Revolutionizing Economic and Democratic Systems

Over the last three decades, two major waves of reform have established a system of governance popularly labelled the New Governance. This concept refers to one of the megatrends in industrial societies, the shift from government to governance. Generally, this shift entails a relaxation of the authority of the bureaucratic and hierarchic nation-state for the benefit of “the creation of a structure or an order which cannot be externally imposed but is the result of the interaction of a multiplicity of governing and each other influencing actors” (Stoker 1998: 17). The first wave emerged in the 1980s, when neoliberalism and rational economic theories were introduced in public service through the concept of New Public Management (NPM). The second wave of reform was largely a response to the first wave, whereby system and network theorists tried to make sense of the network society that had emerged. Both politicians and the government saw a tool in these theories for managing and steering the plurality of institutions and networks that were involved in public management following NPM (see e.g. Bevir 2010: 12). In other words, the first wave aimed at achieving efficiency, while the second wave sought improved steering. Consequently, the shift from government to governance has brought about a room for manoeuvre at the local level, i.e. bottom-up processes, that was not present earlier, at the same time as new kinds of steering processes restrict actions in ways that are difficult to interpret or predict in advance. In what ways is this new concept of governance influencing, for instance, democracy, legitimacy and efficiency? The assumption for this chapter is that New Governance and governance networks have been constructed as a consequence of changes in both the economic and political systems, and that New Governance accordingly has become the centrepiece of economic and democratic theory development. As mentioned, benefits for both democracy and economy of increased bottom-up processes are found in the academic literature, and when combined, suggest that an increased room for manoeuvre for these kinds of processes may offer both economic and democratic gains. Let us now take a look at these theories.