Costs and Challenges of Polycentric Governance – in the Context of Community Self-Governance, Management of the Commons, Institutional Diversity and System Resilience by Michael D. McGinnis

Overview

“Polycentric” connotes many centers of decision making that are formally independent of each other . . . . To the extent that they take each other into account in competitive relationships, enter into various contractual and cooperative undertakings or have recourse to central mechanisms to resolve conflicts, the various political jurisdictions in a metropolitan area may function in a coherent manner with consistent and predictable patterns of interacting behavior. To the extent that this is so, they may be said to function as a “system.”

The basic idea is that any group of individuals facing some collective problem should be able to address that problem in whatever way they best see fit. To do so they might work through the existing system of public authorities, or they may establish a new governance unit that would impose taxes on members of that group in order to achieve some common purpose, including monitoring and sanctioning of individual contributions. Many problems may not warrant establishment of a formal organization, but the basic idea is that the governance system in place should facilitate the problem-solving process, for any group facing any particular problem.

Given a suitable range of choice, communities will craft complex networks of institutions (both on their own and in the process of interacting with other communities facing similar problems). Such bottom-up governance institutions have significant advantages. Each institutional component should enjoy a greater sense of legitimacy and a high level of community participation. In addition, because people with access to knowledge on local conditions selected these institutions, they should be more closely adapted to local circumstances, and thus prove more effective in the long run. Finally, flexible and locally grounded networks should prove more resilient to ever-changing challenges.

An underlying premise of this conceptualization is that community self-governance is facilitated by the broader existence of a polycentric system of governance. The hope is that groups will first try to solve their problems themselves, rather than immediately running to some government unit for an authoritative (and necessarily coercive) decision. The benefits of such a system should be obvious, but the associated costs cannot be ignored. This notion of governance requires that individuals be willing to expend considerable amounts of time and energy in seeking out a commonly acceptable solution and participating, in some fashion, in its implementation.

Components of Polycentric Governance

Polycentricity, like all institutional arrangements, has costs and benefits, strengths and weaknesses. Thus, it is reasonable to ask if we can discern the level of political complexity that is optimal for society as a whole. The standard point of departure for modern welfare economics is to assert that governments exist primarily to facilitate the smooth operation of the economy. The basic presumption is that since market exchange is an efficient way to organize the production and allocation of private goods, governments should intervene only when private markets are unable to cope. Thus, governments should be responsible for providing public goods (such as national defense), which would be under-provided by private markets. Another responsibility of government is to provide the legal framework within which economic exchange occurs, to limit the exercise of private coercion and to ensure that contracts can be enforced and disputes resolved at a relatively low cost.

From Market Failure to Group Rights and Opportunities

This “market failure” model is commonly used to determine the circumstances under which government intervention is most appropriate. Yet there is much more to public policy than the study of firms, markets, and governments. Unique contributions are made by voluntary associations, community-based organizations, faith-based organizations, cooperatives, and other forms of organization that are generally assigned to civil society.

User groups devise rules to limit the extraction of water, fish, or forest products in a sustainable fashion. They monitor each other’s behavior and sanction those who violate these rules. They meet together to revise or update these rules and procedures when necessary. Some of these institutional arrangements have survived intact for centuries. For many observers, perhaps the most surprising result is that they often do all this with minimal assistance from government officials.

In sum, (we) have documented the ability of resource user groups to govern themselves. This capacity for community self-governance is by no means automatic . . . . In other cases, resources that were previously managed communally have been divided up into private plots, often at the insistence of international donors, even if these smaller units are not economically viable over the long term.

Despite these potential dangers, the important lesson is that many communities can, under the right circumstances, craft effective institutions for resource management and self-governance. Too often policy analysts reduce the range of choice to two stark options: privatization or central management. Each of these mechanisms is perfectly appropriate for some circumstances, and each can be disastrous if applied to the wrong set of circumstances.

. . . . a clear definition of private property rights is essential before market processes can operate at anywhere near efficient levels. Economic growth requires investor confidence, because individuals or private corporations will make investments to improve the productive capacity of their assets only if they can expect to enjoy the benefits of these investments. Rarely, however, is this conclusion extended to a clarification of property rights over commonly held assets.

The rights of user groups to manage common property and individual (or corporate) rights to private property should have equal status in law and policy. Just as individuals are presumed to be the best judge of their own tastes, the initial presumption should be that user groups are capable of managing common property. Government intervention should occur only to correct problems of “group failure,” defined in terms directly analogous to “market failure.”

Those groups of resource users who have successfully managed their common resources have done so at the cost of establishing and enforcing rules that call for significant sacrifices on the part of individual members of that group. They are unlikely to continue to pay those costs if governmental officials are expected to establish or enforce a different set of rules. Without this assurance, group cooperation will break down, and individuals may succumb to the temptations to overexploit the resource. The resulting destruction of the resource will hurt society as a whole. By the same line of argument, then, group rights to common-pool resources need to be just as well-protected as are individual (or corporate) rights to private property.

Protection of group rights is particularly crucial if the policy goal is sustainable development, and not just economic growth per se. Resource sustainability is not a new idea: groups of fishers, farmers, and herders throughout the world have always had to cope with sustainability problems. Governmental officials and policy analysts should remain open to the possibility that they can learn from user groups about the conditions for successful resource management.

Protecting Institutional Diversity

In a system of polycentric governance, a primary responsibility of central political authorities is to act to support the capacity of self-governance for groups and communities at all levels of aggregation. Self-governance at the local level is sustainable only in the context of a supportive political and cultural environment at the constitutional level. Market exchange can lead to efficient outcomes only when political and legal institutions guarantee secure property rights and provide general access to low-cost and effective means of conflict resolution.

. . . . participants in any vibrant cultural tradition have access to local knowledge about the wide array of institutional responses to the political and economic problems that community has faced over the course of its development. I contend that maintaining this “institutional diversity” is a crucial element in any long-term strategy to cope with the challenges (and opportunities) posed by globalization. It is especially important to find ways in which previously separate communities can learn from each other, to compare their own institutional arrangements with those that have been crafted by other communities facing similar problems.

Maintaining future access to this diverse menu of institutional options is one of the key challenges facing the world today. Environmental activists have successfully articulated the benefits of maintaining biological diversity; I would like to advocate a similar rationale for the benefits of institutional diversity. In both contexts, diversity serves as a storehouse of ideas and alternative options. Each has intrinsic value. Biodiversity is seen as a natural aspect of healthy ecosystems, and institutional diversity is an essential ingredient in sustaining a community’s capacity for self-governance. Self-governing capabilities are essential for the enjoyment of liberty. In my view, scholars and public officials should act to insure that more local institutional practices survive the onslaught of globalization or regional standardization

. . . . governance structures need to be resilient if they are to survive the vagaries of biophysical change, economic shocks, political changes, and other sources of stress . . . . Ostrom touts the benefits of a complex system of governance that takes account of local contingencies and unique circumstances. A polycentric system enables participants to take advantage of local knowledge, to instill a shared sense of trustworthiness, and better adapt to changing conditions.

. . . . polycentricity is not a panacea. Some groups will not be able to organize and some local tyrannies may prove difficult to upset. Stagnation and unjustified forms of discrimination may lead to unresolved conflicts among subgroups. Finally, it is not immediately obvious how local successes in collective action can be effectively aggregated into an effective system of governance at the macro-level.

Types of Governance Institutions

Type I corresponds to a particularly neat model of federalism, in which a relatively small number of multi-purpose governance units exist for non-overlapping jurisdictions at each of a few levels, with jurisdictions at one level being neatly nested within a jurisdiction at the next higher level. Their Type II covers a looser category of cross-border arrangements, characterized by a large (and changing) number of special-purpose governance units for overlapping jurisdictions that cannot be neatly arrayed by level.

The first (highest) partition defines units that can be called “states” (here I use the most common set of terms in the U.S. federal system). Each citizen is a member of one, and only one, of these component states. Each state is further partitioned into a collection of units, or “counties.” Each county is itself partitioned into “townships.” Additional levels may be added, but these suffice for purposes of illustration. In this neat governance structure, each individual is a citizen of one township, the one county that contains that township, the one state that includes that county, and, ultimately, of the nation as a whole . . . . In this ideal representation, multi-purpose governance units have been established at each of these levels: township, county, state, and a central government that includes all of the states.

However, Vincent Ostrom insists on a more expansive conceptualization of federalism, which he has informally defined as “the efforts of people as communities of individuals to achieve self-governing capacities consistent with requirements of liberty and justice”. This definition shifts the focus away from any particular configuration of institutions to instead focus on the general processes through which communities can better govern themselves. He has argued that the idea of federalism must be expressed in the form of a “polycentric” system of governance in which multiple units of government with overlapping jurisdictions find some way to coordinate their efforts to provide public services for citizens, and especially to encourage citizen participation in the process of their own governance.

Specifically, they expect type II systems in places such as “the public/private frontier,” “the national/international frontier,” “densely populated frontier regions of bordering states” and “where local government interacts with community associations”. Since administrative boundaries rarely coincide with natural watersheds, the management of water resources frequently requires the establishment of Type II cross-jurisdictional units.

In effect, then, Type I provides the primary governance partition, and Type II arrangements are tacked onto this basic architecture. This conceptualization is a useful way of highlighting the ways in which these two different governance systems might complement each other . . . . Evaluation should focus on the system as a whole and on the extent to which different types of institutions complement each other in an effective and sustainable manner.

Two additional complications are worth mentioning. First, it is important to look beyond public authorities. Whereas the term government is used to refer to a particular kind of organization, governance is a broader process that occurs in collective entities of all kinds, from societies as a whole to small family units, and in private corporations and voluntary associations. Policy networks are built up by maintaining contacts among organizations from different sectors of the public economy. Such policy networks locate both Type I and Type II public authorities in a broader, cross-sector context. Second, uniquely important contributions to governance are provided by those institutions which perform an integrative function. Integrative institutions such as family farms and agricultural cooperatives combine selected aspects of private, public, voluntary, and community sectors into a single package. As such, they reinforce socialization of new members and facilitate the monitoring and implementation of collective agreements.

In summary, a polycentric system of governance is multi-level, multi-type, and multi-sector in scope. It includes a wide array of organizations with complementary strengths and capabilities. Especially important roles are played by integrative institutions, which can be seen as micro-level versions of polycentricity all wrapped up in a single place. Yet even integrative institutions must be located within a supportive polycentric context if they are to have their intended effects.

 

Governance Costs in a Polycentric Equilibrium

A Problem-Centered Approach to Polycentricity

Governance architectures establish a correspondence between subsets of the population and specific units of governance. For a Type I system, each individual is a members of exactly one governance unit at each level. That same individual may also be included within an indeterminate number of Type II units. When a dispute arises between two individuals, they can typically either resolve that dispute among themselves or by reference to officials of some governance unit of which both are members.

Some policy problems, however, are likely to evoke affected public subsets that cannot be directly related to one or more of the existing governance units. In a polycentric system, that group can choose to devise its own mechanism for coping with this particular problem by establishing a new Type II unit for self-governance by that particular group.

Each new governance unit comes at a cost in terms of the transactions required to design, establish, and maintain that organization. Groups that are likely to repeatedly face similar problems are more likely to be willing to expend these costs. If it is possible to use the services provided by some existing organization to help them resolve a particular problem, then a group will not have much of an incentive to develop a new, specially designed set of institutional procedures.

Institutions are enduring artifacts. Once established, they can be maintained at a lower cost than would be involved in creating them anew, since any new organization would also entail the expenditure of maintenance effort.

Only those groups who expect to require assistance in coordinating their response to significant problems are likely to be willing to pay the costs to establish or maintain an organization for that purpose . . . . those subsets whose members are most likely to interact on a regular basis are likely to have shared access to many of the same governance institutions . . . . This is where a Type I system proves its usefulness.

When a group first confronts a collective problem that they cannot immediately solve via discussions amongst themselves, they might decide to refer it to an existing governance unit or to create a new governance unit specifically focused on this particular problem. If the effects of most such problems are contained within existing jurisdictions, and if the costs of creating new governance units are high, then self-governance could be achieved in a basically Type I system, but at a significantly lower cost than would be entailed in a fully-saturated polycentric governance system. The problem, of course, is that no such system can ever be complete, for there are always going to be problems that affect sets of people from different jurisdictions. And, in addition, as technologies of communication and transportation develop they end up creating new linkages and thereby generating new forms of political problems and shared opportunities. The opportunity to craft new Type II governance units at a relatively low cost is an essential component of a viable and sustainable system of governance.

The Baseline Condition: An Unequal Distribution of Social Capital

To evaluate the costs of polycentric governance it is useful to define a “baseline condition” for collective action in the absence of any form of government . . . . Even in the absence of any central authority, I assume that some groups of individuals will find it possible to cooperate with each other. This cooperation may well be uncertain and incomplete, but empirical research has amply demonstrated that groups can, by their own efforts, establish and maintain networks of reciprocity and more complex systems of mutually-reinforcing normative expectations. However, not all groups have the same ability to achieve this level of cooperation.

The “baseline condition” is meant to incorporate these differences in the inherent propensity towards cooperation of groups of different sizes and composition . . . . Larger groups with homogeneous interests may find it easier to cooperate than a small heterogeneous group, for example. Similarly, homogeneity of interest makes cooperation easier, in most circumstances, but this effect can be overwhelmed by other factors. Ties of communication, shared normative expectations and access to common rule systems, and other factors are all relevant.

The important point is that this distribution of transaction costs is grossly uneven across groups. As a consequence, some groups will be able to pass the costs of their own collective action onto other groups. These victim groups will be unable to respond because of the greater difficulty they have in coordinating their own actions. Of course, their own victimization may generate an increased realization of the potential benefits of their cooperation, which may inspire them to greater efforts. In equilibrium, those groups able to exploit others will do so, those groups able to resist will also do, and still other groups will remain latent and unmobilized. In this baseline condition, equilibrium is characterized by a radical inequality in the levels of social capital available to groups of different sizes and composition.

Bringing Governance Back In

. . . . there is, or at least there should be, more to the exercise of public authority than the strategic distribution of rents and the imposition of uniform rules and regulations. In a democratic polity, one of the primary responsibilities of public officials should be to facilitate and nurture the ability of local communities to organize themselves for their own benefit. Governments should facilitate community self-governance, which I take to mean a community’s ability to cope, in an effective and sustainable manner, with the challenges and opportunities posed by their physical environment and by their social interactions with other communities. To pursue this line of argument further, we need to re-examine the notion of equilibrium in a polycentric system.

Equilibrium in a Polycentric System

As long as a polycentric system is in operation we should expect to observe unending processes of change and re-negotiation, as new collective entities are formed, old ones dissolve, and new bargains are arrived at to deal with an unending series of new issues of public policy. If this can be said to be an equilibrium, it is a radically dynamic one with nothing fixed except the underlying complexity of the system as a whole . . . . it is chock full of planners and schemers, private and public entrepreneurs of all types, actively engaged at all levels of aggregation.

What would equilibrium mean in a fully polycentric system of governance?

Recall that any form of collective action or coordination or creative problem-solving involves the expenditure of time, effort, and other resources. Whenever any group of individuals faces a common problem (or a common opportunity) that gives them a chance to obtain mutually beneficial results, they will confront transaction costs of various types before they can realize these joint gains. If the costs of organizing for collective action are low, then more of these collective opportunities for joint gain should be realizable. To be fully polycentric, the system as a whole should facilitate creative problem-solving at all levels of aggregation.

Ideally, higher-scale governance units will make it difficult for smaller groups to impose costs of their own collective action onto other groups. In practice, of course, the coercive powers of national governments are frequently used to do precisely that.

The Core of Polycentricity

. . . . a subset of individuals which corresponds to an existing governance unit can use that unit to coordinate its collective actions in response to some common policy problem. Conversely, subsets that do not correspond to a governance unit typically face higher transaction costs in the negotiation and implementation of coordinated responses.

In a totalitarian system, rulers seek to keep costs prohibitively high, except for those organizations formed under the direction of the ruling party. Of course, some groups find ways to arrange for informal cooperation, even under the most repressive regimes. In a democratic system costs should be much lower. However, the value of the costs may differ widely for different types or sizes of groups. In a purely majoritarian democracy, for example, the interests of any minority group may not be obtainable within the context of that jurisdiction.

A fully-articulated system of polycentric governance should insure a low value of costs for groups of all sizes and composition. Public officials should act to minimize the costs involved in brining groups of all kinds together to resolve common problems. However, the public officials need not do the coordinating themselves. Indeed, a more desirable solution is for public entrepreneurs to produce groups with access to the resources they need to resolve their own problems. Otherwise, that group may become dependent on the continued patronage of a political leader. Of course, some leaders may obtain an advantage from nurturing such a sense of dependence, but this temptation should be resisted by imposing some know of cost on leaders who excessively dominate their followers . . . . Nor should all groups be encouraged to form. Governments routinely adopt policies intended to raise the costs of coordination for criminals or for other groups seeking to benefit from coercion.

In the dynamic equilibrium of polycentricity, new groups are constantly forming, some of which may well seek to pass the costs of their collective action onto other victim groups. Thus a low value of costs cannot be sustained automatically. Instead, this requires the concerted effort of public authorities and of the citizenry as a whole.

As costs decreases, the overall transaction costs for governance in the society as a whole will increase. As costs gets very small, these aggregate governance costs will quickly become astronomical. At some point an inordinate amount of time and resources would be devoted to governance rather than to directly productive activities. It might be possible to define a point of optimal balance between the lower costs of organizations facing latent or disadvantaged groups and the aggregate level of governance costs for society as a whole. However, whatever level of costs is chosen, citizens and officials in a polycentric governance system should act to reduce variation around that level.

Successful maintenance of low mean and variance of costs necessarily implies that the resulting system will be very complex. Institutional diversity will be served by this end, but citizens may risk losing a basic understanding of the very system they inhabit. Information overload can have a debilitating effect on any form of action. Thus, public officials must take concerted efforts to alleviate this confusion. In particular, efforts should be made to provide the public with easy access to information on diverse forms of institutional arrangements . . . . It is especially important to ensure that each new generation of citizens gains direct experience with the practice of self-governance.

 

Challenges of Sustainability for Polycentric Governance

The dynamic equilibrium of polycentric governance does not automatically maintain itself. There are several types of changes and developments that can undermine the continued viability of a polycentric order. The most important of these changes are outlined in this section.

Political Pressures against Perpetual Polycentricity

As emphasized above, the operation of a polycentric system of governance requires the repeated expenditure of high levels of time and effort on the part of its participants, both private citizens and public officials. Since all of these actors are presumed to be boundedly rational, they must be expected to seek ways to achieve similar benefits at lower costs to themselves. Some of these efforts, if successful, might undermine the very system within which they operate.

Different-sized communities of interest are served by public officials from different levels of the Type I governance structure as well as by specialized Type II associations. Communities vary widely in their preferences and tastes, and any community tends to react defensively when its own values are challenged. On the other hand, some philosophical or ethical claims that are articulated in a universalistic fashion serve as the foundation for political activism on the global stage. Private entrepreneurs engage in trade throughout the world, introducing new products and posing new challenges for governance institutions of all types. Finally, all of this activity has very real consequences on the bio-physical environment and on overall processes of cultural change.

Losing Balance

The English word “govern” is related to the process of “steering.” To sustain a polycentric system of governance is to steer a course (not necessarily straight!) through this complexity. Yet complexity or the simultaneous existence of multiple actors is not enough to insure polycentricity. Instead, a certain kind of complexity is required, a kind that sustains the ability of local communities to self-organize to cope with their own problems while still remaining congruent with basic principles of justice. Vincent Ostrom attaches particular prominence to the dictates of the Golden Rule (”do not to others what you want others not do to you” or reciprocity), which has been articulated by thinkers as diverse as Jesus, Confucius, and Hobbes.

Polycentricity requires constant movement to sustain itself as a dynamic equilibrium, much like a bicyclist maintains balance more readily while the bicycle remains in motion. In effect, polycentricity connotes balance among all the forces and tendencies identified above. Each type of actor seeks more influence over others or acts so as to lower their own costs, but if any of these actors proves too successful, the overall balance may be lost.

Different paths away from polycentricity can be associated with these actors pushing in divergent directions:

• If authorities at lower levels of authority are better able to mobilize their supporters for violent action, then we are likely to observe a system of warlordism.
• At the other extreme would be an authoritarian system, in which the highest level of authority manages to capture quasi-monopoly control over all mechanisms of coercion. If that authority also captures control over productive assets and the most influential means of cultural influence over the population, then the totalitarian “ideal” would have been realized.
• Some critics of the modern welfare state decry its tendency to mutate into an all-encompassing “nanny state” that does not encourage, nor even allow, its citizens to undertake any risks on their own behalf. For example, those citizens facing a collective problem who immediately seek the assistance of a top public official have lost all capacity to govern themselves. Public officials may encourage such an attitude of dependence on the part of the population. Many leaders of electoral democracies, for example, show no qualms at devising innovative ways to provide services for their constituents in hopes of securing their continued support at the ballot box.
• Religion, for example, is ubiquitous in all human societies, including the most advanced modernized societies. Despite expectations that secularization would remove all remnants of religious superstition, religions continue to provide some sort of real service to their believers, and there is no rational reason to expect religion to wither away in the foreseeable future. Still, an overly secular society might miss the balancing influence of faith-based organizations, and as such may not be defensible as a fully polycentric order.
• Still another path away from polycentricity is paved by efforts to implement universalistic principles. Any normative order, no matter how appealing it remains to its believers, will generate results that someone will consider unsatisfactory. Much of the world has already experienced the devastating consequences of efforts to implement the normative system of communism, which had at least some basis in some desirable goals. We can only hope that future generations will not look back to reminisce about similar failures to implement a perfect Islamic or Christian society.
• Universalizing tendencies can also be rather bland in their manifestation. An over-reliance on the advice of technical experts who organize themselves into professional associations, for example, might result in an elite-driven system that fails to address the emotional needs of the public as a whole.
• Globalization, for example, generates so much recrimination because of the utter disregard that seems to be shown towards the unique strengths of local cultures. Instead, the stultifying homogenizing effect of an emerging global public culture seems relentless in its realization. To a great extent, this homogenization is supported by private producers seeking to minimize their costs of production and distribution. Still, many local peoples have mobilized to resist the worst effects of globalization, and there seems no reason to fear the complete abandonment of human cultural diversity. Nonetheless, it may be prudent to take particular care to protect institutional diversity in the onslaught of globalized patterns of political and economic practice.
• A final path away from polycentricity begins with intolerance. A local community fearful of being absorbed within a globally homogenous mass or of falling under the domination of some other community may erect barriers that prevent the dynamic interchange of ideas and institutions. Taken to its logical extreme, a system of atomized localities might result, with each community engaged in a Hobbesian war against all other communities. Unlike the warlord-based system discussed above, the underlying logic of distinction is not coercion but cultural difference. As leaders in each community impose local values on all members of that community, a system of local tyrannies at war with each other would result.

Each of the component organizations of a polycentric system plays essential roles in restoring temporary imbalances that might result in one of these fatal wrecks.

Examples of Polycentricity in and out of Balance

As each system moves away from the polycentric balance, the relevant communities no longer enjoy the benefits of resilience, redundancy, access to local knowledge, adaptability, flexibility, experimentation, accountability, or efficiency in terms of responding to diverse citizen preferences. The resulting system may prove much less costly in terms of transactions or governance costs, yet many advantages had to be sacrificed to realize these gains.

Vincent Ostrom (1997) expounds on these concerns by raising doubts about the long-term sustainability of polycentric governance among a people increasing dependent on public assistance. He points especially to the rise in power of the national government in response to massive challenges of economic depression and world war, and to continuation of this trend in the rise of the imperial presidency. Along with these changes came a decreased ability of local communities to provide for their own interests. Ostrom attributes much of this problem to the tendency of political scientists and policy analysts to focus almost exclusively on politics and administrative practices centered at the national level, thus undermining the essential foundation of community participation in local governance. Elinor Ostrom stresses a similarly expansive vision of civic education for self-governance, which must push students towards increased participation in their own futures.

The Westphalian system (of sovereign states) can be seen as the antithesis of a polycentric system, to the extent that state authorities assert control over all aspects of public policy. Of course, they never attain that end, but that claim remains at the heart of this system. The logic of this system found its natural extreme in experiments with totalitarian governance in the twentieth century. Totalitarian states of the Nazi and Communist varieties rose and fell, causing unmeasureable grief in their wake. Ultimately these systems failed to compete in an effective fashion with societies whose states were more open . . . . I think it is equally accurate to stress the ways in which the communist party-state worked to undermine the ability of its own people to creatively resolve their own problem.

The Polycentric European Union

As a dynamically changing polycentric order, the EU faces daunting challenges in maintaining an appropriate balance among the forces discussed above. Some subnational loyalties to regions have increased in importance, and yet national feelings remain in force. As detailed elsewhere in this volume, the EU relies very heavily on the imposition of central directives in the areas of agricultural and environmental policy, to the detriment of appropriate local variability in environmental conditions and institutional response. For the most part, the process of integration has been driven by political and economic elites, seeking to make European corporations more competitive in global markets by combining assets and reducing transaction costs.

A common theme articulated by opponents of the constitution is that the EU imposes excessive homogenization of policy and standardization of conditions across Europe as a whole. Remarkably, EU officials denied that the constitution would add anything significant to this process.

In an interview on the PBS News Hour on June 1, 2005, after the rejection of the EU constitution by the French public and a few days before the even more resounding no vote by the Dutch, John Bruton, EU Ambassador to the US and a former prime minister of Ireland, emphasized the importance of recognizing that each level of government has distinct responsibilities and competencies:

“I think it’s time to be more honest . . . . about what the European Union can do and about what it cannot do. And what is the matter of responsibility of nation states to do, and indeed maybe of local firms and local individuals. The European Union can’t take responsibility for solving all the problems in people’s lives. People have to take their own responsibility. Governments at the national level have to take their own responsibility, but the European Union must take its responsibility and we need to explain that there are different levels of responsibility and the EU is not either to blame for or entitled to the credit for everything that happens.”

In sum, the EU is an example of polycentric governance in danger of going off course and losing the balance needed for its continued development. The EU has made dramatic advances in opening up markets and in deepening ties among the peoples of Europe. However, EU officials and advocates need to do a better job of articulating their vision of the essential roles that local, regional, and national diversity will continue to play within the European project. This diversity remains the foundation of European civilization, and it is essential that the European publics recognize and reinforce that diversity.

Conclusions

My argument implies that public officials should be guided by the following normative criteria:

1. Level the playing field by facilitating the formation of effective collective action by latent groups (i.e., those left at a disadvantage in natural processes of collective action or by previous forms of government policy).
2. Raise the costs for groups seeking to transfer the costs of their own collective action onto other victim groups.
3. Provide channels of communication to lower the transaction costs of collective action for latent groups, but encourage them to be self-supporting and not dependent on this assistance. (In short, build a climate of empowerment not entitlement.)
4. Don?ft seek to minimize the total costs of the transactions of governance, but rather encourage forms of cost structures that have the consequences of improving the ability of groups to organize and govern themselves.

Finally, what does all of this say to the current situation confronting analysts and public officials in the EU? The goal of public policy should not be a continent-wide simplicity of policy consistency, as was one of the goals articulated in a recent White Paper on EU governance. Instead, the goal should be to embrace complexity and incoherence. The key concern should be to facilitate the organization of self-governance on a local and regional level. European Union should not be seen as the simple extension of a system of sovereign states to the level of the continent as a whole. Instead, Europe?fs contribution to human civilization should be its continued example as an endless source of complexification, as a commodious compendium of institutional diversity.

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Keywords : democracy, governance, polycentric government, polycentricity, self-governance, community, cooperation, politics, commons, institutional diversity, unity in diversity, resilience, complex adaptive system, co-intelligence
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