Who Governs in Areas of Limited Statehood? The Role of Nonstate Actors

As argued earlier, areas of limited statehood are not devoid of governance. Rather, nonhierarchical modes of social interaction and nonstate actors engaged in governance abound, as the chapters in this volume demonstrate. Institutional state weakness implies that public-private partnerships or even pure nonstate forms of governance are becoming the rule rather than the exception, if governance services are supplied at all. While public-private partnerships increasingly complement classic state functions in Western developed states, they have to substitute for state weaknesses in areas of limited statehood, be it in parts of the territory, in policy sectors, or with regard to parts of the population.

To begin with, the chapter by Sebastian Conrad and Marion Stange provides a historical perspective to the discussion of governance in areas of limited statehood. In the long history of statehood, the ideal type of the “Westphalian system” frequently evoked in definitions of governance was probably the exception rather than the rule. The chapter discusses what the longer genealogy of forms of governance implies for current debates using the example of colonial states. Conrad and Stange argue that under conditions of colonialism, statehood was consistently dependent upon nonstate actors and the delegation of power and authority to them. As a result, the distinction between “public” and “private” actors that has been central for the governance concept as it has developed in political science, is inherently problematic. Moreover, the chapter suggests that we cannot start understanding the governance problematic in areas of limited statehood without taking colonial legacies into account, which is also highlighted by postcolonial studies (Conrad and Randeria 2002).

Highlighting the role of nonstate actors in governance and particularly in rule making challenges our understanding of law as wedded to the state. In the German context, for example, rule of law translates into Rechtsstaatlichkeit (law of the state) as a result of which human rights, predictability, and the legality of political decisions cannot even be conceptualized outside a statecentric framework. The chapter by Gunnar Folke Schuppert takes up this challenge and looks at various instances of nonstate rule making in order to explore what happens to public law in the context of the demise of the state (Entstaatlichung) and the deterritorialization of political rule in areas of limited statehood. He focuses on diverse examples such as the rules governing business transactions among diamond dealers in New York, the American cotton market at the Memphis Stock Exchange, the transnational sports law, and the various transnational standard-setting bodies. These examples constitute rule making by nonstate actors that are self-enforcing and do not require state regulation in order to be effective. However, as Schuppert argues, it would be misleading to analyze these forms of rule making from a perspective that treats the private and the public as polar opposites. In this sense, he agrees with the historical analysis by Conrad and Stange. Law by the state is entangled in many instances of private rule making—if only by providing a “shadow of hierarchy.” At the same time, reputational concerns and the embeddedness of private rule making in social orders can make “law without a state” self-enforcing, which is exactly what Borzel et al. argue in their chapter on the conditions under which companies engage in environmental self-regulation.

The subsequent four chapters deal with the governance role of nonstate actors in areas of limited statehood from various empirical perspectives. The chapter by Sven Chojnacki and Zeljko Branovic takes on a particularly hard case by dealing with the conditions under which security as a collective rather than as a privatized good can be provided even under the most adverse conditions of fragile, failing, and failed states. State collapse and armed conflict give rise to areas where security is provided selectively by a variety of state, quasi-state or nonstate actors. In order to systematically differentiate and analyze the provision of security in areas of limited statehood, the authors trace several modes of security leading to varying forms of security governance (security as a public good, as a club good, and as a private commodity). The chapter uses the analogy of the market to argue that the emergence of different modes of security results from strategies of collective actors on hazardous markets of protection. These are characterized by areas where different public and private actors compete over territorial control, natural resources, and the recruitment of members. The emergence of security governance depends on economic and geographic opportunity structures and on the expected utility to invest in productive means instead of unproductive arming and fighting. The authors then discuss the conditions under which even violent nonstate actors such as warlords or rebel groups deem it in their interest to provide security as a public good for a given population. Chojnacki and Branovic claim, therefore, that stable security governance without a state is possible even under seemingly adverse conditions of fragile or failed statehood.

The next three chapters in this section deal with the provision of public goods in the issue areas of development, public health, social services, and macroeconomic stability in areas of limited statehood. Andrea Liese and Marianne Beisheim investigate transnational public-private partnerships (PPPs) to implement the Millennium Development Goals of the United Nations in areas of limited statehood. Transnational PPPs spread significantly in the 1990s and can be found in all policy areas. The study investigates the effectiveness of twenty-one PPPs in providing governance in the realms of public health, food, and energy for developing countries. The authors evaluate various hypotheses taking from institutionalist and compliance approaches in international relations. The chapter demonstrates that effectiveness of PPPs is highly correlated with the degree of institutionalization of these partnerships, particularly with regard to service-providing and standardsetting partnerships. This confirms arguments taken from legalization research according to which high degrees of obligation and precision of norms are conducive to compliance (e.g., Goldstein et al. 2000; Zangl 2008). In other words, institutional design matters and induces nonstate actors in PPPs to contribute to the provision of collective goods. But Liese and Beisheim also show that the process management of the PPPs influences their effectiveness too, while—interestingly enough-stakeholder participation appears to be less important.

Arguing from a strategic choice approach, Tanja Borzel, Adrienne Heri- tier, Nicole Kranz, and Christian Thauer reach similar conclusions as Liese and Beisheim with regard to the preparedness of multinational and other companies to enter a regulatory race to the top pushing for strict environmental regulations or even engaging in self-regulation. Their argument runs counter to the conventional wisdom that economic globalization necessarily leads to a “race to the bottom” among countries (for a similar argument see Prakash 2000; Prakash and Potoski 2006). Empirically, the chapter examines selected firms in the automotive, food and beverage, and textile industries in South Africa with regard to their propensity to engage in environmental product or process regulation. The study shows that certain factors explain why firms engage in providing environmental governance through either self-regulation or pressing for stricter state rules. These factors include the need to protect brand names and to target high-end markets, exposure to NGO campaigns, efforts to keep foreign competitors with low regulatory standards out of the home market, and, finally, strict home-country regulations in the case of multinational corporations. The chapter concludes that there are good rational reasons why firms should contribute to environmental governance, even in areas of limited statehood in which the shadow of hierarchy is weak or nonexistent.7

The chapter by Henrik Enderlein, Laura von Daniels, and Christoph Trebesch examines a different type of private actor, namely private creditors of developing countries. The public good under investigation here is macroeconomic stability in the face of sovereign debt crises. Many developing countries rely heavily upon financial resources provided by private creditors. Consequently, in situations of financial distress, governments and private creditors often enter a complex strategic interaction. From the perspective of governments, the key focus of this interaction is the provision of macroeconomic stability in the developing country under the constraint of servicing external debt. From the perspective of private creditors, the key interest is to limit losses from potential defaults. In other words, while the chapter by Liese and Beisheim concentrates on cooperative relations between state and nonstate actors in the provision of collective goods through PPPs, Enderlein et al. focus on much more conflictive public-private interactions. Their statistical analysis of government behavior toward private creditors shows that limited statehood-weak regulatory quality and low government effectiveness in this case-is highly correlated with aggressive government behavior toward their international creditors. The same holds true for countries with high corruption and weak rule of law. In contrast, neither democracy nor political violence or stability are correlated with aggressive government behavior toward private creditors. In some, the weaker the state, the more it drives a hard bargain toward its international and private creditors. The chapter shows that even weak and heavily indebted states are in the driver’s seat when it comes to negotiations with their creditors.

In sum, these chapters yield the following conclusions with regard to the propensity of non-state actors to contribute to governance in areas of limited statehood:

  • 1. Areas of limited statehood are not “ungoverned” or even “ungovernable.” In fact, governance is sometimes provided even under rather adverse conditions of fragile or failing statehood. Under particular circumstances, nonstate actors become governance actors in that they are systematically engaged in rule making or the provision of collective goods.
  • 2. At the same time, governance without a state depends on particular scope conditions and on incentive structures inducing nonstate actors such as firms or even warlords and rebel groups to contribute to governance. These scope conditions appear to provide functional equivalents for a state “shadow of hierarchy,” which is systematically lacking or even missing in areas of limited statehood.
  • 3. Last but not least, the chapters also demonstrate that the state actors are not absent in areas of limited statehood. The debate is not between either governance by the state or the complete privatization of governance services. Rather, the empirical contributions to this volume show the various forms of interactions and bargaining relationships between governments and nonstate actors. In some cases (see chapter by Enderlein et al.), even hostile interactions can contribute to the provision of collective goods, in this case macroeconomic stability.
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