality and has been so for several decades now. This is im-pressive enough. But the irony of Indian history, argues Munshi, is that the ground reality appears fractured on allthese points. Independence came to the subcontinent along with communal carnage and partition that caused

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suffering and loss to millions of people. Indian democracy is riddled with perversions, and Indian unity has become precarious.

Is then the reality of India the reality of fractured achieve-ments so far? This may not be out of tune with popular perception. In an issue that attracted much attention, India Today (1997) ran a cover story under the title ‘Fifty-Fifty’ to sum up the assessment about the existence of India as an independent nation for 50 years. The picture seemed to be both disturbing and reassuring. Since 1997, India has attracted favourable attention for its economic achievements. Indian economy is currently being called one of the ‘Goldilocks’ economies with a comfortable growth rate and a tolerable infl ation rate. Now that there seems to be greater confi dence in the future, it is pos-sible that weaknesses will be overlooked. While it will not do to overlook weaknesses, there is also no reason to run down strengths. The weaknesses of India, just as India’s strengths, are massive. There are valid reasons for pessimism as well as optimism. The issue of governability, like other issues, will be settled by the choices that the Indians themselves make for removing major bottlenecks.

It is common to identify these bottlenecks as poor infrastructure and more cripplingly as poor performance with respect to education and health for the country’s masses. The even more basic problem is the manner in which politics has become a way not to achieve the common good but the good of the persons engaged in it. In an article, ‘Poverty of Politics’, Munshi (2005) argues that politics of the negative kind pervades life in India at all levels. The outcome of this kind of politicisation


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is not only corruption but also what he calls ‘vision defi cit’ in public life. Nothing illustrates this better than the controversy that was widely reported in newspapers at that time between Narayana Murthy and Deve Gowda regarding the Bangalore international airport project. Murthy had walked out of the project due to the delay in implementing it. Gowda tried to politicise the issue by bringing in all sorts of considerations that had little to do with the issue of improving the poor infrastructure of Bangalore. For Murthy the issue was to improve the urban governance of Bangalore and indeed other cities, for Gowda the issue seemed to be to protect his political turf. While Murthy, one of India’s most successful entrepreneurs, saw the world as his arena, Gowda as a local politician was doing politics in a routine manner within the confi nes of state politics. These are two faces of contemporary India. This is where Joseph Schumpeter becomes relevant to us. What works in a situation of slow change, he argues, may not work in a situation of rapid change. A new plan in a situation of rapid change cannot be carried out in a routine manner that is more in tune with a situation of slow change. It became clear as the controversy became public that what constituted ‘delay’ in the implementation of the project was seen differently by Murthy and Gowda. The poverty of politics, Munshi argues, in a country like India is that what is required for making a road or for that matter an airport in a world that is increasingly becoming one is not adequately realised. That it requires among other things a high level of effi ciency is something that needs to be understood. Different sections of Indian society, especially Indian politicians, need to wake up to the full potential of India in the world today.

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Index

189

Index

African Union (AU), 11Anglo-Saxon project, 64, 73Asian Development Bank (ADB),

2on good governance, 7

authentic community, 94Awami League, 146

Bank for International Settle-ments (BIS), 113, 115, 116

borrowing countries, crippling with debts, 13

bureaucracy, issue of good gov-ernance in, 23

Canadian International Develop-

ment Agency (CIDA), 2defi nition on good govern-

ance, 8capital allocation, privatisation

of, 135Christian Democracy, 64civic participation, decline in

United States, 86Civil Society, 82, 122–23

for Hegel, 97

Kothari views on, 94Lockean perspective towards

(see Lockean perspective, towards civil society)

Marx views on, 96–98movement from, 81Munshi’s defi nition of, 99nature of, 93–99in Poland, 81, 98in post-Communist European

society, 80Putnam views on, 90relevance of, 99–103role in United States, 85against state oppression, 81

classical social democracy, 59, 60Cold War, 51, 52Cotonou Agreement, between

European Union and ACP, 9

delivery defi cit, 133demand management, 57democracy(ies), 88, 143, 151–55

assistance for promotion of, 150


190

in Pakistan, 144–46issue of, 132

good governance in, 23participation in, 138

problem of, 140promotion in Poland, 94success in United States, 135Vanberg’s analysis, 140voluntary association useful-

ness for, 88Democracy and Political Gov-

ernance Initiative (DPGI). See New Partnership for Africa’s Development (NEPAD)

democratic defi cit, 9, 114, 123, 124, 155

democratic government, 133reasons for failure of, 134

Democratic Leadership Council (DLC), 52

Department for International Development (DFID), 2on good governance, 7–8

dictatorial government, 143direct democracy, 141–42domestic accountability, in inter-

national organisations, 111–12

Economic and Corporate Gov-ernance Initiative (ECGI). See New Partnership for Africa’s Development (NEPAD)

economic crisis, 77in India, 46–48in Latin American countries,

22

in Sub-Saharan African coun-tries, 4

economic policy, reduction in role, of national government in, 107

Economic Security Council (ESC), 118

economic statism, 74egalitarian society, 76ethnic tension, dealing with, 144European Initiative for Democ-

racy and Human Rights (EIDHR), 150

European Social Model (ESM), 76European Union

democratic defi cit, 124on good governance, 9

fi nancial fl ows, volatility of, 128foreign direct investment, 106free market

for global stability, 150of neo-liberalism, 55

Germany, unifi cation of, 151Giddens–Blair concept, 64global agreement, impact of, 109global capitalism, 74global fi nancial market, volatility

of, 128globalisation, 52, 104, 109, 137

approaches to, 105of capital and trade, 106causes of, 105–06depletion of resources, 111foundations of, 74

Index

191

global institutions role in, 112–17

Nayyar views on, 125–26opposition to, 110pace of, 105–06problem in developing count-

ries, 120global regulation(s), 108–09 impact of, 111good governance, 119

for developing countries, 3elements for, 18importance of civil society

groups, 129Munshi’s defi nition of, 24–25on European Union agenda, 2reformation of, 117–31

governanceOxford English Dictionary defi -

nition of, 1 UNDP on, 10government

meaning of, 2in relation to governance, 1–2

human capital, 85humane governance, 20Hyde Park Declaration, 54

industry, issue of good govern-ance in, 23

Intellectual property rights (IPRs), 108

International Monetary Fund (IMF), 2, 32, 113for promotion of good gov-

ernance, 6

role, 33in globalisation process,

115International Labour Organiza-

tion (ILO), 120

Japan, democratisation of, 151Johns Hopkins Comparative

Nonprofi t Sector Project, 101

knowledge economy, 74

Labour Party, 55towards creation of welfare

state, 56laissez-faire state, 39liberal democracy, 15

support towards people par-ticipation, 81

Liberalisation, of global economy, 140

Lockean perspective, towards civil society, 95–96

Malaysia, good governance in, 18–19

market economy, Blair support towards, 57

market failure, Keynes about correction of, 33

military dictatorship, 143modernisation, meaning of, 66multinational corporations

(MNCs), 127–28

Nation-state, 30New Labour, 55

market-oriented approach of, 69


192

neo-liberalism, 55, 59New liberalism, 63New Partnership for Africa’s

Development (NEPAD), 11New right, 59non-governmental organisations

(NGOs), 100–101, 150role in United Nations, 102

Old Left. See classical social democracy

open society, 68Organization of African Unity

(OAU), 11Organization for Economic

Cooperation and Develop-ment (OECD), 2, 115–16, 118good governance for, 6–7inequality, in OECD countries,

134

Pakistan, democracy in, 144–47Plural society, decentralisation

in, 92Populism, 78Post-communist letdown, 82private capital fl ow, in developing

countries, 106progressive governance, for 21st

century, 58public good, 34public participation, reduction

in, 89

regionalisation, 105Rwanda, democratic process

failure in, 148

Social capital, 85relation with civic virtue, 87view of Putnam on, 89–90

social capital defi cit, 87social democracy

association of, 59future of, 58

social justice, 61social welfare, purpose of, 53socialism

and social democracy, 59and laissez-faire, 61, 70

Sovereign territorial state, 30sovereignty, 28Soviet Union, disintegration of,

51–52state

challenges before, 32–42characteristics, 30–32future of, 49–50Indian state, since independ-

ence, 42–49for Marx, 29Rousseau views on, 28

state oppression, 81

territorial enterprises, 139Thailand, government reform in,

22Thatcherism, 60

on free market economy, 36, 39

neo-liberalism association with, 59

Third Wayas combination of progress

and justice, 56

Index

193

criticism of, 62–75New Democrats on, 54lying between laissez-faire and

socialism, 61policies of, 61politics, 60principles of, 52relevance to India, 75–79

Third World nation, economy of, 14

totalitarianism, 93trade liberalisation

impact on poverty levels, 110–11

unemployment rate, in France, 73United Nations, reformation for

global governance, 117–18

United Nations Development Programme (UNDP), 9–10on public sector management,

17

welfare state approach, in Sweden, 69

Western political thought, 27–28World Bank, 2, 32

on good governance, 4, 15World Environment Organization

(WEO), 120World Trade Organization

(WTO), 16agreements impact on member

states, 113–14creation of, 113role of, 115stress towards economic and

sustainable growth, 116

About the Authors

Surendra Munshi is at present Fellow of the Bertelsmann Stiftung. He retired as Professor of Sociology from the Indian Institute of Management Calcutta. He has taught and researched in India and abroad in the fi elds of classical sociological theory, sociology of culture, industrial soci-ology and professional management. He led an Indo-European project on good governance with the funding of the European Commission. The outcome of the project appeared in a book of which he was the co-editor (with Biju Paul Abraham) under the title Good Governance, Democratic Societies and Globalisation, published by Sage Publications in 2004. He is currently working on a book on the theme of language, religion and identity.

Biju Paul Abraham is Professor of Public Policy at the Indian Institute of Management Calcutta. His teaching and research interests include issues related to compara-tive public policy, administrative reforms and good govern-ance. He has also worked on international governance issues, especially decision-making within the World Trade Organization. He is co-editor (with Surendra Munshi) of


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the book Good Governance, Democratic Societies and Glob-alisation published by Sage Publications in 2004.

Soma Chaudhuri is an Assistant Professor in the De-partment of Sociology and The School of Criminal Justice at the Michigan State University. She is a qualitative sociologist whose work focuses on witch hunts, deviant behaviour and social movements. Her dissertation (Tempest in a Tea Pot: An Analysis of Witch Hunts in the Tea Plantations of India) is a study of how a migrant labour community uses ‘extreme deviance’ as a form of protest.

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