Studies on state-rescaling raise a number of concerns about whether, where and how the state might be shrinking. In a longitudinal analysis of 48 nations, Martinez-Vazquez and Timofeev find that decentralisation has increased since , but total government revenue and spending as a share of national GDP has remained relatively stable. Yet they also find differences between whether revenue or spending is decentralised with the latter having a negative effect on government size.
In a subnational study of US states, Bruch and White find that decentralisation and increased state government discretion over welfare spending has generally not led to cutbacks in most areas.
Second, researchers stress that state-rescaling invariably results in spatial inequality: the quality and quantity of government and the rights of citizenship increasingly depend upon where people live within nations Brenner, ; Lopez-Santana, For example, looking at changes in labour market policies among the USA, Italy, Germany, Spain and the UK, Lopez-Santana finds that spatial variability is greatest in the USA and Italy, as these two countries have decentralised a greater degree of decision-making and administrative power to their respective sub-national governments.
Third, different levels of government may operate against each other to shape the aggregate size of the social safety-net and the provision of public services. Kim and Warner , for example, report that in the USA, austerity-minded, conservative state governments are ratcheting up attempts to pre-empt local ordinances, policies and programmes that support disadvantaged populations and community well-being. In summary, the state-rescaling research indicates that the visibility and experiences of state retreat are uneven and depend upon where one lives in a particular nation.
Numerous studies point out that the state increasingly serves the interests of the capitalist class over labour and citizens, as it privileges accumulation over social reproduction Crotty, ; Harvey, ; Keyder, ; King and Le Gales, In some nations, this has led to a reconfiguration of the state, whereby activities supporting democratic capitalism and the common good — such as investing in infrastructure and technology, improving education, health and welfare, regulating business, using the tax system to generate sufficient revenue to fulfil public obligations, and ensuring employment at rising wages — give way to activities whose benefits are easily captured by the private sector and the capitalist class Crotty, Scholars also show how the gap between state support for the middle class relative to the working class and the poor has grown.
The extent to which the state has shifted away from responding to the needs of non-elite class segments varies from one country to another.
The power and accountability of the state are generally thought to decline when the state becomes highly involved in sharing functional responsibilities such as policy design, funding and service delivery with non-state actors Buchs, At the local level, governance relationships are often scrutinised by analysing privatisation, outsourcing of services and public—private economic development initiatives, the effectiveness and equity of which have long been disputed Crouch, ; Ochs, ; Reese and Rosenfeld, These stress that social and political relations are not inherently deducible from the mode of production but, instead, interact with it to regularise production and consumption, providing distinct phases of social stability and forms of state intervention necessary for economic growth.
The periodisations of capitalism identified by these frameworks roughly correspond to well-recognised eras of state change, such as the transition from centrally driven Keynesian systems with a stronger social safety net to market-oriented, neo-liberal governance systems.
Scholars question the extent to which the state as an institution overall is in decline, whether its functional activities have moved away from serving non-elite classes, how the marketisation of government has left the state open to private sector predation, and whether the social safety net of many countries is now irrevocably damaged. One important and recurring theme in the literature on the changing state is the trajectory of capitalist development, including how it should be understood and theorised; the stability of the welfare state; and the potential for progressive social change.
Here we explore the class forces that historically put pressures on welfare states and led to more egalitarian outcomes; and how the balance of class power has shifted as capitalist relations of production have changed and neo-liberalism has solidified.
A recent paper by Neil Davidson compares the major crises in the global economy — , , and — and their outcomes.
THE DEFINITION AND IMPORTANCE OF LOCAL GOVERNANCE
The first three of these crises led to a clear shift in capitalist production relations; for example, the crisis played a role in the creation of the Keynesian-Welfare State and the crisis to neo-liberalism. Both crises already had some of their necessary conditions in place that foreshadowed the movement to a new subsequent order. However, Davidson argues that following the crisis, there is no alternative in sight and no clear conditions for one.
Despite poor growth rates after the global financial crisis, policy makers in numerous countries have pursued austerity and further neo-liberal solutions.
Gowan provides useful benchmarks in his book on globalisation. He argues that neo-liberalism works to the advantage of the former — including the pursuit of short-term gains and the trading of financial assets rather than long-term investment in productivity. Shareholder value and the assimilation of managers to the more short-term view of owners is part and parcel of the shift towards the money pole.
As part of this shift, many contemporary political economists have revived the debate about the important role historically played by labour in pressuring capital for radical change in its organisation and practices Palma, ; Streeck, a , b. Thus, Streeck argues that there are now few counterweights to capital:.
The Routledge Handbook of International Local Government | Taylor & Francis Group
Davidson points out that externalisation and depoliticisation of functions has allowed states to avoid responsibility for the fundamental shift of power to the money pole. For example, the global determination of currency values puts sharp limits on monetary discretion of the nation state. There are large and real variations in the structure and functioning of capitalism and the role of the state Hall and Soskice, The American version of the welfare state was always weaker than its European counterparts and the potential strength of labour devolved to the state level Hall and Soskice, This act let American states determine the legality of the union closed shop.
As a result, closed shops were forbidden across large swathes of the South, the Plains and the Mountain states, paving the way for the shifting geography of manufacturing that would undermine labour Davidson, Moreover, the American labour movement was never a political or social movement in the European sense; more an interest group to which individuals attached themselves with a view to increasing wages but lacking a broader social vision. This gave the USA not one but 50 welfare states.
Western European countries have been more resistant to the neo-liberal nostrums.
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The weakest link is the UK, but even here there is more variation than captured in references to the Anglo-American forms of neo-liberalism. What the UK did share with the USA in the wake of the crisis was a relative competitive weakness in the global economy. The shift to the money pole, though, would also allow a national revival — albeit one that was geographically unbalanced — based on the fortunes of the City of London. France and Germany have been much more resistant to the erosion of worker rights and privatisation and, in Germany at least, rule by the stock market.
However, this balance and the historic strength of the labour movement is under attack in Europe as well. The EU itself embodies many contradictions around labour.
At the same time, numerous nations within Europe have tried to weaken labour rights. Thus, Macron in France was elected on the promise to reform labour law and his administration has decentralised collective bargaining and introduced measures allowing firms to close plants more easily. In Japan, the productive pole of capital continued to prevail long into the s, protected by a distinct ensemble of institutions that insulate industry from short-termism and erosion by money capital in the interest of rent-seeking Dore, As a result, there has been a greater emphasis on governance through inter-firm networks than through the market.
Revenue, therefore, tended to circulate among the member firms, available for reinvestment and salaries and wages. The firm, relatively free from stock market pressure and able to adopt a longer term view, could invest in innovation, the fruits of which were shared with labour. As Ronald Dore argues, this system is breaking down in Japan, although the country remains a much more equal society.
Like elsewhere, Dore argues that this model is breaking down in Japan — and that the weakness of the labour movement is a significant reason for the undermining of the Japanese model. Recent changes in the state and its various forms of retreat have profound effects on specific places and populations. These include shifts in capacity and policy orientation that leave populations bereft of needed public services, increased inequality across geographic areas and sociodemographic groups, and political effects such as the growth of right-wing populism.
Here we assess these and other impacts. Changes in the scale and scope of the national state have often directed and limited the fiscal autonomy of lower scales of the state Kim and Warner, ; Peck, In many countries this has resulted in attempted reorientation of the state away from social welfare functions and presented a challenge to national redistributive policies. This shift away from redistribution is both intensified and enabled by the rise of the austerity or retrenchment policies across many European countries and in the USA. The use of these policies has a long history, which predates the Great Recession, but the global financial crisis created a newer consensus among the financial and political elite around budgetary contraction.
Austerity budget cuts were imposed upon some countries such as Greece, Italy and Spain by international financial institutions; but were actively pursued by other countries, such as Ireland, the UK and the USA, in a bid to reassure financial markets of the stability and basic strength of these economies Clifton et al. Many argue that this is both a budgetary and a political project Jessop, ; Peck, ; Pike et al. Steinebach et al. Gray and Barford show that in addition to cutting redistributive programmes and services, some countries have also cut economic development and tax collection budgets, affecting the traditional capacity of the state to stimulate the economy and collect revenue.
State capacity also has been compromised by generations of outsourcing, and a common impact of the Great Recession was to intensify the trend towards outsourcing public services Peck, The privatisation of public services has a long history in many countries, including the USA and UK, where neo-liberal solutions are less contested, but it is also becoming well established even in paradigmatic welfare states, such as Sweden. As reductions in the capacity of the national and local state can be a by-product of outsourcing, the loss of capacity may increase in velocity in times of austerity.
Failures in private sector provision of public services are increasingly common, as successful bids for contracts are often low cost — but come with a high price of reduced standards. The restructured public sector itself, reflecting the austerity budget cuts, often lacks the capacity for oversight and scrutiny of their private sector contractors. For example, England and Wales closed its Audit Commission in , which was the public body that monitored value for money in public contracting. The Commission was largely replaced by a private sector regime of audit firms with a much reduced audit scope, leaving many areas of local public services operating without effective oversight Ellwood and Garcia-Lacalle, Thus, the work of the Audit Commission to oversee public-sector outsourcing was itself outsourced to the private sector.
In the last decade, the UK has experienced numerous scandals with the private provision of public services from global corporations such as G4S, Serco, Capita and Carillion — with issues spanning poor value for spending, human rights abuses, non-delivery of services, collapse and fraud. This reinforces Steinebach et al. Yet, despite its well-known problems, outsourcing remains an important and ubiquitous mechanism for providing public services indicating that potential declines in state capacity and the quality of service provision are likely to extend into the future.
While reduced state capacity along with deteriorating public services is a central impact another important effect is distributional. Cuts in public services, welfare and public sector employment may be pushed down to the local state where the effects are especially uneven — spatially and demographically Lobao and Adua, The uneven geography of state change has long been noted.
For example, within the UK, Beatty and Fothergill , examining changes in welfare benefits, find that a key effect of welfare reform is to widen the gap in prosperity between the best and worst local economies across the country. Similarly, Kitson et al. They find that the effects of austerity cuts are unevenly concentrated amongst regions and populations that are most dependent on government spending and public sector employment.
Localities with the highest unemployment also have relatively high concentrations of public sector jobs and thus are particularly exposed to reductions in job opportunities in the public sector. Thus, the poor recovery from the recession has meant that the largest negative effects have been felt in the economically weakest regions. State change and the resulting austerity policies also have been shown to have uneven demographic effects, where some social groups bear the costs more than others.
Austerity policies have taken similar form in different countries of tightened eligibility requirements for state benefits, private provision of some benefits areas, lowered benefit rates — outright or by capping annual increases below the rate of inflation — and removal of some benefits altogether. Other common austerity measures include declining social protection and reduced investment in health, education, housing, care and community development services. The social consequences of state change and resulting austerity policies have exacerbated existing gender and racial inequalities.
Many scholars show that women are more likely to depend on public services, work in public sector jobs and need state benefits. MacLeavy highlights how cutbacks in state spending present a particular challenge to the financial security and autonomy of women in Britain, who are subject both to large benefit cuts and the changes to public services. In Ireland, Keane et al. The effects of marginalisation from changes in the welfare state are also bound up with race and it is often the extent of inter-sectionality between race, gender and class which shapes the size of the impact.
Many researchers examine the extent to which race, class and gender reinforce disadvantage in benefits, income and public services under a restructured welfare regime. In the USA, changes to the benefit system, together with severe cutbacks in the public sector workforce, have a disproportionate effect on women, and particularly ethnic minority women who rely more on state benefits and comprise a larger share of the public sector workforce Christensen, Thus, many low-income minority women have experienced increased financial and social precarity.
Debates around race and changes in the welfare state go beyond the effects of cuts to spending on benefits and public services. Many scholars of the US political economy trace the roots of contemporary urban fiscal crisis to longer histories of persistent racial and class inequality, discrimination and deindustrialisation. For example, Hohle argues that due in part to the history of local struggles over race, the welfare state in the USA was displaced and rescaled upward from the state to the national level during the Keynesian period.
Black residential clustering and spatial isolation are powerful predictors of foreclosures across USA Rugh and Massey, A system where local governments to divest from political influence but simply be a steward of public service delivery.
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A local unit is a legal entity that provides public services to its people within the territory where it exercises jurisdiction, but it is also a democratic institution which from the decision making point of view, is governed by a council with representatives elected by the people who are accountable to their constituents Tindal, ; 2.
In order this kind of government can function, the literature suggests that several conditions must be met:. But we can not have a clear-cut division since today are well recognized many forms of collaboration between different local government units, which happens to be offered one or several services to two or more units. Consequently, such separation takes secondary importance given the purpose sought to be achieved.
This means that the unit must be able to administer the taxes collected and provide services to citizens within the financial capacity created by these taxes. Why is it necessary to do so? As we know one way of controling over an institution or unit is the financial control. If you do the opposite analysis, independence and autonomy of an institution is greater when it is held by its funds than when funds are provided by other levels of government.
This means that if the unit is not effective in meeting the needs within its incomes, then it will have to seek additional funding from other levels, and this will lead to lower and easily vulnerable autonomy. The local unit should be well organized from the institutional and administrative reforms in order to have a clear division of responsibilities between the persons elected and appointed.
This takes us to a very important element that is accountability.