Book contents
- Frontmatter
- Contents
- Figures and tables
- Preface
- 1 A state-centric relational approach
- 2 The resilient state
- 3 Metagovernance and state capacity
- 4 Hierarchy and top-down governance
- 5 Governance through persuasion
- 6 Governance through markets and contracts
- 7 Governance through community engagement
- 8 Governance through associations
- 9 Conclusion
- Notes
- Bibliography
- Index
6 - Governance through markets and contracts
Published online by Cambridge University Press: 05 June 2012
- Frontmatter
- Contents
- Figures and tables
- Preface
- 1 A state-centric relational approach
- 2 The resilient state
- 3 Metagovernance and state capacity
- 4 Hierarchy and top-down governance
- 5 Governance through persuasion
- 6 Governance through markets and contracts
- 7 Governance through community engagement
- 8 Governance through associations
- 9 Conclusion
- Notes
- Bibliography
- Index
Summary
A market can be defined as a social arrangement allowing for the voluntary exchange of goods and services. Markets are characterised by the existence of private property rights, competition, and the use of the price mechanism to allocate resources. The use of markets is usually defended on efficiency grounds. Private property rights, when combined with competition, are believed to give firms and entrepreneurs incentives to develop new products and anticipate consumer demand. Prices provide participants in the market with a constant flow of information about demand and supply (Hayek, 1945; Kirzner, 1973). In these ways, the invisible hand of the market is, according to liberal ideology, said to harness individual self-interest for the collective good. As we have observed, the idea that competitive markets represent the most efficient way of allocating resources has become a paradigm of (neo-liberal) governance. In recent decades in a range of countries an ongoing process of ‘marketisation’ has resulted in waves of privatisation and deregulation, contracting-out and the creation of new markets. Not only have the boundaries between the public and private sectors been redrawn, but the public sector itself has been partly recreated in the image of the market.
Economists continue to debate the economic consequences of marketisation. Critics suggest that, in many cases, market failures and high transaction costs outweigh efficiency gains. Our focus in this chapter, however, is on the relationship between marketisation and state capacity. There are two strands to the argument.
- Type
- Chapter
- Information
- Rethinking GovernanceThe Centrality of the State in Modern Society, pp. 115 - 136Publisher: Cambridge University PressPrint publication year: 2009