Edited by Christopher Ansell and Jacob Torfing
In the past two decades, governance theories have arisen semi-independently across multiple disciplines. In law and regulation, planning, democratic theory, economics, public management, and international relations, among other disciplines, scholars have sought to describe new strategies of governing. As a result, the notion of governance is now one of the most frequently used social science concepts in the world. No single theory encompasses this diverse body of work, but rather multiple theories with different aims and perspectives. The Handbook on Theories of Governance collects these theories of governance together as an analytical resource for governing in an increasingly complex, fragmented and dynamic society.
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Chapter 28: Economic theory
Economic theory is about coordination of decision making. Markets, corporate hierarchies and governments are seen as the most important governance mechanisms, and economics is about the proper role and scope of each mechanism. These governance mechanisms are mostly seen as functioning in isolation and according to their own respective rationales. On the other hand, discursive framing of decentralized decision making and the mixture of governance mechanisms as a result of direct interaction, joint decision making and negotiations between actors are beyond the theoretical perspective of most economics theories. However, some theories focus on informal coordination in networks, by means of social capital and through discursive interaction or what is in the context of this chapter called invisible handshakes in contrast to the visible hand. One such example is the economic theory of the governance of common pool resources.
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