Projects - Society between market and state

Society between market and state

 

Description

A major challenge for society is learning how to organize human action in order to stimulate the development of knowledge to solve public problems. The standard repertoire for solving public problems contains mixes of market and state governance, with markets gaining attraction as a solution since the 1980s. However, after the most recent financial-economic crisis, trust in markets as a solution for public problems has decreased significantly. Now that both state and market are regarded as far from perfect solutions for governing society, there is new room for a more realistic perspective that includes a more pluralistic view on governing society, also including collective action that is neither a state nor a market form of governance.

The institutionalised form of collective action, whereby stakeholders are immediately involved in the use and management of their collective resources and services, may offer new opportunities to govern public resources from below, not from above. Creating the opportunities that citizens will be directly involved in the ways in which public resources are governed demands another mind-set than the one which currently rules governmental decisions, whereby the options are limited to solutions made by the state or the market, or a combination of both. Closely related to the current economic and environmental crises, new collective action initiatives pop up all over the world, whereby a local group tries to solve an often local problem but with – if duplicated elsewhere – potentially supra-local effects. Similarly, “the market” is also discovering the potential of collective action, e.g. by relying upon the collective purchasing power of consumers, as in the case of e.g. Groupon. And also the other way around consumers are organising themselves in groups with substantial collective purchasing power, thus addressing the market with new forms of commercial interaction. However, such initiatives are not entirely new: although the current new media were not yet present, other, similar forms, such as in the case of guilds in pre-industrial Europe offer perspectives to study these initiatives in the long-term.

 

The current societal problems and the new, although still sketchy forms of collective action that are emerging call for new research on what kind of institutions are needed to solve public problems. Institutional diversity is key in studying the main public problems that our society is facing. Key public problems are climate change and underinvestment in scientific and technological knowledge, but also the unstable and overwhelming financial system, care for children and elderly, social security, infrastructure/public transport. Solutions for these public problems can be proposed from the traditional state-market perspective, but in practice collective action might provide better solutions (see table beneath).

 

 

Individual/Market (property rights) 

Public/State (government)  

Collective action 

Climate change 

Emission Trade Scheme, pollution tax 

Emission caps, environmental standards 

Transition towns, co-operative seed banks, animal breed societies

Scientific and technological knowledge  

Intellectual property rights/patents;

“entrepreneurial universities” 

Publicly funded science 

Open source software communities, local / sectoral innovation systems, patent commons 

Financial system  

Stock markets 

State banking 

Cooperatives, mutuals 

 

These collective action solutions are not designed top-down but emerge mainly spontaneously bottom-up, and evolve with both private initiatives and institutionalization (by design and by evolution). In many ways, collective action might provide more efficient, effective and durable solutions of public problems, due to their lower bargaining, transaction and monitoring costs and due to the direct involvement of the stakeholders. Even though collective action might provide efficient and effective solutions for insiders, i.e. the current users of the resources involved, it might also close off access to outsiders, and in this sense be an enemy to the open society.

 

Unfortunately there is a lack of comparative institutional studies that provide insights into the potential (monetary and non-monetary) benefits and costs of one type of governance above the other. Discussions about the advantages of one governance regime of another cannot be conducted in a sound scientific way simply because there has been no comparison of economic, social or political advantages of one model over another. Nor are we fully informed about all the institutional variations upon the private/public/collective types or on potential combinations of all these different forms of resource governance. There is insufficient knowledge about collective action institutions such as co-operatives in general, but also about the many different forms they can take, also as partnerships with market or state-partners.

 

Aim

In this project we aim for a comparative institutional analysis that takes into account the bottom-up initiatives for collective action, and provides a heuristic (cf. Sen 1999; 2009) approach to evaluate the effectiveness and efficiency of different forms of governance to solve public problems (cf. Dewey 1927). We intend to develop a set of criteria that include not only the economic advantages but include welfare and well-being parameters (see Stiglitz et al. 2009).

 

This project, sponsored by Utrecht University as being a part of the 'Focus en Massa'-program, will deliver new insights into how to organize human action creatively from the bottom-up in order to stimulate the development of knowledge to solve public problems, going beyond the standard repertoire of (mixes of) market and state governance. The proposal also is closely related to current research being done by the Wetenschappelijke Raad voor het Regeringsbeleid  (report on “Markt, Staat en Samenleving”). Considering the current European-wide search of governments for alternatives to the market and the state as governance regimes for public and other goods and services, this timeliness of this topic cannot be underestimated.

 

Participants in this project

  • Dr. Erik Stam (Project co-ordinator, Utrecht University, Utrecht School of Economics)
  • Dr. Tine De Moor (Project co-ordinator, Utrecht University, Research Centre for History and Culture)
  • For this project 3 postdocs will be hired for one month as visiting scholars to work together on a new plan about the above issues.

 

Projectcode Utrecht University

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