Significant tasks of governement

lt has been widely accepted that the role of the state has in reality become quite different from that put forward by Political Theory, which traditionally described the state as characterized by external independence and sovereignty within. By the end of the 20th century, this role has changed significantly.

Some speak of an erosion (Cerny 1996), decline (Schmidt 1995), crisis (Dunn 1995), retreat (Strange 1996) and even the end(Ohmae 1995) of the nation state. They point to the impotence of state governance of the economy in a world largely without borders and the futility of attempts at compensation through welfare state measures which will only serve to disadvantage the competitive position of domestic business.

On the other hand, there are authors who refute the hypothesis of the growing insignificance of the state and see not only a continuing significant task for the nation state, but one that may actually be growing. These authors talk about the revival of the nation state and of new tasks for it. In this perspective, the hypothesis of the withering nation state is seen as a myth: rather than losing importance, the nation state continues to be the crucial institution determining
the conditions under which the process of economic globalisation takes place.

Why different views? Conditions for state action are changing - that is not only agreed in the academic debate, but also the result of voluminous studies from international organisations (cf. United Nations Research Institute for Social Development 1995, World Bank 1997). But so far, the academic community has not been able to agree on a common view as to the direction of that change.

One study to confront predictions examined results from two recently concluded studies that deal with governance and state capacity in the financial sphere - the reason for that choice was that this was where pressure from globalisation is commonly perceived to be highest, making this policy area into an ideal and hard test case for theories of convergence that presently dominate the discourse about globalisation.

What is the conclusion? It was demonstrated that evidence from the policy area of banking regulation does not support the more sweeping claims at (policy and institutional) convergence often found in the literature on globalisation. While there is substantial (but imperfect) convergence in terms of regulatory content and policy, there is none in terms of the political processes and the institutional dimension.

Policy discourses in the field are only to a small degree characterized by the frame of international competitiveness, while more often national specific issues dominate the day-to-day legislative debates.

But does that mean that there is more support for the theories of divergence and path dependence? Again, some relevant qualifications have to be made.

When faced with the momentous changes in the policy field in the mid 1970s, countries did not primarily embark on the search for national specific solutions, but tried to coordinate their actions through the Basle Committee. Even if these negotiations took 15 years to reach a first agreement, they resulted in a common regulatory framework that often required substantial changes in national regulation.

With respect to the dimensions of politics and polity, however, the latter theoretical approaches are much better suited to explain the absence of change and the continuing divergence. Nationally specific institutional configurations, historically developed, produced incentives which favoured certain patterns of action and inaction and thus influenced the strategic choices of political and economic actors. Routines and patterns of interaction were developed and in turn created stability and lowered transaction costs.

If there was any change, it was triggered through national crises, not international developments, and different national contexts led to very different reactions.

National institutions, we can sum it up, function in a way as filters of globalisation. They deal with similar or even the same problems in their own specific ways, thereby producing different policy outcomes and dynamics in the various countries.



Source: Workshop on Theories of Regulation, Divergence or Convergence? Andreas Busch CEPES and St. Antony's College, University of Oxford


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