2 The Intrinsic and Instrumental Value of Good Governance
Governance is generally defined as the formal and informal ways in which power and authority are exercised within a given entity (e.g. organisation, firm, or country). It is a multi-faceted concept, and the precise usage of the term varies considerably. Applied at the national level, it encompasses the constitutional structure, the operation of political and judicial processes, and public management. Important components of governance include relations between the state and the individual citizen, the state and civil society, and the state and markets.
On one view, the quality of governance at the national level is determined by the impact of the exercise of power on the quality of life of its citizens – an instrumental approach in which the test of governance is the outcomes that collective state actions help to bring about. In another view, governance involves, in addition to the above, elements that are held to be important ends in themselves, such as individual freedoms of various kinds.
A recent influential exposition of the latter approach is by Nobel laureate Amartya Sen, in his book Development as Freedom. Sen (1999) asserts that freedom is central to the process of development because it is intrinsically important, and because, in its various dimensions and the interconnections between them, freedom is critically dependent on the “free agency of people.” Sen uses the term “agency” not in the sense of a principal/agent relationship, but to mean individuals acting and bringing about change whose achievements can be judged in terms of their own values and objectives.
For Sen, long-asked questions such as “are political and civil liberties conducive to development?” are misconceived. They constrain “development” to a narrow focus on material output. Such liberties should be seen as ends in themselves, not requiring any further justification on the basis of their instrumental effects on other outcomes, such as economic growth. Similarly, Sen argues – in the tradition of Adam Smith – that exchange of goods in markets has a prior justification in terms of an intrinsically important freedom to exchange.
Sen makes the further assertion, however, that such freedoms are also critically important to the achievement of social development, in the form of economic growth and improvements in the quality of life. He assembles empirical evidence on the connections between freedoms of various kinds, and a variety of social outcomes. Some of the evidence is drawn from developed countries, and Sen argues his framework is relevant to the issues confronting rich countries as well as poor countries.
Sen identifies five different freedoms:
- Political freedoms – democratic systems with freedom of expression and organisation, and a free media.
- Economic facilities – the opportunities that individuals enjoy to utilize economic resources for consumption, production or exchange. These depend on initial endowments and the conditions of exchange (including the functioning of markets).
- Social opportunities – social arrangements for education, health care and so on which influence individuals’ substantive freedom to live better lives.
- Transparency guarantees – social interactions operate on some basic presumption of trust. The freedom to deal with one another under guarantees of disclosure and lucidity is important to preventing corruption and other underhand dealings.
- Protective security – a social safety net for the poor and vulnerable, comprising on-going institutions and ad hoc emergency measures.
Sen focuses on the empirical connections that link freedoms of different kinds.
“Political freedoms (in the form of free speech and elections) help to promote economic security. Social opportunities (in the form of education and health facilities) facilitate economic participation. Economic facilities (in the form of opportunities for participation in trade and production) can help to generate personal abundance as well as public resources for social facilities. Freedoms of different kinds can strengthen one another.” (Sen, 1999, p.11).
Sen rejects any claim that this concept of development is a narrowly Western democratic one, and cites a history of non-Western thought in support of his argument.
In this paper the focus is on those elements of Sen’s five freedoms that are directly relevant to the governance of public institutions and the evolution of social norms. They are political freedoms, economic facilities, and transparency guarantees. The specific channels through which these freedoms may impact on well-being are identified in Section 4, together with references to supporting evidence.
In the next section the relationship between social norms, social cohesion and formal government institutions is considered.
