In addition, a long-standing concern with the government is that it does not have sufficient information or the capacity to achieve positive structural change in the economy. Give governments too much power, the argument goes, and they will direct resources to the wrong places and become captive tools of special interests. This argument is central to neoliberalism, and it will need to be overcome for any successor paradigm, such as productivism, to succeed.
A more accurate account of state capabilities recognizes that they are neither inherited nor static. Rather, once appropriate priorities are set, they develop over time through experience, learning, and building trust with private entities. For public officials, the relevant question is not “Do we have the capacity?” but “Have we established the right priorities and the right mode of governance?
Skeptics might say it sounds good in theory but is unachievable in practice. Just look around and you can find failures of public governance almost everywhere, locally, nationally and globally. But as Charles Sabel of Columbia Law School and David Victor of the University of California, San Diego show in a new book, effective governance models exist and have already made a big difference. The practice is there; it is the theory that is lacking.
Sabel and Victor focus on climate change, which is the biggest political challenge of our time. It is also an area where governance is doubly difficult: regulations must not only be effective at the national level, they must also be negotiated on a global scale between states with different interests and circumstances.
Sabel and Victor base their argument on the example of the 1987 Montreal Protocol, which succeeded in limiting ozone-depleting substances (ODS) to the point where the ozone layer is now on the path to recovery. complete. From the outset, ozone depletion and climate change looked like similar challenges, as both involve significant scientific and technological uncertainty and major differences between the positions of advanced and developing economies. This is why the 1992 United Nations Framework Convention on Climate Change (UNFCCC), the first global climate agreement, took the Montreal Protocol as its model.
Both the Montreal Protocol and the UNFCCC started out as very “thin” regimes, relying on broad commitments to reduce emissions (of ODS and greenhouse gases, respectively) by a certain date, but with little operational content. But the two regimes evolved differently. While the Montreal Protocol has made steady progress in bringing businesses and governments together to tackle real-world technology issues, climate change agreements have often ended up stalled in global negotiations.
Sabel and Victor draw attention to a key difference between the two regimes: the Montreal Protocol created sectoral committees in which ODS-emitting companies joined national regulators and scientists in the search for technological alternatives. These groups started out small, but grew and multiplied as knowledge accumulated, skills were acquired, and trust was established between the parties. This approach worked because problem solving was devolved to local actors, namely companies with the required technological know-how. When innovation stalled, goals were reset. The result has been a virtuous loop of innovation on the ground and goal setting at the highest level. Under the climate regime, on the other hand, companies have been kept away from regulators, for fear that they will take over the process. But it has entrenched conflicts of interest and hampered innovation.
The Montreal Protocol is not the only successful case of what Sabel and Victor call “experimental governance”. ) to the Irish agricultural pollution regime. In each case, experimentation in the field is associated with the definition of higher level objectives. The successful practices that emerge from these collaborations are then routinized through dissemination and standard setting.
The successes are not limited to environmental policy either. ARPA-E, after all, was inspired by the Defense Advanced Research Projects Agency (DARPA), the US agency responsible for some of the defining innovations of our time, including the Internet and GPS. At the local level, the most successful initiatives to revitalize communities and create jobs take the form of public-private collaborations that bring together training programs, businesses, non-profit groups and public officials to create new pathways to economic opportunities. Effective national industrial policies take a similar collaborative and cross-sectoral approach.
As Sabel and Victor explain, the general strategy in all of these areas is to start out with ambitious and somewhat ill-defined goals. Program managers need to recognize deep uncertainty and therefore the likelihood of errors and false starts. There must be incentives for the parties with the most detailed and accurate information (usually companies) to seek solutions, which means that public agencies must establish a combination of sticks (the threat of regulation) and carrots (public incentives and contributions).
Since success depends on frequent reassessments and revisions, setting milestones and tracking progress is crucial. When solutions emerge, they can be generalized in the form of standards or regulations. Innovation is central to this process, as higher living standards (including a cleaner environment and better jobs) are only possible through increased productivity. This type of policy development differs from current approaches. From the point of view of experimental governance, the “state versus market” dichotomy is simply not relevant. States and markets are complementary. The standard model of top-down, principal-agent regulation of economists becomes useless. To succeed, a new paradigm like productivism will have to transcend the outdated ideologies of the past. Fortunately, the governance models it needs already exist, and in abundance. ©2022/Syndicate Project
Dani Rodrik is Professor of International Political Economy at Harvard University’s John F. Kennedy School of Government and author of “Straight Talk on Trade: Ideas for a Sane World Economy”.
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