"Good Governance” and the MDGs—Contradictory or Complementary?
Presentation by Alejandro Bendaña, ISGN/CEI, at the IGNIS-Confernce "Whose Governance? Obstacles to the MDGs" at Mastemyr (Oslo) 20-21 September 2004
(for ytterligere informasjon, se FNs tusenårsmål - en historie om fusk og svik, RORG-Samarbeidet 24.09.04)
In much of the development debate today, the notion of governance has been presented as the missing link to successful growth and economic “reform” including the attainment of the MDGs.  But governance has diverse understandings. There is one that is people-centered and there is another—unfortunately predominant--which in our opinion takes us away from democracy and the possibilities of genuine development (including the attainment of the MDGs). In essence, a faulty notion of “good governance” is taking us away from the goals because it entails placing the state and society at the service of the market, under the presumption that economic growth alone will deliver development.
A discussion over governance becomes important as it influences not only mechanisms but also strategies each of which in turn responds to ideological presumptions about development and the means to attain greater economic democracy. Unfortunately the overly eager leadership of the World Bank in framing the good governance debate, as with the UNDP and World Bank partnership to implement the MDGs, tends to narrow the possibilities for a critical examination of the World Bank’s role in crating poverty and malgovernance through their structural adjustment programs and “state modernization” schemes. Questioning the global trade and finance regime, and global political malgovernance, is clearly outside the hegemonic discussion parameters—to avoid approaching malgovernance, hunger and extreme poverty as political issues, preferring instead to leave them in the hands of highly-paid “technical” experts.
Poverty, hunger and bad government cannot be eliminated without the democratization of policy making to the most local level possible. This in essence would be a critical feature of democratic governance. Unfortunately decision-making is going in the other direction, as it is increasingly concentrated in the hands of a few multilateral institutions.
For purposes of this presentation, we will concentrate on the official Bretton Woods institution’s line on governance examining it in its own terms. According to the Washington Consensus, good governance consists essentially as the political administration of economic policies: the deregulation of exchange, trade and prices systems, the preferential treatment of individual and corporate investors, while eliminating governmental involvement in credit allocation. In short, all measures necessary to complement and reinforce neo-liberal economic policies while leaving the social model untouched. The chief presumption being that attracting forcing investment and “aid” is critical to long terms development, and that good governance is the link between the two.
The State is the other actor critical in this debate over MDGs and good governance. One will acknowledge that the State was one of the first victims of the post-Cold War offensive ideological and cultural offensive, virtually “satanizing” the State while exalting the virtues of the market. Intellectuals and to some degree populations came to believe that governments were responsible for all evils and that A couple of decades down the line, there is a reconsideration of these postulates of the state being associated with what is evil and inefficient while markets are good and efficient.
Donor rediscovery of the State (good governance) is somewhat suspect. In the face of multiplying zones conflicts and increasing poverty after more than a decade of neoliberal policy fixes, it is not surprising that multilateral agencies are looking for explanations. Of course neoliberalism is not to blame. Instead we have a new explanatory reasoning that goes by the name of the absence of “good governance” and the existence of corruption as primary factors explaining the deteriorating social environment. Thus the international community comes up with a new fix. But not every one is fooled by the silver bullets of MDGs and governance. For example, when the 2002 Human Development Reports concluded that good governance and strong institutions were necessary to foster economic growth, the august Economist took the conclusion to task reminding its readers that “governance and democracy, even together, are not enough”. As it the 16th century wars of conquest, the sword had to accompany the quest to “reduce” the Indian savages who were to be deprived of their lands and families in the process.
In reality, the upsurge in the concern over governance responds to the need to provide answers to the inevitable question of what to do in the light of the failure of structural adjustments and “economic reforms” to deliver political stability. In another sense, however neoliberalism is reaping, at this new stage, from the restructuring of political and economic power that took place over the course of the previous decade. Haven augmented economic inequality and simultaneously increased the bargaining power of a governmental and bureaucratic elite (while severely undermining social organizations) the multilateral institutions are prepared to negotiate with a severely weakened state.
Institutions for Markets
Notions of good governance measure effectiveness in terms of market-friendly reforms and private-sector development yet take countries in the opposite direction. Are markets subservient to democratic institutions or, as the 2002 World Bank’s World Development Report’s title suggests, is it all about Building Institutions for Markets? The 1997 World Development Report, The State in a Changing World, acknowledges that the state has a critical role to play in promoting development, in direct contrast to its pro-market policies of the 1980s. The report envisages the state ‘not as a direct provider of growth but as a partner, catalyst, and facilitator.’ But the good governance recipes handed down by the economic powers and demanded by multinational corporations carefully avoid raising questions about the nature and realm of development, the politics of the dominant economic growth paradigm, and the forces that control such development in their own self-interest. The same corporate-generated neoliberal development model is responsible for the enormous concentration of wealth and assets. The Human Development Report admitted that over the course of the 1990s, income per head fell in no fewer than 54 developing countries, the very same years of “economic reform”. Perhaps one had something to do with another? By no means said the Bretton Woods institutions: the problem was not the reforms but rather “institutional factors”. For example, from precarious yet stable balance between Market and States in Northern Europe gave way to the “atomization of the State while elevating the virtues of markets”.
For the World Bank ‘good governance’ takes the form of forging a capital-friendly agenda by way of constructing a supporting positive relationship between the state, the market, and civil society in loan-receiving countries. The ‘minimalist state’ is to give way to an ‘effective state’ in order to achieve the unchanging primary goal. An effective State, for the Bank, is one that manages and regulates the market in a non-confrontational but a supportive way with refurbished institutions. As for poverty and other social problems, these will be alleviated as a result of the new relationships, legal reforms and anti-.corruption measures attractive to big capital.
More specifically, good governance for the Bank takes the form of securing the establishment of a “well-functioning” market economy with stable property rights, enforceable contracts, high levels of transparency, and low levels of corruption. The creation of effective institutions is seen as a counterweight to arbitrary or “populist” state action, in which the IFIs would feel supported within the country by way of expand on a democratization and participation agendas—principally in addressing the role of corruption. Addressing corruption however does not take place as part of a democratization agenda but rather as a function of insuring the macroeconomic “stability”(financial sector strengthening, privatization, etc. Sooner than others, the World Bank has come to see the relationship between state and the market at the core of a “good governance” agenda, and therefore as a means to advancing toward the materialization of the MDGs. But in any case the governance agenda remains market-centric rather than state-centric. As one study concludes, “the Bank’s faith in market mechanisms underestimates the significant challenges posed by institution-building and the need to protect the vulnerable.”
How were those institutional factors to be addressed? Here is where the school of market-oriented orthodoxy known as the Washington Consensus introduced the notion of “good governance” as a revised component of the neoliberal paradigm stressing deeper political interventions to accompany the existing economic ones. New recipes called for improved management techniques and securing the collaboration of all the various social actors (civil society and business). In this way, markets could flourish as all “stakeholders” pitched-in to create the “atmosphere” conducive to private foreign and national investment. Notions of good governance measure effectiveness in terms of market-friendly reforms and private-sector development, yet the same thinking can take countries in the opposite direction. Are markets therefore subservient to democratic institutions or, as the 2002 World Bank’s World Development Report’s title suggests, is it all about Building Institutions for Markets?
While some would have us believe that corruption and sloppy governance is chiefly third world affairs, there are always cases in the news that show the opposite. Perhaps the most recently publicized cases involve the arrest of Mark Thatcher for involvement in an alleged coup plot in oil-rich Equatorial Guinea, or the scandal plaguing the Riggs Bank in Washington DC which funneled channels not only for ex-dictator Pinochet but also the family of Obiang Nugema, president of Equatorial Guinea. Or the World Bank involvement in the Lesotho Highlands Water project?
Good governance recipes handed down by the economic powers and demanded by multinational corporations carefully avoid raising questions about the nature and realm of development, the politics of the dominant economic growth paradigm, and the forces that control such development in their own self-interest. The same corporate-generated neoliberal development model is responsible for the enormous concentration of wealth and assets in the hands of a few transnational entities while causing massive social and environmental dislocations. While the adoption or impositions of the models are overtly political acts, there is a refusal to recognize their outcomes in political terms. We witness therefore an attempt to depoliticize development and governance, reframing these as largely technical problems with technical solutions, denying the structural and political roots of conflicts. Separating the notion of governance from democracy and sovereignty is not simply inaccurate it is dangerous. For example in Chad, the international liberal community approves the World Bank's imposing rules on the development of oil fields in that country, including a plan in which revenues are held in escrow abroad and will be directly spent on health, education and road programs. A revenue oversight committee of citizens is monitoring the process.
Whatever the intentions, such a practice smacks a return to colonial management practices. This is particularly true, as “good governance” has spelled more conditions being placed on countries of the South in order to access or restructure loans. As one study admits, “conditionality, or the attaching of conditions to loans, has played a key role in the implementation of the good governance agenda. The objective of governance conditionality is to exert pressure on borrowing countries to improve their policies and thus enhance the effectiveness of aid. During the course of the 1980s the number of good governance conditions attached to World Bank loans rose dramatically, from an average of 21 conditions per loan in 1980, to 55 by 1990, falling gradually to 33 average conditions per loan by 2000. This ineffectiveness derives in part from the vagueness of the concept of good governance itself, and from the fact that there is a real confusion at the heart of the governance agenda about whether governance is a precondition for successful development or development’s objective. ”
Development theory aside, “good governance”, in this context, forms part of reinforcing the hegemonic development paradigm and discourse that precludes challenges to neoliberal orthodoxy as regards the link between economic growth and democracy. Discussions over governance tend to take place within its own framework carefully excluding challenges to the economic model. The World Bank cranks out policy guidelines (and conditionalities) on governance, as it does on environment, conflict, poverty reduction, gender and sustainable development insuring ample research, diffusion and training in support of the policies. These carefully crafted guidelines also serve the purpose of allowing the World Bank to present itself as an entity (and a paradigm) responsive to the pressures of social movements around the world.
The question is whether the type of governance developed by the International Financial Institutions and the “donors” for their lending and development policies limit themselves to procedural definitions of democracy, with its corresponding emphasis on the importance of political institutions for economic stability and growth, indirectly imposing neoliberal economic policies as part of liberal political values that are, in turn, the norms that should be followed by government. Under such approach the focus is placed on combating corruption and insuring accountability—in practice there is a further transfer of power towards the top socially and bureaucratically, as both the public and standing governmental structures become disempowered. Such a notion runs counter to the positive examples being set in cities in the South where progressive powers are building power and achieving municipal successes. It is politics--and not pro-market management as the World Bank would have it—that is at the center of local participatory governance debate and practice, forging innovative styles of democracy and socio-economic advances.
What is missing is a capacity to reflect and respect realities as experienced by people outside of the narrow lens of capitalist development and a hegemonic system based on greed, economic imposition and militarism.
In its version of good governance, the International Monetary Fund employs its power –i.e., conditionality—to push “institution-building” and policy “advice” on banking law, contract law, company law, and on the role of the judiciary and arbitration mechanisms modeled on US jurisprudence. The reforms get “institutionalized” or locked-in through national laws and the threat of sanctions. Departure from the governance norms can deprive the offending government of the IMF seal of approval, which for “donors” is a precondition to further lending. In similar fashion, according to one study, “the World Bank’s understanding of good governance continues to reflect a concern over the effectiveness of the state rather than the equity of the economic system and the legitimacy of the power structure.” To which another analysis adds, “Much of the content of the good governance agenda…is concerned with a very narrow set of issues and interests: state accountability for business, less so for citizens strengthening of property rights, but not land redistribution or attention to criminal justice. It is not surprising, then, that many critics ask, ‘where are the poor?’ in the Bank’s governance agenda” Stated differently, the rights of capital are locked in thereby locking out democratic control over key aspects of the political economy. As political scientist Stephen Gill argues, “in the new constitutional frameworks of disciplinary neoliberalism the goal of public policy is increasingly premised on the goal of increasing the security of property (owners) and minimizing the uncertainty of investors partly through placing populations and governments under constant surveillance”.
Of late, the “donors” are insisting that African governments take up their own regional police work. The New Economic Partnership document (NEPAD) presented by key African governments to the G-8 and embodied in the new African Unity platform places great emphasis on the good governance agenda. But some Africans posed the uncomfortable question whether this was really an “African” agenda or simply a sop to the North in return for more assistance, debt relief and reduction in trade barriers. According to one analysis, “despite NEPAD’s emphasis on democracy, the rule of law, peer review and other such political instruments, NEPAD will fail because it is economically and fundamentally flawed. The NEPAD economic prescriptions for Africa’s development are precisely the source of Africa’s problems, in fact it can only worsen the problems of Africa”.
While there is much to be commended in the “Peer Review” mechanism announced by the steering committee of NEPAD some weeks ago, particularly its review of country records on human rights and democratic practice, other elements such as economic transparency and property-protecting mechanisms (economic management) responds to the corporate agenda. Will this bring the 34 African countries that are LDCs any closer to the MDGs? Indeed, it just may be that the achieving both the set of economic and social goals proves impossible. Exports are growing, as are net resource flows, but the IFIs seem reluctant to channel new resourced into social policies. Small wonder that that NEPAD is heading in both directions at once--UNCTAD cautions that the number of people in the LDCs living on 1 dollar or less a day may increase from 335 million in 2000 to 471 million by 2015.
Democracy and People’s Governance
Ugandan political economist Yash Tandon suggests there is a “mainstream” theory seeking “to hide the systemic causes of poverty and conflict in Africa.” According to Tandon, the dominant discourse on the causes of conflict in Africa will emphasize the lack of economic growth and poor governance. “Of course,” says Tandon, “these aspects of good governance are important not because the West now includes these as part of the ‘conditionalities’ for aid to Africa but because Africans also value life, liberty and the pursuit of happiness, just like anybody else.”10
While the adoption of official good governance models is overtly political acts, there is a refusal to recognize their outcomes in political terms. Stated in other words, we witness an attempt to depoliticize development and governance, reframing these as largely technical problems with technical solutions, denying the structural and political roots of conflicts. Separating the notion of governance from democracy is not simply inaccurate, it is dangerous.
Better public administration and technological know-how are not, in and of themselves, sufficient to impel fundamental changes in governmental policies, let alone its social impact. Empowerment of peoples may be listed as a goal, but in contradictory fashion, so too is the need and demand for external political vigilance, conditionality or “policy leverage”” as expressed by the World Bank and the “donor community”. The degrees of external influence and even control will vary from one poor country to another, but this involvement forms part of the dynamics of “local” politics including oppression, and such dynamics many times entailing long term “instability” and new conflict. By the same token, if poverty as defined by Amartya Sen is “capability deprivation”, one must seek the deprivers and system of generating deprivation also in global historical terms, including the identification of international (mal) governance. As with the global political regimes, the global trade and finance regimes are highly unequal and non-transparent, and are disproportionately weighted on the side of rich countries. Yet most approaches to governance and the MDGs conveniently cast aside that central reality. Governments and governance seems closed to the option of exploring other development and political models that structural prioritize the elimination of poverty and hunger along with redistribution policies to counter deepening inequality and political apathy.
Many components of the official good governance agenda have been long present in past and ongoing struggles for democratization (participation, accountability and transparency). But in the modern world the struggle for democratic governance cannot and does not stop at the local or national level. The search for people’s governance entails tackling the unjust distribution of power and insuring basic services to the population. It entails, in most cases, resisting the privatization of water and electricity services, or agricultural liberalization, which are taken by “donors” and governments as fundamentals of “good governance”. Unless “good governance” and the MDGs can clearly address the core causes that create and entrench instability, poverty and hunger, they are irrelevant.
One would conclude that the governance promoted by the multilateral agencies are at odds with other policies they also claim to support. Good governance (as interpreted by the IFIs) and the MDGs share the same assumption that rapid economic growth will effectively address their respective aspirations. Diverse studies however have pointed to the limitations of the “growth response” indicating that the emphasis on quick growth has come at the expense of equity and equality, and therefore at the expense of democratic governance. Unless one applies narrow managerial and numerical criteria to determine what is poverty or what is appropriate governance, then the result is not satisfactory from a social standpoint. At the same time, good governance recipes strongly discourage direct intervention by governments to regulate to mitigate and prevent negative social impacts. Thus there is a basic contradiction between poverty eradication on the one hand, and the narrow application of good governance development strategies on the other. Those contradictions must be acknowledged and unpacked in order to arrive at a genuine discussion about possible alternatives.
There is consequently a need to shift or broaden the governance discussion to include the nature and operating condition of multilateral institutions and corporate capital. Yet few things could be as dangerous as to believe that the profit-oriented nature of private capital and the corporations to which it belongs can meet the growing demands of the poor for better services at affordable prices. Unfortunately the trend among development “experts” in the North (with their many official followers in the South) is that a profit-driven strategy can indeed “empower” the poor and even lower the higher prices they are forced to pay. How easy to prefer this harmonious interpretation over the sad reality of rebellions and groundless hope that is part of the reality of the oppressed.
In a recent study by the Transnational Institute in Amsterdam, there is an examination of Latin America and of the episode that lay basis to the claim that the “left is back” (as though it had absent itself). Diverse studies explores examples of progressive parties in local office fro across the continent (Mexico, Uruguay, Brazil, Peru, Ecuador) where studies and failures are being monitored. The point here is that in each experience politics rather than management (governance) at the center of the local governance debates. It is politics and not management that is at the center of the local governance debates, as it examines the new and innovative styles of democracy in major Latin American cities.
In the final analysis the fundamental problem is not governance or the MDGs, but rather our inability to use these two areas to question the justification and dominance of the neoliberal paradigm. Are we talking about ideological instruments intended to shore up neoliberalism’s dwindling legitimacy, or are we referring to valid instrumental concepts and goals oriented to improve the efficiency, the planning of governmental institutions and the political system? Whatever the inclination, it is important to scrutinize technical approaches that tend to hide and fragment reality. A holistic interpretation is required in order to arrive at the objective limitations of the MDGs and the notion of good governance: to have the analytical courage and intellectual integrity to ponder what are the political and institutional pre-conditions that limit development. We need to remind ourselves that both the MDGs and governance are born not simply as occurrences of a given moment, but in response to concrete political problems. . Today, the moment is changing and we must be aware that the “war on terror” is taken precedence over the war on poverty and hunger, providing a useful excuse for governmental failure, North and South, to assign resources for the eradication of poverty and hunger.
Terrorism, poverty, hunger and malgovernance are not “current conditions”. They are all the products of historical processes of marginalization, mal-development, expropriation, exploitation and desperation. Addressing theses issues requires addressing the social, cultural, political and economic forces and processes that perpetuate vulnerability, marginalization and corruption
Good governance as with good MDGs intentions must confront and not disguise those structures and systems that generate enormous inequalities between in global consumption and is responsible for the state of oppression and misery afflicting the majority of the world’s inhabitants. This system of neoliberal global and national governance designed to enrich a few and make them ever more powerful, allowing them to practice war at will, can not at the same eradicate poverty, save the environment and prevent new wars.
 See M. Mallock Brown’s introduction to the 2002 Human Development Report, Deepening Democracy in a Fragmented World,
 “Years of Plenty?” The Economist, July 12th, 2003, p. 68.
 World Development Report 2002, Building Institutions for Markets, (Washington, 2002).
 World Development Report 1997,The State in a Changing World, p.1.
 Neoliberal policies have vastly increased the numbers of the poor and "extremely poor," and widened the gulf separating rich and poor. According to a recent report from ECLA: Poverty is the greatest challenge for the economies of Latin America and the Caribbean. Between 1980 and 1990 it worsened as a result of the crisis and the adjustment policies, wiping out most of the progress in poverty reduction achieved during the 1960's and 1970's. Recent estimates place the number of poor at the beginning of this decade, depending on the definition of poverty, somewhere between 130 and 196 million. Recession and adjustment in the eighties also increased income inequality in most of the region. In the countries with the most highly concentrated income distribution, the richest 10 percent of the households receive 40 percent of the total income. Cited in Atilio Borón, “Democracy or Neoliberalism”, Boston Review.
 Vivian Collingwood, ed., “Good Governance and the World Bank”, www.brettonwoodsproject.org
 World Development Report, Building Institutions for Markets, (Washington, 2002).
 Rod Little, “Help me, Wonga”, The Spectator (UK), September 3, 2004; Mike Muller, Getting Priorities Right, Business Day (South Africa), September 3, 2004. www.odiousdebts.org
 The New York Times, (Editorial) August 1, 2004.
 Vivian Collingwood, ed., “Good Governance and the World Bank”, www.brettonwoodsproject.org
 Santiso, C., ‘Governance Conditionality and the Reform of Multilateral Development Finance’, G8 Governance no.7, at http://www.g7.utoronto.ca/g7/governance/santiso2002-gov7.pdf.
 Bretton Woods Project, Good Governance and the World Bank, www.brettonwoodsproject.org. p.26.
 Stephen Gill, “American Transparency Capitalism and Human Security: A Contradiction in Terms”, Global Change, Peace & Security, Volume 15, No. 1, (February 2003), p.40
 Until the last diamond—Civil Wars in Africa”, Supplement, Alternatives, Alternative Information & Development Centre, Vol. 2, No. 5, (April, 2003). p. 2
 “Strong growth amid poverty”, Africa Renewal, UN Department of Public Information, Vol. 18, no. 2, (July 2004), p.24
 Yash Tandon, “Root Causes of Peacelessness and Approaches to Peace in Africa”, Peace & Change, Volume 25, No. 2, (April, 2000), pp. 166-187.
 Amartya Sen, Development as Freedom, (Oxford, 1999), p. 13
 “Contradictions between the stated goals of eradicating extreme poverty and hunger, and the development policies promoted by donors, IFIs and the UN. The policies and economic strategies promoted by the IFIs, regional banks, and bilateral donors/creditors often contradict important UN conventions on development and human rights, and undermine the UN’s commitment to the MDGs. (italics in original). Focus on the Global South, “Anti-Poverty or Anti-Poor: The Millennium Development Goals and the eradication of extreme poverty and hunger”, (Bangkok, 2003).p.13
 Development students are now being told to support profit-driven strategies: “If we stop thinking of the poor as victims or as a burden and start recognizing them as resilient entrepreneurs and value-conscious consumers, a whole new world of opportunity will open up”, C.H. Prahalad, “Face Value, Profits and Poverty”, The Economist, August 21st, 2005.
 “The Left in the City”, Transnational Institute Politics, (Amsterdam) www.tni.org