Functional Borders: The Political Economy of Scale and Governance
by Peter Buker, Acadia University
for the British Columbia Political Studies Association Conference Simon Fraser University Burnaby, British Columbia May 5-6, 1995
DRAFT COPY: Please do not cite this paper without the author's permission FUNCTIONAL BORDERS: THE POLITICAL ECONOMY OF SCALE AND GOVERNANCE Introduction: This paper explores the relationship between the scale of functional requirements for public service provision, and the appropriate size of governance structures. It provides a basis for further formulations by building some possible taxonomies connecting scale of functions and governance. The central question being addressed is: `What is the appropriate size of the organization of democratic governance if we look at the functions it serves?' The inquiry draws upon the notion postulated by David Mitrany in the context of international relations1, that there exist functional imperatives that lead to governance structures. Municipalities exist to collect garbage because functionally, citizens need to have their garbage collected. The following analysis draws upon literature pioneered by Leopold Kohr which addresses the question of the appropriate size of social organization needed to meet citizens' needs. An admittedly normative bias towards `human scale' is present in such appraisals. What follows seeks to connect this functionally-driven analysis of appropriate size to some speculation about the appropriate sizes of various democratic governance groupings. Included is the need to assess the hierarchical arrangement of authority among governance groupings. One of the primary reasons for pursuing the question of size and governance is the perceived crisis in governance responsiveness to citizen's needs. What we once perceived as the effects of `growth in government' ascribed to increasingly complex social organization and the welfare state2, may be conceived as a problem of inappropriate size or scale. There is an implicit notion that governance forms are flexible and can vary enormously in the size of their jurisdiction, while functional service delivery is determined by technology which may have one `optimal' scale. The idea that governance groupings - political and administrative - are or ought to be subordinate to the technology of service delivery may to be mistaken. Democratic responsiveness to governance structures and the scale of human organization implied by it is also functionally driven. We can look at functions being driven by technology, functions being driven by administrative human organization, functions being driven by the formal political processes of elections and legislatures in a pluralist society, functions being driven by power interests, or functions being driven by some combination of these four things. This paper first explores the concepts of scale in society, and then examines these four functions sequentially. While the issue of the scale of governance may seem highly abstract and speculative, it may be the central variable informing the question of democratic responsiveness. It also may serve to shed light on issues such as the on-going tendency of privatization of government services, the increasing concentration of income, wealth, and power in Western Democracies, and libertarian public moods. Human Scale Literature: Writings about 'human scale' in social and technological organization by Leopold Kohr, E.F. Schumacher, Ivan Illich, Kirkpatrick Sale, and others, seek to connect public undertakings to human needs and motivations. Consideration is given to the scale of economic and political activities, and the motives of the individuals it affects. This literature argues that the need for a human scale is the need to ensure that control structures work to establish a clear, personal link with economic, political, and social activity. In particular, they argue that community-based organizations need to gain more economic autonomy from the vagaries of large-scale market demands, and need to build control structures that are understandable and accessible to community members. In the context of the scale of governing structures, this argument can be reformulated into the language of transparency of government activity, and democratic responsiveness to individual citizen's preferences. The human scale literature tends to describe the appropriate functional size in terms of technology. Leopold Kohr's The Overdeveloped Nations: The Diseconomies of Scale asserts that of all the factors affecting behaviour in a community, the size of the community, by population, is the primary variable. Crime, the cost of social services, the efficiency of bureaucracy, traffic congestion, political participation, and as well as many other social functions, all depend on the size of the community grouping. We can see analogies to Kohr's arguments in studies of the size of effective business organizations, public administration theory, studies on optimal currency areas, and in the literature about international economic integration and fragmentation. Kohr's is a broadly applicable theme; much of it can be reduced to a need for meaningful democratic information flows between the decision makers and the decision receivers - an issue of governance. Kirkpatrick Sale, who also emphasizes the primacy of scale, writes: ...the concept of scale [...is] at the bottom, the single critical and decisive determinant of all human constructs, be they buildings, systems, or societies. No work of human ingenuity, however perfect otherwise, can possibly be successful if it is too small or, more to the usual point, too big...3 The notion of economies of scale is a misleading one when applied to governance structures designed to be democratically responsive. The application of large scale in governance is arguably an artifact of what may be termed the `consciousness of modernity'4 derived from the technology of modernity. Traditionally, the technology of modernity relies on belief in economies to scale stemming from Adam Smith's The Wealth of Nations (1776); this permeates our understanding of industrial culture. Economies of scale derive from specialization of economic activities (labour for example), and from certain types of productive activity (e.g., nuclear generating stations) require a certain minimal size to be practical. If you aggregated enough resources, so the argument goes, you will have relatively cheap and efficient production. From this, and indeed from practical observation of the early years of industrialism, emerges the mostly unquestioned belief `big is better'. Big is not only thought better by productivity standards, but big also has the advantage in productive organization in a competitive market economy where monopoly and quasi-monopoly powers may be engendered. There are, however, in-built inefficiencies with size. Some inefficiencies may be explained by command-and-control type problems stemming from more layers in the hierarchy, and more individuals at each layer. This makes information dissemination more difficult because it is both slower and more inaccurate. This problem is exactly the same whether in a private-sector firm or a public-sector government. The problem has a more human source, as well. In such large-scale structures, people must struggle to gain motivation, a sense of belonging, and an understanding of the whole. There are limits to specialization of labour beyond which labour is alienated from the means of production (to paraphrase Marx). There are limits to how much conviviality is to be expected between a person and her or his job if their perceived position in the productive process is impersonal. This phenomenon is well documented among the behaviouralist school in the discipline of public administration. Large corporations and governments have used various means to try to circumvent this problem as it affects productivity. Productivity suffers long after the individual person suffers, however, and is a poor indication of convivial production. One solution to the problem is the engagement of the employee in the process. Such engagement requires responsiveness and democratic values. The culture in the civil society that responds to individual preferences behaves similarly to the political culture that responds to individual preferences. The legitimacy individuals give to command and control structures that provide public goods and ameliorate problems is a consequence of those individual's having positive responses to their preferences. Big also leads to complexity of interactions. Just as 2 people conversing describe 2 interactions of talking and listening, 3 people describe 6, and 4 people describe 12, bigger organizational structures experience geometric rather than arithmetic progression in complexity. This is true for any organizational structure. Specialization, where the more complex structures allow greater productivity, works up to a point. After that, structures become overwhelmed by their own internal complexities. Economists describe this phenomenon as diseconomies of scale. It is a common enough concept in business, but it is also directly apropos to the 'efficiency' of governance groupings that serve citizen needs. Kohr argues that the polity is there to serve the individual - the summum bonum5. He examines four public functions provided to the individual, and describes the minimal, optimal, and critical population size necessary for their provision. The minimal size is the size below which the economies associated with specialization do not exist in any appreciable way. For instance, small communities in the interior of British Columbia are unable to provide their population with a viable concert hall. The critical size is the point where the internal frictions become counterproductive to the benefits of specialization. Urban dwellers most commonly experience this as crowding, traffic congestion, and crime. When you have to consider time and frustration taken in traffic, parking, and lining up for tickets when attending a concert hall, you are directly experiencing the tension between the specialization (that your community can support a concert hall) and diseconomies to scale (the frustrations of attending). Optimal community size lies in a rather large range between the economies of scale and diseconomies of scale for community functions serving the individual. Kohr's four functions of the community to the individual are: economic, political, cultural, and convivial. Economic functions serve the individual if a variety of consumer products are available at a reasonable (i.e. competitive when compared to other community's economies) price, and where individuals can find a market for their productive skills. Political functions serve the individual by protecting her or his interest among competing interests of other citizens, by regulating private activity and by making policies regarding allocation of public resources. Cultural functions are those providing resources to develop and refine the intellect and artistic taste through participation, education, and training. Convivial functions are those that allow social interactions with individuals of similar tastes and temperaments, as well as social interactions where la difference provides stimulation. So what are the minimal, optimal, and critical sizes for each of these four functions? Clearly if you are Robinson Crusoe, you will get on just fine in a society of one. If you are content to survive on market gardens and simple domestic life, a town of 5,000 will do quite nicely. If you have tastes for opera, or attending professional hockey games, you had better dwell amongst several hundred thousand other people to support such enterprises. If your chosen vocation is corporate law or brain surgery, you had best live in a large city. It is a matter of consumption standards, demand for specialized skills, and tastes that will determine the scale necessary to provide functions. At a certain point, diseconomies of scale make large urban centres dysfunctional; more resources are spent to ameliorate the negative effects of the complexity of life and their negative consequences than the benefits warrant. By human dimensions, administratively, politically, and by considerations of equity of power distribution, there are upper limits to the size of various functions. Kohr interprets size as a single community's population; if we are concerned with democratic governance we might consider a hierarchy of governance structures determined along lines of both political and technical functional needs. Kohr looks to evidence from existing population aggregates to discover optimal and critical sizes of communities. He demonstrates, through examples, that functions such as policing, national defence, and attributes like traffic congestion all increase in geometric proportion to the size of the population. He cites examples of physical structures (eg. skyscrapers) and biological organisms (eg. insect legs as a proportion of body weight versus elephant legs). His argument is more observation than explanation, unless we think along the model of geometrically increasing interactions with size, suggested above. Then, any increase in size, whether in numbers of employees, number of products produced, number of activities involved in creating a product, number of policy decisions required, and so on, will increase burdens of internal functioning by some geometric function. If we look at the success of small organizations versus big organizations such as the percentage return to investment of small businesses to large businesses, we observe anecdotal proof of this principle. So what does Kohr's theory mean for the scale of governance? Are the lessons of the industrial revolution, of specialization and growth to be considered as dominant functional criteria that the size of public governing structures must reflect? Is the evolution toward larger scale and greater specialization, with the consequences of increasing integration and interdependence in governance necessary and unavoidable? Kohr's argument and evidence of increasing inefficiency, vulnerability, and even systemic failure attributable to excessive size suggests that limits be placed on the size of communities as functional technologies. Imposing democratic governance values on the public command and control structures may place limits on size in other ways. It is not simply that the limits to growth as dynamic change present difficulties for adjustment in governance. Kohr's contention is that greater size fundamentally is not amenable to more adjustment, but rather the greater size is itself the problem. While this paper is about appropriate scale of governance rather than small scale of all social structures, what is appropriate scale is often small scale. Command and control decision structures which lead to rational policy decisions typically need responsive democratic governance structures. The issue is ... of scale. There is no very successful way to teach, or force, the moral view, or to insure correct ethical responses to anything at all. The only way people will apply `right behaviour' and behave in a reasonable way is if they have been persuaded to see the problem correctly and to understand their own connections to it directly - and this can be done only at a limited scale. It can be done where the forces of government and society are still recognizable and comprehensible, where relations with other people are still intimate, and where the effects of individual actions are visible; where abstractions and intangibles give way to the here and now, the seen and felt, the real and known. Then people do the ... `correct' thing not because it is thought to be moral, but rather the practical thing to do. That cannot be done on a global scale, nor a continental, nor even a national one, because the human animal, being small and limited, has only a small view of the world and a limited comprehension of how to act within it.6 According to the human scale theorists, good, rational decision making is ensured by keeping the connection between the subject and the object clear and short. Technology-Driven Functions: The notion of functional scale is easiest to calculate and understand for non-human technology. Microeconomics is replete with examples of optimal scale in production. Optimality is described by minimum input costs and maximum output production. The costs of human organization and administration are considered exogenous to microeconomic models. This perspective is one from which technology is qualitatively held as a superior determinant of optimal production, compared to the quality of human organization and administration. Thus, as a category of social activity, technology dominates bureaucracy. Berger et al explain from where this domination stems. While technological production and bureaucracy are both central to modernity, ...bureaucracy, unlike technology, is not intrinsic to a particular goal. If one has set oneself the goal of producing automobiles, there is no way of doing so except through processes of technological production. If, however, one has made a decision that citizens travelling outside the country must obtain a passport, one may set up either bureaucratic processes or non- bureaucratic ones as the means by which these passports are to be obtained. Therefore, before any further statements are made concerning bureaucracy it is possible to say: The relationship of this phenomenon to whatever sectors of social life are dominated by it has a lesser quality of necessity than the relationship of technological production to its appropriate social activities.7 If we accept this argument of technological domination of human organization - including, we would assume, governance structures - then command and control systems are sized arbitrarily to reflect simply physical production technologies. This may well be true in private-sector firms, but is it the case for the delivery of public- sector goods and services? Berger et al contend that the underlying logic of technology is its practical and conscious end of production. Human organizations, on the other hand, are shaped by other factors which allow for greater variance in their institutional embodiment compared to technological production. If technological `engineering' considerations of efficiency and productivity are compelling enough, the human organization will use knowledge and processes that coincide with that technological production. This is particularly the case with bureaucracies that directly administer production. In comparison, political bureaucracy that indirectly administers public- sector production of goods and services (including regulation and legislation) is freer from the consciousness of modernity's technical domination. Thus it can create institutions that account for its `variability' by uniquely governance functions.8 In fact, for much of public-sector provision of goods and services, technology-driven functional criteria make profound good sense. Non-contestable areas of public administration constitute the bulk of public resource use and have readily identifiable `optimal' scales. Many optimal scales simply result from non-divisible technologies; if one garbage truck, normally depreciated and driven in working hours five days a week serves 10,000 homes, that is the optimal scale for governance of garbage collection. Policing, fire protection, road maintenance, libraries, and other local government functions have quite obvious minimum efficient scales determined by the non-divisibilities in technologies. Maximum efficient scale, where diseconomies of scale gain importance, are not as obvious when technological functions are the only consideration. Administrative and human organization functions are far more likely to exhibit some type of maximum efficient scale, even though they have been traditionally treated as subordinate functions to technology. Administrative Human Organization Functions: The administration of human organization functions in public bureaucracies has a rich analytical literature. Much of the literature pertains to optimizing organizational efficiency rather than effectiveness. It concerns making organizations responsive to internally identified demands and problems, rather than external preferences considered more in the realm of `politics'. If we segment administrative human organization functions from both the need for democratic political responsiveness and from technological functions, we might build a taxonomy to make sense of the cost- benefit trade-offs related to the scale of governance. The ceteris paribus model we might use is one of the `administrative state' rather than one of `representative bureaucracy'. In some respects, the focus on functionally-driven provision of public sector services has antecedents in traditional public administration theory. This theory purports that persons served, place administered, and process used crucially determine the institutional form - including size - of a public bureaucracy. Similarly, in delivering government services and providing regulation, the number of levels and scope of control from public administration can be interpreted functionally. Traditional public administration orthodoxy is that, given hierarchical control, there are competing trade-offs between the number of levels in the hierarchy and the span of control of higher levels over lower levels. Somewhere there is an optimal solution, depending on the function of the bureaucracy. Superimposed upon the structure of bureaucracy per se are the needs of the clientele. Serving the clientele (public) is increasingly important to governments, as government administrative services have become interpreted as the `front line' where public approbation or condemnation is acquired. There exist natural `thresholds' of bureaucratic interaction, which can be described by a variation of Kohr's or Illich's `convivial function'. The observation that power decreases with distance from the centre of power, may be re- written that all forms of power, including influence, as well as legitimacy and natural authority decrease with distance from the governing decision maker(s). If governance is to be wielded by natural authority9, it functions best if it is also within the convivial structure of face-to-face communication. At scales beyond face-to- face communication, electronic or paper communication is, with few exceptions, identical no matter what the intervening physical distance. The critical transition point is between face-to-face communication and paper or electronic communication. The transmission of information can be described as either convivial or non-convivial; information is either subjectively determined (face- to-face) or determined by an `anonymous replaceable functionary'. This conceptual threshold remains critical even though the transition point may be blurred by factors such as a `tag-team' of face-to-face encounters common to hierarchical bureaucratic structures, infrequent face-to-face contacts, or previous intimate subjective knowledge acquired between individuals (eg. among former classmates or co-workers). The personal encounter allows the weltanschauung of the individual a place in the process. The decisive factor for governance is how the mutual understanding and information flows foster or damage democratic responsiveness. The key ingredients for democratic responsiveness are representation, accountability, participation, and access10. The proper functioning of these hinge upon good information flows. Democratic responsiveness in administrative functions is not only about communication of possibilities and preferences, but is also about public power over the public administration. The ultimate power to reward and punish, hire and fire, will exist in the political sphere, but mechanisms of scale might also be used to promote responsiveness by increased transparency of decisions. For example, mechanisms of transfer of public monies from one citizen to another (tax and expenditure) can be made transparent and hence more directly controlled by individual citizens if the function is clearly demarcated and is at an appropriate scale. One method of securing this end is to decentralize or `cantonize' governance by function, thus allowing smaller scale to increase the proportional importance of each citizen. Such decentralization would be compelled by the need to match the size of the tax base to the size of the public projects. It is destructive to flows of information necessary for democratic responsiveness when citizens are taxed by large governments which then re-allocate that money to the citizen's functional community for community-sized projects. If an ice arena, library, or sewage treatment plant requires a tax base of 10,000 citizens to be `economically' viable, then, following technological functions, those 10,000 citizens should define what should be the specific organized tax base should. A second method to match taxes meaningfully to expenditures is to earmark tax monies for specific purposes instead of collecting taxes in general government coffers to be dispersed to those purposes by government decisions. This is more in keeping with a functionally-driven specification rather than a community-based geographical/population specification. Again, this may promote democratic responsiveness by making the individual far more aware of the breakdown of public expenditures. Far from being a neo-conservative cry for 'less taxation' or less redistributive justice in the economic system, it is a cry for more empowerment, more awareness, and more democratization in expenditure. From an administrative point of view, conventional perception is driven by the tenets of Weberian `Ideal-type' bureaucracy. Ideal-type bureaucracies, which separate the individual from their position, and create anonymous replaceable functionaries for purposes of non-partisan, fair service to the public, imply large-scale administrations. Division and specialization of labour, written record keeping, and universally applied standard operating procedures make public administrations egalitarian in their treatment of the public, but also tend to make them large-scale and restrict their responsiveness. The tension between `responsibility and responsiveness' is an age-old problem; in an effort to ensure responsibility to political masters, however, the upper limit of the size of a public bureaucracy becomes the size of the political governance. Appropriate administrative scale harkens back to the discussion above, where the domain and scope of governance is determined by the quality of the information flows between citizens and decision makers. In the past, perhaps similar to technological functions, individual administrators were represented as non-divisible human capital. Government services were correspondingly represented as non-divisible by department or agency. In truth, human capital is highly divisible, public employees being capable of both flexible hours of work and flexible activities. The amalgamation of government agencies is similarly elastic. This has been demonstrated in the Province of New Brunswick which has promoted the function of where citizens are served by one- stop government service interactive computers. The observation that bureaucracy is subservient to technology is only true if we factor out the quality of information flows and the responsiveness of the administration to citizen preferences. Human organization has its own, unique, scalar functional imperatives, which are as important as technological functional criteria, only they are less obvious. If we are to value human interaction as part of `power of the people' democracy, we would expect bureaucracies and human organizations to be small, approaching some `minimum efficient scale'. Political Processes and Functions: Political processes and functions are driven by the formal political institutions of elections and legislatures in a pluralist society. When we consider the issue of the scale of governance, our perceptions are already conditioned by our experience with existing hierarchies of control, domains and scopes of control, and current public participation in our political culture. We regard the role of governance as one that preserves equality - or at least equity - and coordinates decisions among disparate interests. In our desire for better public decision making, we seek more coordination rather than less; consequently, we look up the hierarchy of governance structures rather than down, for solutions. Coordination among public service functions may be less important than responsiveness of separated functions to democratic dictates, especially if coordination means large-scale governance structures that are de facto unresponsive and restrict citizen participation. Political functions may be better defined by the borders that exist between functions rather than the coordination among functions. Crucial to the issue of functional borders is the belief in a prime or single level of control. This is the level where there is, optimality of economies of scale for technology, and optimality before diseconomies of scale for human control arrangements (including service to the public). In a sense, this is a non-hierarchical understanding of the delivery of public services. Hierarchy might still serve some coordinating functions, and will continue to exist to the elected representative in traditional terms of responsibility, but typically, functional service can be conceived as being primarily a single-level phenomenon. If levels in hierarchies or spans of control are models of high explanatory and predictive worth, we would still conceive of functional borders. Indeed, because functions within a public bureaucracy are inevitably combined, we would expect that pure functional optimality for each separate service is not realistic. Rather, a set of functions might be combined in service of the public. Multiple functions could be superimposed on one another where their functional optimal scales correspond. It is that point of correspondence which we could designate as the top level of the function. These are the points where functional levels of governance would be located in a pure administrative state. If we overlay existing levels of political governance in a representative democracy, we may or may not see reasonable functional correspondence. Functional optimality from a political governance viewpoint is one where the costs of elections and democratic institutions versus the benefits accruing to citizens in participation and representation meet some kind of criteria of optimality - perhaps equating marginal costs to marginal benefits? The issue of corresponding political and administrative governance structures is not moot; for example, the European Union is an example of a polity with a morass of governance levels11. Transnational interdependence driven by an apolitical and relatively amoral system of international capital is a general case, which functionalism ‡ la David Mitrany's formulation describes. Thus, even the extra-sovereign anarchistic international system, and perhaps especially in this system, we see governance structures developing on theoretically transparent functional lines. Again, the fundamental question is what the optimal scale of the governance structures will be for any function or combination of functions. Underlying the notion of optimality is a point where there is a ceiling on the level of the governance hierarchy for any particular function. Local garbage collection, if defined by functional optimality, would not be subject to supra-local governance structures. If representation and participation are considered central tenets of democracy, then governance structures would functionally be best served by smallness approaching some minimum efficient scale. Politically, independent of what the electoral and representative governance system might look like, would citizen's democratic participation be able to endure the increased burden of a complex fragmented governance structures if hierarchies of functions were reduced to their minimum efficient scale? Clearly, using existing participation rates in elections is an inadequate indicator; electoral participation is as likely to reflect voter recognition of their ineffective single vote as it does their interest. Ballots which offer voter choice through referenda, such as in California or Switzerland, may indicate something about participation in governance, but often reflect concerns beyond the functional boundaries of individual direct experience, and hence are suspect. Better indicators may be what Nancy Rosenblum would consider democratic behaviours exhibited in civil society12, or democratic attributes of what we traditionally consider to be political culture. Rosenblum argues that democratic competency is learned, preserved, and practiced in everyday activities within the civil society. From voicing unfairness to a store clerk to lining up in queues, citizens of Western democracies reveal their democratic and egalitarian values. Political cultures in which letters to the editor are commonly featured in newspapers and where popular public media are replete with ersatz political news, also indicate latent competency of the public to participate in a more complex fragmented, but transparent functionally-driven governance structure. Perhaps the key to governance structures reflecting democratic political functions is one of the consciousness of the citizen clients, not the decision makers. Power Interests and Equity: Optimality of the scale of governance structures to reflect technological functions, human organization functions, and political functions is rational, if efficient, effective, egalitarian public service is the goal. Empirically we have witnessed, however, increased `concentration' of political power over public service delivery. This is similar, in some respects, to increased concentration in the private sector. Income and especially wealth disparities are ever increasing in most Western democracies; we can explain these phenomena by a variety of hypotheses. Marxian processes of rent accruing to the owners/controllers of capital is one such hypothesis. Dependencia arguments, where power resides with the controllers of the final product in a vertically integrated production process, may have some explanatory power. A dynamic model, where the velocity of the flow of capital is crucial to the accumulation of economic power, also may explain increased capital concentration and the attendant income and wealth disparities. In this model13 the relative velocity of response of capital to market or regulatory changes determines much of its eventual relative accumulation of power. Hence, human capital is slow to create and credentially change, and physical capital is quicker to create but has a real-life deprecatory and market life- span in change. Financial capital, in contrast, can have near infinite capacity to change. Public-sector concentration - meaning large- scale public service structures - may, by analogy, follow some of these private-sector processes of concentration. They are alternatively described in political terms by Michel's Iron Law of Oligarchy, and by Mancur Olson's analysis of organized group behaviour in society. Michel's Iron Law may be more descriptive than analytic; his observation that "the many will be ruled by the few" is a rather banal assertion. If we interpret Michel's Iron Law from the perspective of the human organizational structures necessary to accommodate the technology of mass production and large-scale economies, we have a broad-brush rule of social organization driven by technical functions. Michel's Iron Law also reflects multifarious social structures of class and family self- interest. Mancur Olson's analysis14, while susceptible to criticism15, has a germ of theoretical truth to it. Olson argues that organized small groups in society have the power to secure a disproportionate large piece of the social `pie'. This is because of the greater benefit-to-cost ratio for each individual in the group versus society to act, and because of the lower costs of organization (both administratively and by single purpose) of smaller groups. The viability of structures that give small groups power is derived mostly from their smaller relative size compared to the larger social group. If the larger social group is proportionately small, as it might be for numerous functions of public sector delivery of services, small groups' benefit-to-cost ratios will be lower, their single- purpose and administrative costs would be less significant relative to the larger group, and their activities would be more transparent in a democratic structure. The argument is that small group behaviours which gain disproportionately in relation to larger society and hence result in concentration of resources or power, cannot work as well in a smaller society. If we define `society' by public function, the disaggregation of public service provision to the smallest scale possible will also combat concentration of resources/power. Disaggregation to the smallest scale of function is intrinsically democratizing in the sense of preserving equity among citizens of economic and political resources. The problem of power begetting power in some kind of cumulative causative structure, and the problem of Realist motivations of power being accumulated for the sake of power, are not functionally analyzable by democratic governance structures. Rather, they are the reasons why functionally appropriate scales of public-service activities - and indeed private-sector activities - are often exceeded. We might also wish to analyze the private sector concentration phenomena with respect to public sector concentration by analogy, and by its possible effect on the consciousness of modernism. Certainly if the concentration of private-sector enterprises is growing, the concentration of the regulatory power in governance (and hence size of governance) must also grow. Competition Among Governance Groupings: One of the main problems with disaggregated functionally- driven governance structures is interjurisdictional competition for economic benefits. This cross-border competition is clear in the processes of international interdependence, neo-imperialism, and dependency. What is significant is the competition between regulatory environments created by governance organisations? The advantage of large over-arching structures of governance, such as strong central governments in sovereign states, is that arbitrage-like behaviour across administrative and regulatory boundaries can be controlled. Arbitrage, a term borrowed from the stock exchange and securities business, is about the calculation of the relative values of securities, currencies, and the like, in different places. They are traded, bought and sold with a view of speculative profit, based on their differences. Those differences are often artifacts of regulations, which in turn are decisions of governance. For example, the age-old argument in Canada about the equal provisions of health service across the country is about governance structures restricting difference between administrative jurisdictions, and ultimately arbitrage-like movement between those jurisdictions. Similarly, the decision to amalgamate the cities of Halifax, Bedford, and Dartmouth was partly motivated by a perceived need to stop these three adjacent cities from destructive competitive `bidding' on newly- locating private enterprises. These cities had been offering tax breaks and other incentives to businesses in order to attract them away from each other. Much of the recent debate about The North American Free Trade Agreement is a consequence of similar problems. The competition between regulatory boundaries is destructive in these instances, as private capital operates as a monopsony, often getting advantage from locating in jurisdictions where negative external costs are borne by the community. The inadequacy of regulation to endogenize externalities universally across all governance bodies is the prime reason why inter-jurisdiction competition for private- sector investment occurs. The argument that competition between governance jurisdictions is destructive, and leads to the `lowest common denominator' of standards, can be countered. Depending on the function examined, jurisdictions which operate efficiently and effectively in their provision of public services may force other jurisdictions, through long-run competition of citizens re-locating16, to rise to the highest standards. Efficiency and effectiveness may include value-for-money, friendliness of service providers, positive responsiveness to citizen input, and the like. There are examples where model communities17 which reflect convivial social values, safety, and ecological attractiveness fetch premium prices in the market. Only the problems of negative externalities - including shadow economies - make inter-jurisdictional competition destructive. Summary: This paper speculates that an argument can be made to organize the scale of governance by criteria of the functions of technology, administration, and democratic political responsiveness. Existing governance scales tend to exhibit diseconomies of scale with respect to those three functions in society, making for less democratic, responsive, and participatory governance. A possible `solution' would be a system of disintegrative and disaggregative governance structures at appropriate scales for each function. Institutionally, this would require a far more complex system of elections and representative institutions, but might also return power to the people and quite possibly change the consciousness of modernity from passivity and mass-mentalities. The central principle is a match of governance scale to function. This may require continually changing institutional aggregations, disaggregations, and borders between voters to reflect functional changes. ÊÊÊÊ1 See David Mitrany, The Functional Theory of Politics. London: M. Robertson, 1975. ÊÊÊÊ2 See for example, Anthony King "Growth in Government" ??? ÊÊÊÊ3 Kirkpatrick Sale, Dwellers in the Land: The Bioregional Vision, San Francisco: Sierra Club Books, 1985, pp. 54-55. ÊÊÊÊ4 see Berger, Brigitte, Peter L. Berger, and Hansfried Kellner. The Homeless Mind: Modernization and Consciousness. New York: Random House, 1973. ÊÊÊÊ5 See Aristotle, Politics, translated by Benjamin Jowett. New York: The Modern Library, 1943. ÊÊÊÊ6 Kirkpatrick Sale, Dwellers in the Land: The Bioregional Vision, San Francisco: Sierra Club Books, 1985, pp. 54-55. ÊÊÊÊ7 Berger, Brigitte, Peter L. Berger, and Hansfried Kellner. The Homeless Mind: Modernization and Consciousness. New York: Random House, 1973, p. 41. ÊÊÊÊ8 Berger, Brigitte, Peter L. Berger, and Hansfried Kellner. The Homeless Mind: Modernization and Consciousness. New York: Random House, 1973, p.42. ÊÊÊÊ9 `Natural authority' ˆ la Weber's notion that authority is willingly ascribed and obeyed if the institution or individual wielding the authority is regarded as uniquely able and acts with good faith towards `subjects'. ÊÊÊÊ10 see Patrick J. Smith, "Local Government", in Michael Howlett and David Laycock (eds), The Puzzles of Power. Toronto: Copp Clark Longman Ltd., 1994, pp. 486 - 487. ÊÊÊÊ11 These `levels' may not be as apparent in the structure of the EU as they are in the policies of the EU; EU policies are divided by a mixture of sector-specific and region- specific laws and regulations. ÊÊÊÊ12 Nancy L. Rosenblum, in a paper delivered at Acadia University, Nova Scotia, March 9, 1997. ÊÊÊÊ13 See Peter Buker, Human Versus Non-Human Capital and Power in Society, Ph.D. Thesis, Queen's University, 1991. ÊÊÊÊ14 cite Mancur Olson's The logic of Collective Action? 1968? ÊÊÊÊ15 find reference - check book advert thing ÊÊÊÊ16 Get Paddy's statistics on re-location frequency from electoral-list data ÊÊÊÊ17 See Witold Rybczynski, Looking Around: A Journey Through Architecture, pp. 106 - 111, for a detailed description of Seaside, a community designed to a 'human scale' with convivial functions at its core.