The Three Actors Upon Governance – State, Market and Civil society – Government Essay

The Three Actors Upon Governance – State, Market and Civil society – Government Essay
This essay attempts to offer an explanation and overview of the terms governance, institutions and “good governance”. Throughout the history the term governance has been associated exclusively to the role of the state ignoring other social factors. Most recent theories offer a very

different view of this term, but most stress the relationships between the three actors of governance -state, market and civil society- as necessary requisite to the act of governance. In my understanding governance is the way these actors organise themselves and make decisions according to a set of formal and informal rules that together form institutions. To achieve the perfect governance suggested by the UN is considered an utopia as conflict of interests and failures in the three actor networks arise as regular features of governance making therefore impossible the permanent respect of the Human Rights.

Governance and Institutions.

2. 1. Governance.

Governance is the process of decision-making which conducts public life in a society and guarantees respect of citizens’ Human Rights, equality in resource distribution and safety. Governance is in charge of the application of the rules of the game which will determine the absence or not of political legitimacy in a country and the population’s quality of life.

All actors other than government, the army and the members of the market are put together as part of civil society. In some countries the criminal society has such influence in the decision-making process that may be considered as another actor of governance. Governance is therefore the result of the interactions among state, market and the civil society and function according to a set of rules and norms.

Earlier definitions of governance linked this term exclusively to the action of government. Today definitions are wider and cover non-state actors as mentioned before. Rhodes (1997) relates governance with concepts as “self-organising” and “interorganisational netwoks”. According to his point of view society is able to organise and govern itself independently of the state and through a process that can be defined as symbiotic as all the members of society need to each other to achieve their aims. The social interactions which result from this exchange process are regulated by a set of rules and how they are applied will determine the level of democracy in societies. This autonomy from the state is the result of concepts such as decentralisation and privatisation of the public services that have transformed present societies.

In the words of Rhodes (1997) “no single actor, public or private, has the sufficient knowledge to dominate ultimately a governing model”. Governance is the result of a social-political-administrative sharing process where state, market and civil society have their own role. The state does not have any more a central role.

2.2. The role of Institutions.

So far governance has been described as the way state, market and civil society interact according to a set of norms and rules known as institutions. These are in charge of providing the instruments which make possible such interaction. According to Gorringe (1997) institutions are created as a result of the necessity of improving the co-ordination among the different members of a society, preventing conflicts of interests and supporting cooperativism. A society without institutions or rules of the game would be an anarchist society where lack of organisation may lead to chaos.

Two different degrees of formality can be identified within the rules: formal norms (those based on written constitutions, laws, formal contracts, etc.) and informal norms (based on moral rules, unwritten societal codes of conduct, etc). Informal norms have more importance in developing countries for social administration and poverty alleviation given that generally formal institutions are very limited and do not have the necessary structure to carry out its tasks properly (Jutting, 2003). One of the most significant problems that formal and informal rules have to cope with is to find the way to evolve at the same rate. Sometimes the application of formal norms are against the beliefs or established moral norms of a certain society. An example can be taken from China when during the 70’s the state, trying to control the population growth, decided to impose fines to those families that did not respect the limit established in the region on the number of children per family. This new norm was imposed in a society where having large families was a very old tradition and has very positive connotations.

The scope of work of institutions is very wide and cover all the economic and social aspects of the individual as personal security, property rights, resource distribution, level of freedom, education, etc.

The application of the rules of the game needs the pre-condition of the society acceptance of such norms and of the democratic process. However, in reality the people who design these rules and who finally apply them through the governance actions are normally a small part of the society in clear advantage respect the rest of the society members. Therefore they have the chance to shape society according to their own interests. Thus depending on their actions cases of tyranny or societies living in most absolute liberty can be found (Crukshank,1999).

3. Good governance.

The concept of “good governance” has had a lot of different interpretations along the history. At the present moment the most common approaches are those based on the interactions among state, market and civil society. The differences arise when defining how these relationships should make “good governance” possible. An example of it is showed by Cruikshank (1999) through the different views of two North American authors from the 60’s (Huntington and Wolin) about the interactions between state and civil society and its influence on governance. Whereas the former thinks that the role of the state is in danger when the civil society intervention increases in the political scene – “too democracy and participation”- the latter, by contrast, sees the danger in limiting the participation of the citizens in the public-political life. Thought the two authors disagree about how governance should be, both of them stress “an overflow of politics out of the realm of the state and into the realm of the social” (Cruikshank,1999).

It is widely thought that a necessary condition for “good governance” is that the interactions among government, market and civil society should occur under the framework of democracy and the respect of the Human Rights (civil, cultural, economic, political and social rights) as it is described by the United Nation in its Resolution 2000, 64 (UN High Commission for Human Rights). Democracy is not just understood as the citizens chance to participate in the electoral system but it also involves a pluralist political and social system, the integrity of the three governance actors, the legitimacy of the decision-making process and the opportunity for public scrutiny of the actions of those who holds the power (Archer, 2003).

Under this framework “good governance” involves that all members of a society should therefore enjoy safety –against internal and external threats- and freedom to act and express themselves irrespective of their sex, ideology, race or religion. Also they should have equal access to a welfare system covering all their basic needs and providing them with a decent quality of life – not just at subsistence levels-.

This “ideal” model of governance is according to the UN only possible if it takes place under the umbrella of transparency, equity participation of citizens in the decision making process, consensus among all parts involved seeking the best common interests, following of the rule of law, responsiveness to serve all the society members, accountability to the public and institutions and effectiveness and efficiency to meet the society’s needs and protecting the environment (UN ESCAP). In this utopian model of governance every actor has a task to undertake. Thus, the market should create the necessary conditions for fair trade and competitiviness, as well as to maintain the balance between private and public companies to make sure that everybody has the same chances to access to goods and services. According to Archer (2003) the state should be in charge of financial control, good and long-term planning (in economy, infrastructure people,…), to provide an equal welfare and education system and to offer a judicial system which upholds the law without bias. Finally civil society’s should promote co-operativism to eliminate powerful interest bias and to claim political and economic accountability to maintain social equality.

But why has no country in the world achieved total “good governance” if they have the theory and knowledge to do so? The main answer is the existence of conflicts of interests in the decision-making process that make impossible to apply concepts as transparency or consensus and the consistent failure in the respect of the Human Rights leading to situations of inequality among the society’s members.

Sometimes is civil society who build barriers to “good governance” trying to take advantage of the democratic system. An example can be seen in Spain through the continuos outrages committed by the terrorist group ETA against the rest of the Spanish population and the government. They use the arms and threat to impose their rules in a region of the country ideologically divided (Vasc Country). With their actions this group break down the natural interaction which should take place between civil society and state. Also break the consensus between citizens in their claim for a better society.

Another factor that could represent a barrier to the model of “good governance” is that the failure in the functioning of one of the three actors may affect the success of the other two members. For instance, in the case of the market a set of reasons related to lack of effectiveness in the social and government context can lead to market failure. Situations of inequality and conflict of interests can be seen when the state benefits -with reduced taxes, privileged access to capital, guaranteed markets, etc- some companies more than others. The lack of a good education system results in gap knowledge in technology and a consequent poor competitiveness. Finally, an ineffective rule of law could be cause of conflicts, different forms of abuse and the detriment of investments as companies ask for transparent policies to reduce financial risks.

In the international sphere Stiglitz (2002) explains a case of unfair trade and political power between US and Bolivia. This was widely discussed in one of the most recent Uruguay Round of trade negotiations as the South American country opened its barriers to allow US to control the traffic of cocaine and was almost eradicated the growth of this in the country -even being the only income of many Bolivian citizens. However, US responded keeping its barriers closed to agricultural products that Bolivian farmers might export. Thus, US used its economic and political power to get better benefits for itself and did not fairly respond to the efforts of Bolivia. Thus, “good governance” is not possible in developing countries when they are in economic and political disadvantage respect to rich countries.

Archer (2003) concludes that “good governance thesis highlight the fact that there is an overlap between business interests and Human Rights”.
4. Conclusion.

The UN Commission for Human Right offers a very sensible definition of “good governance” based on the necessity of the respect of the people’s civil, cultural, economic, political and social rights. Also gives to the three actors of governance the instructions about how they should achieve a more fair society. But the problem is that even having the instruments and the knowledge to do so too many different interests have to be put in common, which is an utopia in a world where advantage sectors take benefits of the differences of power within societies.

A society cannot develop properly without the proper functioning of its formal and informal institutions that at the same time have to be designed and applied according to the needs and beliefs of the citizens, not trying to satisfy just the privileged minorities that dominate the interactions among state, market and civil society.

The aim of those who holds the power spheres should be to seek equilibrium among the three actors of governance while applying the rules of the game and the maintenance of a democratic network system. To find the right balance is difficult and although some countries get very close to it there is no society in the world which achieved a total “good governance”.


Archer, R. (2003). United Nations. Non-Governamental Liason Service. Development dossiers. Market and good governance.
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Cruikshank, B. (1999). The will to empower. Democratic citizens and other subjects. Ithaca and London: Cornell University Press.

Gorringe, P. (1997). The State and Institutions. The Treasury Wellington New Zealand.
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Jutting, J. (2003). Institutions and Development: A critical review. OECD. Development Centre. DEV/DOC (2003) 08. Technical papers. No 210. Pgs. 11-12.
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Rhodes, R. A. W. (1997). Understanding governance. Policy networks, governance, reflexibility and accountability. Buckingham and Philadelphia: Open University Press.

Stiglitz, J. (2002). Globalization and its discontents. London and New York: Allen Lane. The Pinguin Press.

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