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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DRAFT COPY: 	Please do not cite this paper without the author's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.