1 Introduction
This paper considers in detail a component of social capability that is suggested by the Treasury’s Inclusive Economy framework[1] as being centrally important to the well-being of New Zealanders: the functioning of the public institutions that provide the broad environment within which politics, society and the economy operate. Related to this is the role of the informal “institutions” of social norms in contributing to social cohesion and well-being, and in facilitating the functioning of formal institutions.
The Inclusive Economy framework is based on analysing the complex inter-relationships between social capability, productive capability, and well-being, as illustrated in the following diagram: [2]
The term social capability is defined here as a society’s capacity for collective action in a variety of spheres, including non-market and market, and involving voluntary interactions as well as the use of the coercive powers of the state. [3] In this broad sense social capability subsumes the notion of social cohesion – a more cohesive society will, in general, have a higher level of social capability. For example, it will be able to support a wider range of market exchanges and non-market interactions and institutions.
The perspective adopted in the paper is one in which social norms and formal state institutions can both substitute for and complement each other. The paper draws on agency theory, on the literature on social capital, on social norm theory, and on the concept of a national integrity system.
The paper attempts to identify the ways in which governance and social norms may impact on well-being, and to assess the relevance of these issues to New Zealand. A number of areas are then suggested where the governance of public institutions can be strengthened in this country. [4] This last discussion takes as given the fundamental elements of New Zealand’s constitutional arrangements, and focuses on improvements to the transparency, accountability and integrity of public institutions. The paper also contains some tentative remarks about the potential role of government in New Zealand in influencing the evolution of social norms.
The structure of the paper is as follows; section 2 presents a short discussion of the intrinsic and instrumental value of good governance. Section 3 discusses the contribution of social norms to well-being, and considers some of the interactions between social norms and formal institutions. Section 4 presents the specific direct and indirect channels through which governance and social norms, respectively, may affect well-being, cites evidence for those effects, and discusses the relevance of the evidence to New Zealand. Section 5 identifies a number of areas where the governance of public institutions can be strengthened in New Zealand, and contains some tentative remarks about the potential role of government in influencing the evolution of social norms. Section 6 contains some concluding comments.
Notes
- [1]See Treasury (2001).
- [2]Taken from Treasury (2001), p. 4.
- [3]This use of the term contrasts with recent usage by some within the social capital literature to refer to that sub-set of social relations (or social capital) that involve only the formal institutions of the State (e.g. Woolcock, 2001). For a description of social capital theory and its relevance to public policy in New Zealand, see Petrie (2000).
- [4]A separate paper considers in detail issues in Maori governance and Maori society that are little more than touched on in this paper. See Greenland (undated).