Rainer Tetzlaff
The discussion about the differing roles of state and market in the development process was lifted to a new level by the demand for "good governance". The aim is not diminishing the state role as much as possible, but greater orientation to goals and efficiency. This demand, first raised by the World Bank, has since also been adopted by other donors.
In the present development policy discourse "governance" means the way state power is used in managing economic and social resources for development of society. Hence to OECD governments and the World Bank "good governance" would be a synonym for solid, responsible development management in the direction of democracy and efficient markets, especially avoiding misallocation of sparse investments and corruption in politics and administration, spending discipline in public budgets and creation of legal and political frameworks for flourishing private entrepreneurial activities.
Governance as effective administrative action
This is now a regulative idea with high capability of consensus worldwide. It stands for the concept of the territorial administrative state carried into the world by colonialism. It has contributed to the universalisation of the European state concept. But it will take several generations for this state idea to be fully internalised and institutionally anchored. In the postcolonial era there has been "good governance" in the sense of efficient administrative action in very few states. Those that stand out positively are the Asian Tiger states. And it has been there to some degree also in Costa Rica, Mauritius and Chile. Considerable economic successes (albeit at high ecological cost) have been primarily achieved in states with authoritarian leadership. Only in their second development phase did the opposition democracy movements have success, if at all, lifting the development process to a higher macroeconomic level.
Especially the democratic movements in Africa and the exiled opposition groups of the Middle East states have made clear that they regard "bad governance" in the sense defined above as a main cause of the mismanagement and impoverishment of large parts of the population. The election campaigners against President Kenneth Kaunda and his corrupt unity party UNIP in Zambia, against Kenyan president Daniel arap Moi, the broad opposition against the FLN which has disappointed as the state and economy party of Algeria, against the brutal and inefficient Biya regime in Cameroon, not to mention problematical military states such as Zaire, Togo, Mali, Somalia, Liberia, Burundi, etc. all these autochthonous reform movements, highly welcomed by the West and for the first time since the Cold War also encouraged from abroad, have raised the accusation of "bad governance" against the established regimes. Against the background of their own suffering they are now demanding free elections and more jobs, pluralistic democracy and respect of human rights.
Criticism of the governance concept
Hence it probably misses the point when the use of this concept by the World Bank is interpreted as the invention of a scapegoat to explain the Bank's own development policy setbacks, as Carol Lancaster does, for example: "The Bank's interest in 'governance' stems from a central source: the inability of its structural adjustment programmes to produce a convincing success on the African continent... Especially private investments have not happened." There's a similar second voice from the chorus of the quickonthedraw critics: Susan George, Associate Director of the Transnational Institute (TNI) in Amsterdam complains that the lack of "good governance" in Africa was cited as the cause of the failure of the structural adjustment programmes of the World Bank, as a "new explanation for everything that doesn't work in the South". "An area of society which in its core is as political as governance", she argues, "now appears completely apolitical, more technoadministrative, and in this way opens the door to interference by the World Bank". This accusation doesn't hold water and belongs in the reálm of political myths. It suggests that there were now for the crisis states of the Third World other solutions adequate to their problems which World Bank and Company are willfully blocking. As if the modernising societies could get out of the development trap sooner without structural adjustment programmes! In the late phase of President Julius Nyerere the Tanzanian government tried that with dreadful consequences for a population cut off from important imports.
Moreover, it is easily recognised on closer scrutiny that since is beginning about 50 years ago the business activity of the World Bank and the International Monetary Fund like every bilateral development policy was always accompanied by a political and social programme that had to be accepted as a precondition for receiving loans, albeit with clenched teeth. And the object of criticism was always the behaviour of state classes, sometimes the political, sometimes the economic behaviour. And so the "dialogues", often perceived as degrading, but nonetheless often justified, about the necessary devaluations of national currencies and about liberalisation of foreign trade for years unpleasantly accompanied the credit negotiations between the Bretton Woods institutions and the recipient states.
Political conditionality: nothing new
Political conditionality in the framework of funding development projects has existed on the side of the Bretton Woods institutions as the general rule, especially during Cold War times, although in a less publicly efficient way than now. One need onIy recall the efforts of the World Bank under Robert McNamara who made agricultural support for Tanzania conditional on smallholder family farms being encouraged instead of the statedriven socialisation projects (Ujamaa villages with enforcement character). Another example of political "armtwisting" tried by the Bank in the McNamara era was to advance modernisation of agriculture through land reform in feudally structured states like Iran under the Shah, Ethiopia under Emperor Haile Selassie or the Latin American states with their rigid land oligarchies, to preclude socially undesirable eruptions like that under Castro in Cuba.
McNamara's political concept to integrate the rural and urban poor in the modern flow of money and markets as a productive factor (according to the motto "investment in the poor") was as daring as it was a failure many times over. In the face of massive political resistance in the developing countries against structural reforms with impact on the distribution of income, land and power, the leverage effect of the Bank was much less than critics claimed. Most dictatorships have very robustly survived the "political interference" of the Western donor community they are, after all, needed as allies. And not even now, with the EastWest confrontation over, repressive regimes such as those in Sudan, Togo and Zaire appear repulsive enough to disqualify themselves from further IMF dialogues.
Despite this, "good governance" was, is and remains a desirable goal in development policy negotiations, an indispensable demand in which this is my view the pressure applied should be inversely proportional to the state of democratisation of a political system. The only question is, whether a desirable revision of domestic policies of the type wanted by the World Bank in connection with structural adjustment programmes would suffice to pull the bogged waggon of development out of the quagmire. In some highly indebted, impoverished states the situation appears to be so badly mired that not even heroic efforts by democratically legitimated or developmentoriented regimes (say in Peru, Mozambique, Uganda, Burkina Faso or Namibia) would suffice to make structural adjustment programmes acceptable to the population.
It must at any rate be positively assessed that with the discussion of "good governance" has come the admission by the donors that they have also made political mistakes. With reference to sobering reports by the World Bank and the regional banks one even hears mention of a "new culture of selfcriticism". No doubt the end of the EastWest conflict has freed the World Bank of compulsions to refrain from exercising political influence, according to its constitution. Now it can be plainerthan before 1989 in criticising the behaviour of state classes. When in 1980 it wanted to report objectively about the developmentpreventing behaviour of the African state classes in the "Berg Report", which appeared as only a draft at that stage, there was an uproar of indignation from African governments which ultimately forced the Bank to dress up the report at the expense of the truth. At last more political realism is possible in respect of some of the causes of the development malaise; in circles of power the defects of world economic structural crises are discussed as little as before.
A constructive critic of the World Bank, Hans Illy, has defined four central dimensions of the governance concept that would now be perceived as relevant to the Bank's work:
The danger of state dissolution
One last aspect to be discussed here is a danger that has become visible in many African states the erosion of state authority in the train of structural adjustment programmes, which classically also means the reduction of state powers and hence income.
Both the right and the left, which in the intoxication of development planning visions wanted to mobilise and steer the economy and society according to socialist or other ideals, have early on referred to the ambivalence of Third World governments in the framework of the state class discussion. It has become clear that the state alone cannot develop a backward society. But clear,too, isthatthefruitfuldevelopment of a society needs a political and legal framework which must enable the cohesion of mostly ethnically and culturally heterogeneous, fragmented societies. In the usual criticism within the framework of the discussion on the failure of the state this aspect has probably been underrated. The presidential oneparty regimes have not ushered in social development (apart from a few lucky exceptions), but they have opened up chances forthe growing together of cultures, regions and ethnic groups. How else is a collection of ethnic and professional groups and individuals, artificially forced together by distant colonial powers, to grow into a political community with its own national identity?
Many postcolonial states, when they were founded as independently acting subjects of international law, were no more than juridical fictions without real sovereignty. Instead of an emancipated citizenry there was a charismatic president with a more or less large clientele who tried by cooptation and distribution of favours to unify a political community from above. The state made the glue that held society together.
Now there is the danger that in the course of deregulation of the economy the postcolonial state class not only loses its ample and costly privileges against which there are few objections but also that the acting state has taken away from it the means to maintain not only law and order but also political loyalty. The postcolonial state of Africa in many cases remains "the major instance for securing the economic existence of the population groups on which the state rests". If the financial basis of the state is cut beyond a critical minimum, it can no longer fulfil its functions for the society: political stability anci social integration. The ultimate consequence would be decomposition of the state and dissolution of statal security organisations such as the military and the police into parallel private organisations which because of higher incomes (acquired through robbery and pillage) can be quite attractive to the individual. Among others, this is one of the problems standing in the way of all attempts at political reconciliation in Somalia, Liberia, Chad, southern Sudan and above all in Sierra Leone.
Finally, I refer to another important aspect of state decomposition. A government which no longer has the personnel and funds to implement political decisions loses all capacity to steer. Customs regulations, economic laws and trade bans on drugs and arms will then be breached at will. Borders to the outside become circumstantial and ignored with impunity, by which state sovereignty ceases to exist. This scenario means the end of all development policy efforts to improve the conditions of life.
The conclusion to draw is that the justified criticism of the outgrowths of state in developing countries "bad governance" must not make us forget that without a functioning state the infrastructural and legal framework conditions for all forms of development disappear. A society on the way to democracy and modernisation survives a number of regimes with their political failures, but never a longer phase of state decomposition.