Good Governance: A New Public Managerialism

Abstract

This paper is an outcome of extensive reading and discussions on the subject of good governance between the authors. It is not a literature review alone but represents the understandings of the authors about the meaning of governance and good governance. The paper searches the background and current use of the concept and tries to give a complete picture as much as possible to comprehend how long it can be stretched to explain current problems of governing. It also discusses to what extent, the concept has a theoretical value and whether this is desirable or not. In the end, we suggest that the concept is a sign of an emerging political and administrative theory that relies on multiple sources of social sciences. That means this emerging theory has both normative and pragmatic characteristics, yet incomplete.

Full text

Review of International Law and Politics (RILP),
Vol. 4, No: 14, 2008, pp. 165-187.
GOOD GOVERNANCE: A NEW PUBLIC MANAGERIALISM
Coskun Can Aktan
Dokuz Eylul University
Faculty of Economics and Management
Izmir, Turkey
Hayrettin Ozler
Dumlupinar University
Faculty of Economics and Management
Kutahya, Turkey
ABSTRACT
This paper is an outcome of extensive reading and discussions on the subject of good governance
between the authors. It is not a literature review alone but represents the understandings of the
authors about the meaning of governance and good governance. The paper searches the
background and current use of the concept and tries to give a complete picture as much as possible
to comprehend how long it can be stretched to explain current problems of governing. It also
discusses to what extent, the concept has a theoretical value and whether this is desirable or not. In
the end, we suggest that the concept is a sign of an emerging political and administrative theory
that relies on multiple sources of social sciences. That means this emerging theory has both
normative and pragmatic characteristics, yet incomplete.
Keywords: Governance, good governance, global governance, institutions and ethics
JEL Classification: D73 H1, H11
1

I. INTRODUCTION
We believe in humanity and rationality of human beings but also we can witness
fellow beings engaging in horrible actions such as ethnic cleansing, murdering the
innocent, and torturing other fellow beings. Today the human society is in a state
of moral and administrative crisis. This crisis has many symptoms, the most
dramatic being the remorseless increase in levels of criminal, delinquent, and
terrorist behaviors and organizations, not unrelated to the practices of our states,
laws and social institutions, all of which form our governance system. Then there
is the decline of civility, the decline of public trust in corporations and the
weakened public consensus on any sort of social and civic values which form our
moral systems. We seek tranquility in a word which is in a transcending mode of
state. It seems like the knowledge we acquire today and the wisdom we gain will
turn into lies and delusions tomorrow. We see that much blame has been put on
some trends such as globalization. One can even blame human creativity and
increasing liberties which somehow make us indifferent to and not subservient to
any fixed moral codes. We abstain ourselves from committing to any value that
counters our private will. Is something wrong with the humanity? Are we
evolving into technologically more advanced but morally more primitive men?
The answer is no, only if we think and believe in the idea that people are not
corrupt but the systems and values of government get corrupted. Only by
accepting this premise one can develop a healthy framework for effective and
moral governance. As Keohane puts we need not just effective governance but the
right kind of governance (2001: 1). By governance we do not mean the politics
and public administration alone because governance systems include economy,
state and society in one big more-or-less institutionalized whole.
The complexity and un-manageability of globalization with the sweeping power
of economy and exchange between borders is worrying for governments,
international institutions and NGOs. How can we govern these processes and the
complexity of economic, cultural and political interactions without idealizing and
exalting the nation state? In this age of unreason (borrowing from Charles Handy)
almost everyone have come to believe that human institutions must follow the
guidance of moral purpose(s) for a human way of living, for a general good or a
common human well-being which is capable of being shared by everyone and
which provides a standard for both good legislation and good governance. What
are the basic principles for good governance? Despite emerging consensus among

some international or supra-national institutions, to expect a total consensual
answer for these questions are of course pointless. The ideal form of governance
has been a lingering question for political thinkers. Since Socrates and his student
Plato, philosophers and practitioners have been searching for the best way of
governance, a morally mature community and the best form of state. Platon in his
works, “the State”, “Politics” and “the Law”, contemplated on the ideal state and
ideal political governance. He also couldn’t help to pose the question: “who
guards the guardians?” Indeed, the sates and governments in history usually based
their power on coercion rather than persuasion in order to derive the consent of
their subjects. Even policy sciences as a scientific branch of politics search for
policies to have people conform to rather than searching for ways to increase
public control over policies. Our conventional models of governance tried to
develop institutional protection from the arbitrary exercise of coercion and
increase communication and collective reflection on state policies and actions. Yet
the more we strive to govern, the less we succeed. The institutions and policies the
state creates can easily turn into tools of exploitation, manipulation and
oppression.
By good governance, most people mean democratic governance which attributes
importance to agreement, dialogue, compromise, participation and communication
within a complex network of actors and institutions rather than relying solely on
free and timely elections, market economy etc. Some of the newly emerging
forms of governance advocate for the dispersion of decision-making and
implementation away from central state and bureaucracy and the inclusion of
interests and actors as diverse as possible. These new forms use too numerous
neologisms and catchwords such as network governance, democratic governance,
pluralist-deliberative democracy, multilayered governance etc. In network
governance, for example, decisions are made through processes of bargaining and
negotiations among government, business and civil society actors in semi-
formalized institutions (Mathur and Skelcher, 2007: 229). In all these concepts
there is an assumption to find an effective and good governance system that
encompasses governments (or government offices) and citizens (or NGOs). The
innovation of good governance is the idea that networks are more efficient than
hierarchies and that dialogue and consensus can build political legitimacy and
effectiveness (Bevir, 2006).
Some managerial ideologies like Fascism and National Socialism at one extreme
exalt the state (hierarchy) as a sacred entity prior to the individual and society;

others like Marxism as a socialist ideology and liberalism as an individualist
ideology are anti-state. Marxism considers the state as the steward of dominant
classes and an institution to alleviate class struggle. Instead it adheres to a state
which is a servant of the community of equals who are refrained from private
property, social ranks, and so on. Liberalism on one hand believes in the
minimum-state and demands the limitation of the state authority and obsolete
legislations; and on the other it advise the expansion of individual freedoms that
lead a flexible market society to meet the demands of the changes in
circumstance. These theories and ideologies are not too distinct as they are either
on one horn or the other of the governance dilemma, which Keohane defines as
“the dilemma between the liberalism of progress and the liberalism of fear”
(Keohane, 2001: 9). Market liberalism calls for institutions to promote exchange;
social liberalism calls for institutions to control human vices.
It seems that good governance literature acknowledges that market (economy),
hierarchy (state) and community (civil society) are competing but mutually
dependent entities based on human will and choice whose ends are not always
anticipated as they are networks with varying degrees of flexibility and change.
“However dominant any one of these three may have been at a given moment
and/or for a given set of actors, almost everyone would concede that modern
societies/polities/economies can only be analyzed in terms of some mix of them”
(Streeck and Schmitter, 1991: 227). The concept of governance is widely used to
explain theoretically, ideologically and contextually different modes of policy
practices. They all commonly defend a system of governance that is “non-
hierarchical, non-centrist, communitarian, market-oriented and morally pluralist
democracy”. This new and ambiguous concept despises many other political
theories and ideologies which usually ignored plurality of human interactions and
preferred one mode of governance to another.
There have been some attempts to combine these different interaction and
coordination mechanism under the auspices of the welfare state. However, the
popularity of theories and discourses on the welfare state between 1960s and
1980s, now seem to be old-fashioned as the questions, like “can the ideal state be
defined and formed?” and “what are the basic features of the ideal state?” have
lost their prominence along with the de-idealization of the state, in the last decade
of the 20th century. Scholars, Schmitter (1996) for example, can describe
possibilities of a non-state order in Europe. We now witness the decline of the
state not necessarily as an entity but as a unit of analysis. Now even the scholars

of international relations (IR) argue that states should not be the focus of analysis
in IR and that more systemic and institutionalist perspectives are required to
understand IR (Milner, 1998). Besides, the state is an organization that will never
be both all-inclusive and unitary at the same time. Therefore seeing the nation-
state as the main actor-player in global and domestic governance would not help
in any way.
Good governance may relive itself to us through its outcomes, functions and
procedures (Keohane, 2001). Good governance deliver outcomes which increase
the set of human capability or freedom to achieve productive purposes (Sen,
1999) in a just way which benefits the least advantaged ones by making at least no
one worse off (Rawls, 1971). Most functions of governance, as being proposed by
the advocates of good governance concept, should be performed at market and
community level and less on hierarchical state level. The institutions designed for
governance should be culturally and politically diverse so that most of the
functions could be performed at local levels. Modern governance should be
dispersed across multiple centers of authority (Hooghe and Marks, 2003). But the
governance institutions should be able to limit the opportunities to externalize the
cost of actions at one locality onto others. In other words, governance institutions
are to provide focal points like in a collaboration game situation where no one has
an incentive to defect. There are also procedural criteria which are accountability
of elites for their actions, participation of people in making collectively binding
decisions, and persuasion to make people abide by the rules rather than depending
on force or sanctions (Keohane, 2001). These procedural criteria are essential for
voluntary cooperation based on honest communication, rational-moral persuasion,
and thus, legitimate process.
II. DEVELOPMENT OF THE CONCEPT OF GOVERNANCE
The concept of governance owns its development mainly to developments in
institutional/constitutional economics (Buchanan and Tullock, 1962), new
institutionalism (March and Olsen, 1984), economic theory of politics (Coase,
1988) and organizations (Williamson, 1981) and behavioral sciences which
emphasize contract and choice with more emphasis on the former. These are not
always compatible theories; however, they have common implications based on a
criticism of classic market model which assumes that institutions will evolve
spontaneously in the direction of structural efficiency through simple rational
exchanges among numerous actors. Governance paradigm perceives politics as

complex exchanges among political, economic and social actors with differing
values and interests within an institutional environment. This complex body of
literature is also critical of simple hierarchy model as many modern polities have
multi-centered, multilevel, network character rather than a single center with
lawful hierarchical authority (Kohler-Koch and Eising, 1999).
Governance paradigm shares many assumptions with neo-institutionalism which
sees institutions not as static and unchanging structures, instead they shape
preferences and are shaped by the preferences voiced in collective volumes.
Institutions enable individuals to secure collectively their own privately defined
objectives that cannot be efficiently secured through simple market exchange or
democratic voting although the both increase accountability. Williamson (2002)
defines the concept of governance as a combined form of choice and contract.
This reasoning means human behaviors are inclined towards not to maximizing
but to satisfying, a continuum from the best to “good enough” (Williamson, 2002:
174). Instead of the logic of consequences alone, the logic of appropriateness
(March and Olsen, 1998) is a preferred model of human and organizational action
in both governance and new institutionalist literature. Actors behave in
accordance with their interpretation of rules and practices that are socially
constructed. Identities and rules are constitutive and constituted by social
interaction and experience (March and Olsen, 2001:193).
Contracts are codified promises fixing the rules for a given transaction and
collective action by establishing the rights and obligations for each contracting
party. Contracts are therefore social institutions embedded in a rational-moral-
cultural framework which includes language, symbols, roles, reputation, mutual
expectations, commitments, rewards and punishment. Binding contracts are also
public goods for participants who are usually willing to contribute to sanctioning
others and punishing defectors in a face-to-face repeated game situation allowing
the exchange of complete information (Ostrom, 2000). Therefore, not every
conflict in a transaction or collective action requires a third party intervention. As
we know that only the trustworthy will survive in an evolutionary and repeated
game of exchange and cooperative behaviors (Güth and Kliempt, 1998). There are
studies showing that a social norm can work in generating cooperative behavior as
well as an externally imposed set of rules and that cooperation is likely to survive
longer than that of imposed externally. The rules that have been crafted by
internal agents, as contrasted to the elite or government, are more likely to be
respected, observed, and complied with (Ostrom, 2000).

Despite the deficiency of an external rule-maker and enforcer, most contracts
involve a social demand for third-party dispute resolution that is the law and
courts to sustain social exchange and cooperation overtime (Sweet and Brunell,
1998). The third party –be it courts, judges, legislatures or ombudsmen- adapt
continuously the law governing exchange to the exigencies. But they do not
necessarily impose their own rules without any concern to internal parties; instead
the third party should accept and consolidate the legitimacy of internal rules. Not
every dispute should be brought to a court except fraud, illegality or conflict of
interests. Since all contracts are unavoidably incomplete due to unintended
consequences of bounded rationality, opportunistic behaviors and so on, there
emerge always needs to devise supportive governance structures (extensive rules,
independent monitoring agents etc) and alternative modes of governance (like
unanimity voting, referendum, veto power, etc) in discrete structures. These
changes are simply adaptations to changes in conditions (such as expansion by
new comers, entering into different domain of interests, changes in resources, etc)
and availability of information and to the evolution of transactions. These
adaptations can be coordinated as in hierarchies or spontaneous as in markets. But
the adaptations of governance structures in addition to contracts, as argued by
Keohane (2001), do not take the form of either markets or hierarchies but markets
and hierarchies.
For Keohane governance institutions are mainly the result of interdependency and
information scarcity. Therefore institutions perform signaling function providing
information and incentives to help actors define their strategies within the limits
of a cooperative relationship. Governance structures, that are institutions, infuse
order in transactions to mitigate conflict and realize mutual gain. The realization
of interests occurs through persuasion based on bargaining and signaling as forms
of information flows between parties. In this information flow, parties exchange
credible promises and threats as well. Persuasion based on recalculation of
choices and consequences does not necessarily involve changes in values. In good
governance concept, however, persuasion means the appeal to norms, principles,
and values that are shared by participants in a conversation (Keohane, 2001: 10).
Persuasion requires giving moral reasons for actions, reasons that go beyond
assertions about power, interests, and resolve (Elster, 1998; Keohane, 2001).
Williamson argues that through governance structures contracts become credible.
The regime of contract laws is an important dimension and asset of alternative

governance forms. The regime of contract laws only provides a framework or
occasional guidance in case of doubt and dispute but does not indicate a concrete
form of relations among parties in order to maintain voluntary exchange. Each
generic mode of governance is defined by an internally consistent syndrome of
incentive intensity, administrative controls and contract law regime. That means a
governance system is generic mode which include a market structure or a price
system, a hierarchical structure inferior to the law, and a
contractual/communitarian consensus-based system of rules and law. Governance
approach maintains that structure arises mainly in the service of economizing on
transaction costs (costs of exchange, monitoring, dispute resolutions, etc.) rather
than maximizing value (Williamson, 2002: 176-178).
Political decisions are ultimately moral choices (Sabine, 1961: 745) and talking of
principles implies an ethical dimension. Furthermore, the legal order and legal
principles, as socially embedded institutions, emphasized by good governance
implies a formation of community morality and taking community values into
consideration. Yet this process of taking into consideration of community values
and allowing a community morality to be built by the state must be neutral or
independent of any particular conception of good life and must support diversity
and complexity (Dworkin 1985); must not foster any conception of good life that
some people must reject (Larmore 1987); all conceptions of the good must be
considered equally worthy and should not be judged from a social standpoint
(Rawls, 1982); or as Snopoli (1993) puts rightly, the state may support policies on
non-neutral grounds providing that other citizens, who do not share or reject the
value of those policies, are not treated as less valuable than others.
Harlow (2006: 190) derives a distinction between “principles”, which form an
essential building block of a legal system and “values”, which are largely
formulated outside that system. Principles are largely procedural while values are
the ends towards which procedures aim. There must be compatibility between
these macro level principles of law and micro-level values of administration. The
former implies a “bounded government”, a framework for administration and
principles of governance, while the latter implies “values of governance”.
Principles of law consist of a universally accepted typical mixture: fairness,
legality, consistency, rationality and impartiality. Good governance on the other
hand requires collective action and rights to participate in policy making.
Therefore participation, transparency (openness and access to information),
accountability and reasonableness become the values of good governance. These

values are not new and their origin can be found in classical Western tradition of
public management and revised by the “new public management reforms” during
the 1990s.
The concept of governance generally implies a market-supporting regulatory
framework, minimum government, partnership between state and civil society,
decentralized and participatory public administration, consensus-based political
institutions, social equity and inclusiveness, accountability and integrity, so on
and so forth (Brinkerhoff and Brinkerhoff, 2002). Governance is an attempt to
close the gap between policy development and implementation, democracy and
efficiency, democracy and the rule of law (constitutions), and between political
science and public administration. These gaps started to grow since the time
Woodrow Wilson in 1887 attempted to separate public administration from
politics with his essay “The Study of Administration” (Wicker, et al., 1993).
Several scholars followed the lead in the USA. At the 1939 meeting of the
American Political Science Association (ASPA), public administration created its
own professional organization contributing to the divergence between political
science and public administration (Guy, 2003). Similar attempts took place in
Europe as well at about close dates. Guy argues that “Scientization” of politics
almost ignored the popular will, morality and social institutions by focusing on
positivist behavioralism and empiricism on the side of political science in the
1950s and 60s, and efficiency and performance on the side of public
administration. “The growth of scientism in the social sciences resulted from a
desire to gain knowledge for prediction and control: knowledge that would rise
above the human and be objective, neutral, value–free, and above ideological
dispute. The promise of quantitative techniques was to lift political science from
the untidiness of politics to a science of “apolitical” politics” (Guy, 2003: 648). In
the height of 1960s and 70s a new interest began to grow in institutions, but also a
growth of literature on “new public management”, “new right” politics, policy
analysis and “public choice”. However different they are, these approaches shared
a reformist agenda for public administration to be more imaginative, responsive
and anti-establishment.
Good governance refers to the processes that bring and collate different interests
and resources together in a functioning order to produce and achieve collective
goods at global and national levels. These goods (goals) are shaped by political,
economic and social values from which a particular form of governance derives
its legitimacy by discovering and enforcing overarching values. These

overarching values are not the properties of the state but of the polity. Too much
dependence on laws, rules and regulations may also mean the value-basis of the
community and society is in collapse, therefore more emphasis is put on
procedures like dialog, discussions, participation and democracy to increase the
legitimacy of governance structures and laws. Besides, this inclusion of
conflicting interests and worldviews should occur not in terms of “inclusion in the
state” but “inclusion in the polity” (Dryzek, 1996). In addition to the overgrowth
of state apparatus and bureaucracy, inclusion in the state may result in less vital
civil society, erosion of some existing democratic accomplishments, and a
reduced likelihood of further democratization in the future. Dryzek (1996: 476)
prefers a passively exclusive state (which simply leaves civil society alone) to
actively inclusive state (taking steps to mobilize latent groups and driving them
into the state). An actively inclusive state or governance leaves the decision to
select whom and how will participate in negotiations to established political
institutions and therefore governance becomes a consultation not an active
dialogue (Bevir, 2006: 429)
GOOD GOVERNANCE IN GLOBAL ARENA
Good governance concept is a western concept despite the existence of other
compatible systems of governance such as that of Ottoman system of governance
which devolved authority to communities to administrate their own affairs in
many areas. Good governance is highly influenced by European structural models
such as French administrative law, the English common law, the German
principle of proportionality, and the Scandinavian ombudsmen institution. Thus,
the concept is Western and might have been perceived as a disguised form of
cultural and economic imperialism. Nevertheless, these concerns might be
perceived excessive since the Asian and East European countries are voluntarily
and readily willing to adopt it. What prevents them from a complete adaptation to
this new system is that the system is too expensive for them to implement and it
seems good only for the developed world. And only the wealthy and well-
supported individuals and organizations may be able to suck in the values and
benefits of the new good global governance system supported by international
administrative and commercial law and the global institutions (Harlow, 2006).
As rational-choice institutionalism suggests institutions come into being and
sustain themselves as long as they offer selective incentives to politicians and
leaders to invest in institutional innovations and as long as they provide

distributive advantages to powerful interests and collusive groups for their
sustenance (North, 1990; Olson, 1965). This is because institutions are collective
goods and once they are produced (established), late-comers or initial by-standers
can free-ride on them. Therefore institutional investment requires collective action
of an effective coalition of entrepreneurs who can diffuse the cost of institution-
building on to others. These entrepreneurs on the other hand are the keeper of
first-mover advantages just like in the case of the European Union (Keohane,
2001). New members of the EU have no choice but to accept the rules already
established by the six founding members who gain persistent and cumulative
advantages. This first-mover advantage may change in the near future as the EU
polity, the council and parliament are given more legislative power in relation to
the superiority of the Commission and the Court of Justice.
Furthermore, in the context of global governance, Harlow (2006: 210-212)
suggests that the skeptics of legal globalization are concerned with the structure
rather than the values and principles as power is diffused to networks of private
and public actors. Moravcsik (1998), for example, argues that the preferences of
multinational firms as exporters for larger markets, pan-European regulation, and
exchange-rate stability have been prime movers behind European integration, and
thus governance. Therefore, suggesting that some principles and values govern the
processes of European integration and enlargement seems not very true, but also
has certain truth in it because of legitimacy concerns. If there are actors who are
capable of escaping controls of democratic government and law the institutional
structure will lose legitimacy and stimulate free-riding. Without politics, society,
a forum for citizens, power sharing, diversity and subsidiarity a universal form of
good governance and administrative law is not democratic and legitimate.
However, the institution building in the EU should aim for collaboration rather
than coordination since coordination institutions combine coercion for late-
joiners. Collaboration institutions provide fewer opportunities for initiators as
late-comers can defect at lower cost (Krasner, 1991; Keohane, 2001). Rather than
reflecting power as in coordination games, cooperative institutions provide focal
points preventing powerful states to rely on ad hoc cooperation and making them
institutionalize cooperative patterns of actions (Martin and Simmons, 1998: 746).
The good governance concept now has a widespread use in the Global Good
Governance Programme promoted by the IMF, the WB and the OECD in an
interactive website managed jointly with the Commonwealth Association for
Public Administration and Management and the International Institute of

Administrative Sciences. With the reports published by international
organizations such as the United Nations, World Bank, IMF and OECD good
governance has become a subject matter for serious research and review in the
academic field. Partnership with these bodies operates to legitimate good
governance values in non-Western countries. Not all these international
institutions have similar internal governance systems. For example, in the General
Assembly of the UN member countries have an equal vote regardless of their size,
while in the IMF and the WB; voting rights are proportional to the contributions
of the countries in accordance with their GDP. These international institutions
however are not directly accountable to the people but the ministries of relevant
policy areas of the governments. The WB may have links with the civil society
and a large number of ministries in a developing country. The gap between
internal functioning of these institutions and the ideas they promote may seem to
be hypocrisy. However, international institutions’ main reason to exist, according
to public choice perspective, is to provide a way for states to overcome problems
of collective action, high transaction costs, and information deficits or
asymmetries (Martin and Simmons, 1998). Confusing them with states or regimes
may create perception problems and lead to misrepresentation of reality. These
institutions have come to exist after successions of international agreements
between nation states. It is therefore acceptable to suggest that they affect the state
behaviors because agreements are self-enforcing. And because these institutions
collect and provide policy-related information, they can alter state choices.
Global good governance advocated by international institutions primarily
privilege neo-liberal faith in the protection of private property and basic market
freedoms, it emphasizes economic constitution based on international free-trade
and a global code of corporate responsibility, but also emphasize representative
and responsible governments, protection of fundamental rights and environment,
and absence of corruption. For example a global economic constitution is
emerging through intergovernmental organizations (e.g. the WTO, WB, IMF and
OECD) which are entrusted with power by member nation-states to fill out the
terms of contract. The contract as the rules of the game governs the transactions
among members at local, national and global levels. The Bretton Woods
organizations (the WB and IMF) are public institutions, designed to facilitate
collective action and cooperation at the global level against market and state
failures (Stiglitz, 1999). Through continuing globalization and integration efforts,
at least a rather convergence has emerged on some universal principles towards
good governance and human rights in the second half of the 1990s.

These intergovernmental and international organizations have pursued different
goals and missions some of which have changed overtime. For example the WB
was established to rebuild the war-torn Europe, and then began to promote the
economic growth and the eradication of poverty in less developed countries. The
instruments used to pursue that objectives have also changed over the years. The
Bank first supported large scale growth oriented projects of governments, and
later adopted projects to reduce poverty, focusing on individual projects. The
Bank has noticed that as far as governments do not improve the way they govern
and adopt policies supporting market economy these projects have little value in
the long term to reduce poverty and facilitate sustainable development. The IMF’s
structural adjustment initiatives and their failure in many developed countries due
to large scale corruption in governance also increased concerns about the
developing the governance and policy making in the troubled countries which try
to integrate with the global economy. They began to emphasize the administrative
aspects of governance including civil services, public sector downsizing,
democratic governance, judicial reform, anti-corruption, and so on. Many of these
attempts are noble yet many of them are doomed to fail as most of the countries
are ruled by corrupt, incompetent, authoritarian class of elites who are reluctant to
devolve their power and authority and legitimacy to societal elements.
Representation and citizen voice is the most critical aspects of good governance
but reformers as well as international agencies think of these matters as residuals
in a sequence of possible interventions. Developing countries on the other side are
very likely to see this type of advice related to governance practices as
interference in their internal affairs.
There is no right sequencing since good governance requires interlocking reforms
taken in with a messy but all-together approach in a specific historical and cultural
context. It is the early failures of structural adjustment and reform programmes in
the developing world stimulated the interest of the WB and other
intergovernmental and international institutions in good governance. As the
governments in those countries were out of touch with the governed, WB-
financed programmes faced local hostility, widespread corruption, disappearance
of aid funds, and inadequate auditing arrangements. Consequently a WB report on
Sub-Saharan Africa in 1989 promoted the idea that “democratization in the
context of a free economy would compel governments to be more accountable,
less corrupt and hence more efficient developmentally” thus, participation,
accountability, and transparency formed the triad of good governance values

(Harlow, 2006: 199). What is missing in the administrative law principles for
good governance is the emphasis on diversity and pluralism. The norms and
principles of governance should be able to operate in different value systems in a
way to facilitate democracy; otherwise the system might impose so-called
universal and global values which are mainly western in origin. There is also
considerable evidence that international institutions like the World Trade
Organization (WTO) have played a central role in moving the world towards a
freer trade regime by reducing tariffs (more on manufacturing goods, yet less on
agricultural goods) assisting the developed world rather than the underdeveloped.
We need to further remind the cleavage within global governance arguments:
hard-line economic liberals and their institutions (the WTO, WB and IMF) in one
side and softer liberal economic theorists’ “good governance” agenda with a
flavor cosmopolitan law and social democracy (Harlow, 2006).
We find it useful here to summarize how the institutions that started using the
term firstly define “good governance”. The World Bank, which uses the concept
most frequently, defined “good governance” as the traditions and institutions by
which authority in a country is exercised for the common good. This includes (1)
the process by which those in authority are selected, monitored and replaced, (2)
the capacity of the government to effectively manage its resources and implement
sound policies, and (3) the respect of citizens and the state for the institutions that
govern economic and social interactions among them. This means that governance
is measured by looking at how authority representatives are selected, whether they
are accountable to the public, whether they produce sound policies and have the
capacity to implement them, and whether they can manage their own resources
effectively. The WB has embraced decentralization as one of the major
governance reforms on its agenda (WB, 2000). With the emphasis on
decentralization the Bank aims at reducing the role of central state; replacing
command and control economy to market economy; increasing inter-
governmental competition and thus learning by doing; providing additional
checks and balances in political processes and increasing the responsiveness and
efficiency of governments; defusing social and political tensions; and ensuring
local and cultural autonomy. This way, market failure would turn for their
solution to the government at local level where the transaction costs are relatively
low and the information problem that can contribute to central government
failures are less acute. In this picture central government stands to intervene when
the local governance is captured by local elites, when spillover effects and
coordination problems across local governments increase. (Bardhan, 2002).

The definition of the United Nations Development Program, as written down on
UNDP policy document 1994, has nine major characteristics. It is a strategic,
participatory, consensus oriented (inclusive), accountable, transparent, responsive,
effective/efficient, and equitable decision making and implementation which
follows the rule of law (UNDP, 1997). Participation means that all men and
women have a voice in decision-making, either directly or through legitimate
intermediate institutions that represent their interests. Participation needs to be
informed and organized. This means freedom of association and expression on the
one hand and an organized civil society on the other hand. Such broad
participation is built on freedom of association and speech, as well as capacities to
participate constructively. The Rule of law means that Legal frameworks should
be fair and enforced impartially, particularly the laws on human rights.
Transparency is built on the free flow of information. Processes, institutions and
information are directly accessible to those concerned with them, and enough
information is provided to understand and monitor them. Responsiveness means
that institutions and processes try to serve all stakeholders. Consensus orientation
helps the mediation between differing interests to reach a broad consensus on
what is in the best interests of the group and, where possible, on policies and
procedures. Equity means all men and women have opportunities to improve or
maintain their well-being. Effectiveness and efficiency assures that the processes
and institutions produce results that meet needs while making the best use of
resources. Accountability is the property of decision-makers in government, the
private sector and civil society organizations who are accountable to the public, as
well as to institutional stakeholders. This accountability differs depending on the
organization and whether the decision is internal or external to an organization.
Finally, Strategic vision of leaders and the public have a broad and long-term
perspective on good governance and human development, along with a sense of
what is needed for such development. There is also an understanding of the
historical, cultural and social complexities in which that perspective is grounded.
The View of the IMF on “good governance” is primarily concerned with
macroeconomic stability of the monetary system and of the world economy,
external viability, and orderly economic growth in member countries. Therefore,
the IMF’s involvement in governance is understandably limited to economic
aspects of governance. However like the World Bank, the IMF’s tools and
missions have changed overtime as the fund started to provide assistance and
advice to countries in transition in its Enhanced Structural Adjustment Facility

(ESAF) Programme (Stiglitz, 1999: 581). The contribution that the IMF can make
to good governance through its policy advice and, where relevant, technical
assistance, arises principally in two spheres (IMF, 1997):
• Improving the management of public resources through reforms covering
public sector institutions (e.g., the treasury, central bank, public enterprises,
civil service, and the official statistics function), including administrative
procedures (e.g., expenditure control, budget management, and revenue
collection); and
• Supporting the development and maintenance of a transparent and stable
economic and regulatory environment conducive to efficient private sector
activities (e.g., price systems, exchange and trade regimes, and banking
systems and their related regulations).
The OECD (Organization of Economic Cooperation and Development) attributes
to the concept the almost the same features which are respect for the rule of law;
openness, transparency and accountability to democratic institutions; fairness and
equity in dealings with citizens, including mechanisms for consultation and
participation; efficient and effective (public) services; clear, transparent and
applicable laws and regulations; consistency and coherence in policy formation;
and high standards of ethical behavior.
Similarly a “White Paper on European Governance 2001” of European
Commission mentions five good governance principles: openness, participation,
accountability, effectiveness and coherence. Article 46 of the European Charter of
Fundamental Rights instructs EU institutions to maintain an open, transparent and
regular dialogue with representative associations and civil society. Probably this
instruction to consult with NGOs is going to be constitutionalized concerning all
matters of EC law. This emphasis aim at to counter arguments relate to the
democratic deficit and legitimacy crisis in the EU in which representative
institutions like a strong parliament may be contrary to a multi—level
“governance system by the experts”. Plus, in a global world participation of
ordinary citizens in global governance systems through representative or direct
democracy seems getting harder and harder. Although the white paper mentions
participation at all stages of the policy making, that can be possible only during
agenda setting, preparation of legislative proposal by the commission and may be
during the implementation stages. Legislation and policy-decisions remain in the

hands of the Council and Parliament. Citizen involvement can be more visible in
the governance of small localities.
Good governance is about debilitating the discretionary power of central
bureaucratic power-holders by enlarging and strengthening the interrelations and
transactions among effected parties within a decision area in order to attain the
acceptability, efficacy, responsibility and therefore morality of rules and rights.
Good governance is largely perceived as a political and economical order which
includes representation, participation and audit, an effective civil society,
superiority of law, de-centralized clean/transparent administration and liability to
render account, quality and ethics, rules and limits, alternative representation
methods in accordance with competition and market economy and finally
consistency with the digital revolution (the new basic technological developments
in the management of the state.
As can be seen from the definitions given above, the international organizations
using the concept focus on a global administrative law and order that comprise an
expanding set of requirements, which include: an efficient public service; an
independent judicial system and legal framework to enforce contracts, the
accountable administration of public funds; an independent auditor responsible to
a representative legislature; respect for the law and human rights at all levels of
government; a pluralistic institutional structure and a free press. According to
Harlow (2006) the “global administrative law” based on economic rule of law
ideology and the “cosmopolitan social democracy” unites around a rule of law
agenda, impartial administrative law at the international level and greater
democracy and participation, transparency, and accountability in global
governance. Cosmopolitan social democracy however adds deeper commitment to
social justice in pursuit of a more equitable distribution of the world’s resources
and human security.
The international institutions which are shortly sketched above have several
governance dilemmas as well: the agency problem and related other problems
such as asymmetry of information, closure and lack of transparency etc. (In case
of the WB see, Stiglitz, 1999). What if these institutions become an interest group
themselves? This problem arise for instance when the power and prestige of an
international organization is pitted against the weak position of a developing
country. Another problem is accountability and asymmetry of information
between these epistemic communities (Haas, 1992) and national interests. Incase

the internationally supported polices are failed in a developing country, there is no
clear guidance to point out those who are responsible for the failure. Actually, the
accountability problem increases with the complexity of procedures within a
network system of governance and remain a problem at both local and global
level to be solved by the adherence of good governance (Considine, 2002; Bevir
2006: 428). The Bretton Woods institutions are too strong for poor countries and
yet their advices are ignorable for some wealth nations. The inability of the IMF,
for instance, to take on its powerful members threatens the global public good of a
stable international economy (Chowla et al., 2007:5). International institutions
have faced many dilemmas such as these and now they are more willing to
involve effected parties in their development policies. Therefore these institutions
are not reluctant to solve these problems but actively develop governance
structures and tools to improve their internal system of governance to meet the
criteria of good governance such as participation, democratic accountability, and
transparency (see, Stiglitz, 1999: 583-584).
IV. CONCLUSION
Competing theories have conflicting assumptions about men and society, like
individualism versus collectivism. However, the fallacious division between
individualism and collectivism and the scientific ignorance of identity and
morality based in the relationship between the individual and society will not
provide us a totally value and conflict free institutional environment. Morality
cannot be produced by legal coercion nor is it an individual property, morality is
the production of association and interaction among actors. The state or legislation
alone cannot make a moral society. But the both can be made moral. Good
governance explains what for institutions should be, and that is, to provoke a
democratic society and active responsive governance system. The good
governance means holding government up to the best that it might accomplish for
the moral society (at global and local level) because the institutions (states,
governments or international institutions) should not have any given policy
framework or decision independently of societal interests. That means good
governance perspective does not see political outcomes a function of three
independent actors, say state, society and market actors. It argues that governance
will be more effective if the outcomes emerge from a broad set of overlapping
institutions that incorporate diverse set of actors within state, society and markets
(Bevir, 2006: 428). Bureaucracy, voluntary associations and corporations are
endogenous, interdependent and embedded actors of a bigger institutional

environment which are hold “together and apart” by the system and institutions of
governance. Good governance advocates persuade governments to involve
citizens in their own governance. Citizen participation beyond voting is to be
valued not based solely on policy results and efficiency concerns, but for the mere
process itself, since engaging in political activity is a creative, enlightening
experience for individual and a source of legitimacy for governance process
(Leighley, 1991). We witness a widespread recognition of the limitations within
any single perspective which might be confined to one of systemic, institutionalist
and individualist levels of analysis or which adheres to market, hierarchy or
community oriented perspectives (Adler, 2001). This recognition allowed us to
expand our notion of government to that of governance, a broader construct that
incorporates all the institutional or non-institutional sectors of society: the state,
economy and civil society. This new concept attempts to cover rational and
institutional interests, symbols and communication, democracy and
administration, values and preferences, and selfish and altruist sides of human
being.
If good governance is claimed to be a normative theory, it has to be of some use to
contribute to our understanding at least in two areas. (1)It should describe,
explain, integrate and interpret a wide range of reality more than being
prescriptive. (2)It must be normative in a sense that helps us solve some moral
and ethical dilemmas of policy making and adopt a clear position on these main
issues. Good governance may not be perceived as a moral theory as it does not
meet those criteria despite multiplicity of its principles and values. For instance, it
does not mention why and how stake-holders are assured that others are also pre-
committed to reasonableness, consensus and righteousness. Is it justified to force,
bribe and compel them to do so? By including hierarchy, market and trust within
the broad framework of good governance, we can answer this question with a
“yes”. But this “yes” is conditional, providing that stake-holders are free to enter
and exit the polity by free will. Overarching criterion for governance paradigm in
terms of what is ethical is “inclusiveness” against “exclusiveness”. Other values
are and rules are questionable. Good governance as a moral theory avoids making
any commitment towards what it should be, instead tries to picture how it should
be done. It stands within the school of procedural justice and combine its
outcomes with the idea of public good which is different from any single
composition of good. What governments and international institutions should not
do is simplifying the paradoxes of ethics, norms and interests by imposing an
artificial unity on a diverse context. However we accept that good governance

paradigm is still an embryonic theory for the resolution of the ancient conflict of
ideas about ethics.
Any social and political theory may contain axioms such as: (1) Human beings
have free will and the capacity to make choices based on reason, however,
depending on social and legal situations that limit the range of choices. (2)
Humans can be held accountable for their actions as they are moral creatures able
to make judgments of right and wrong in a mutual relationship between individual
and society. (3) Humans have certain rights and freedoms which constitute a
claim against other concrete fellow beings and state officials and institutions in a
defined situation. And finally, (4) a single-minded violation of collectively
defined rights and agreements is morally wrong for everyone of any status. In
terms of these criteria, good governance is a theory but it has not got clear
assumptions about human nature. It does not provide some guidelines, for
example, about the nature and causes of human interaction in both public and
private spheres. It lacks internal coherence as it is rather equivocal and show no
deliberation of answering what, how and why questions. It envisages combining
many assumptions of a wide range of theories in economics, sociology and
politics in one single perspective. This is both a curse and blessing for the
concept. It is a curse because of the difficulty to determine non-conflicting
hypotheses to verify or falsify. It is a blessing as it provides us with a wider
insight and richer tool-set to make and evaluate comprehensive policies. The
theory justifies itself by relying on a newly discovered truth that both markets and
states can fail. But it stands on a transcendent ground devoid of failure by
defending the view that there is no best universal governance and every situation
is unique and thus requires a unique combination of governance mechanisms and
local values as long as they stand by the universal principles of good governance
mentioned in the text.
Overall, governance is a process to establish fair rules of behavior (institutions) in
a given context. The good governance concept includes dialogue and compromise.
Undoubtedly, it is not enough to have communication (political participation)
between the public and its agents for democracy. The people should also have the
right to control whether the decisions and the actions of the agents comply with
the law. Good governance paradigm urges for the development of public policies
and institutions that enhance socially beneficial, cooperative behavior based
mostly on societal norms. Furthermore policy initiatives are to be facilitating

collective action aiming towards the formation of social norms that might enhance
cooperative behavior in their own way.
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