The concept of governance in the spirit of capitalism

Abstract

Through combining insights from political economy and sociology, this article explains the early genesis of the policy notion of governance in relation to ideological changes in capitalism. Such an approach has tended to be neglected in existing conceptual histories, in the process, undermining a sharper politicization of the term and how it became normalized. The argument dissects how the emergence of governance can be understood in light of a relationship between political crises, social critique and justificatory arguments (centered around security and justice claims) that form part of an ideological ‘spirit of capitalism’. Through a distinctive comparison between the creation of ‘corporate governance’ in the 1970s and the formulation of a ‘governance agenda’ by the World Bank from the 1980s, the article elucidates how the concept, within certain policy uses, but by no means all, can reflect and help constitute a neoliberal spirit of capitalism.

Keywords:

• capitalism
• corporate governance
• governance
• legitimation strategies
• World Bank

Notes

1. For the counter-argument that governments have been ‘hollowed in’ to enhance their capacity, see Bell and Hindmoor (2009). Other ‘second wave’ accounts include Jessop’s conceptualization of ‘metagovernance’, that is, how the state is claimed to steer actors and networks within society who, subsequently, do much of the governing themselves, including implementing policies and providing public services. For a summary, see Jessop (2011).

2. This critique of governance as a term is also partly inspired by Bourdieu and Wacquant (2001).

3. The book draws upon some earlier arguments contained in Boltanski and Thévenot (2006). For deeper reflection on Boltanski and Chiapello’s project, see the illuminating debates in du Gay and Morgan (2013).

4. The metaphors of core and periphery in this context are derived from Freeden (1996).

5. Until the 1970s, the word does not appear to have been very popular. For instance, in a search of publications at the British Library for the period 1900–1969, only 41 items return ‘governance’ in the title. Indeed, in one edition of the Chambers Twentieth Century Dictionary (Edinburgh: Chambers, 1972), the expression was defined as obsolete.

6. In Boaventura de Sousa Santos’ article, ‘Governance: Between Myth and Reality’, this same historical context is also recounted to explain the rise of the term.

7. In the most abstract sense, forms of politics associated with neoliberalism arose in reaction to the crisis of governability, although intellectual seeds existed earlier, such as with the Colloque Lippman in Paris in 1938 and the ‘thought collective’ anchored by the Mont Pèlerin Society after 1947. See Mirowski and Plehwe (2009). In the 1970s, within leading governments such as the US and UK, a critique of Keynesian economic policies was combined with a generalized suspicion of collective models of social and political organization. The need to reassert the legitimacy of corporate practices interlaced with such concerns. For the most careful historical exploration of neoliberalism, including the difficulty of defining what ‘has always been an open-ended, plural and adaptable project’, see Peck (2010).

8. Employment experts from OECD countries were particularly concerned about the increased frequency of strikes in France, Italy, Germany and the United Kingdom.

9. For an overview of the rise of the term, but with a theoretical context not adopted in this article, see Cheffins (2013). For a neo-Marxist reading, see Soederberg (2010).

10. Examples of forms of criticism that Bank officials would have recognized included the opposition to SAPs by African states in the Abuja Declaration (1987) and the Khartoum Declaration (1988); frequent episodes of social protest and mobilization by workers in many countries (‘the IMF riots’); the prominent activism of US-based environmental groups, such as the Environmental Defense Fund (as explored by Robert Wade); and important policy-relevant publications, such as Cornia et al. (1987). I thank Alastair Fraser for guidance on these sources.

11. The Bank was careful not to sell every SAP in every country as a success story. At times it noted that it may have been ‘too optimistic’ about the capacity of governments to implement its dictates. See World Bank (1988).

12. The legal memorandum was originally submitted by Shihata to the Executive Directors on 11 April 1991.

13. For example, in 1991, the Bank devoted part of its Annual Development Economics Conference to the theme of ‘good governance’. This was later followed by the publication of World Bank (1992), as well as important interventions by Pierre Landell-Mills, Senior Policy Advisor for Africa. See Landell-Mills (1992).

14. Also see, in particular, Weaver (2008) and, more generally, Abrahamsen (2000); and Craig and Porter (2006).

15. On debating the role of trade relative to other economic reforms, see the OECD’s work in particular, including Love and Lattimore (2009). More generally, see the argument that the ‘Washington Consensus’ has now been ‘augmented’ through attention to issues of institutions and ‘governance’ in Rodrik (2006).

16. Post-bureaucracy is a concept that has been formulated principally in management studies, organization studies and different areas of critical sociology within the past 20 years. The paradigm of the so-called post-bureaucratic organization contains a lot of claims, but in essence it states that the decentralized, non-hierarchical, fluid organization is the model now and for the future. Management authors in this literature, such as Tom Peters, claim that this type of organization operates on the basis of vertical and horizontal networking, mutual collaborative adjustment, and is guided by visions and shared values. The ability of the organization to enable movement and to empower workers, to give them autonomy and space for creative expression, is a central objective. In turn, it is argued that the mainstreaming of such a model – through connections, communications, and ties of trust – will bring efficiency savings and greater worker satisfaction. See Heckscher and Donnellon (1994); Grey and Garsten (2001); and Johnson et al. (2009).

Additional information

Notes on contributors

Matthew Eagleton-Pierce

Matthew Eagleton-Pierce is a lecturer in international political economy at SOAS, University of London. His research interests are focused on the politics of world trade and the history of neoliberalism. He is the author of Symbolic Power in the World Trade Organization (Oxford: Oxford University Press, 2013), and Neoliberalism: The Key Concepts (Abingdon: Routledge, forthcoming).