The course, contradictions, and consequences of extending competition as a mode of (meta-)governance: towards a sociology of competition and its limits

Bob Jessop (Lancaster University)

Initial and Incomplete Draft for ITEPE conference, 19-20 June 2014

Initial abstract (will need updating)

My contribution combines Polanyian, Marxist and Luhmannian perspectives on the process of governance through market completion and the governance of markets. It aims to disambiguate the meaning of markets and marketization and, in this context, explores the effects of marketization of fictitious commodities, such as land, labour-power, money, and knowledge, as well as the colonization of the public sphere by market proxies. In addition to exploring the growing significance of differential accumulation in the organization of the economic field, it also explores the conditions under which the relative influence of the economic system on other systems and world society in general is increasing through (world) market completion and the impact of finance-dominated accumulation and the indebted society. I relate these processes to economic determination in the first instance, economic domination, economic hegemony, and the tensions in the process of neoliberalization between Chicago School neo-liberalism and Freiburg School Ordo-liberalism. To situate the implications of market completion and the extension of market proxies within the broader, contemporary framework of neoliberalization, I also address the increased importance of credit relations, financial intermediation, and risk-management (and its later parasitic extension into excessive financial speculation and risk-bearing) and the growing influence of capital as property, e.g., derivatives, as the circuits of finance capital as property have become dissociated from the circuits of finance capital as functioning capital within the real economy. Finally, all these issues are related to questions of governance, governance failure, and meta-governance (and its failure) within a multi-spatial framework that is suited to analysing the changing character of a European Union organized increasingly around a market completion project.

Prefatory note for the Conference

Pressure of other research and writing commitments as well as the usual trials and tribulations of examining and university administration mean that this contribution falls short of the initial ambition. What is missing but should be developed in a second draft is more specific concern with the forms of market proxy that encourage governance and regulation through competition in the public sector and civil society and the specific public goods and/or pathologies with which they are associated. I did not reach this part of the paper because it was first necessary to de-mystify the nature of competition and to show the limits of efforts to promote and/or regulate competition in the formally rational capitalist market economy before importing mistaken ideas and theoretical fallacies from an idealized conception of competition into the provision of public goods and services. What goes missing as a result is a nuanced analysis of the areas where markets and competition may be beneficial and those areas where they are inefficient and/or ineffective. This means that the move from market failure to metagovernance is too hasty and the conclusions are therefore also underdeveloped. I plan some more reading and reflection before the conference begins and hope to bring a simplified analysis and more robust thoughts on the underdeveloped parts of the paper. Of course, I also expect the discussion to improve all parts of the analysis.

15 June 2014

The course, contradictions, and consequences of extending competition as a mode of (meta-)governance: towards a sociology of competition and its limits

Competition and competitiveness are complex and confusing topics that defy any simple interpretation and explanation. As buzzwords or catchwords, they are polyvalent and vague. Competition is said to exist in nature (hence naturalized and, in Darwinian terms, seen as beneficial) but it is also regarded as an artefact of specific social practices, which can have quite varied effects. Markets are socially constructed via a set of agreed on or imposed rules of the game. There is no natural or spontaneous implementation of market mechanisms. The nature of market forces varies with the nature of markets (e.g., perfect vs monopoly competition, free trade vs protectionism). Different dispositions of resources, different sets of economic agents, and different market rules will produce different market outcomes. This highlights the importance of institutional design and suggests that market forces are not a fact of nature but depend on specific social relations.

If specific markets seem to be self-equilibrating mechanisms, this results from adherence to sophisticated regulations concerning the quality of goods exchanged, the inner organization of transactions, the legal penalty for non-compliance, etc. Without such mechanisms, private sector opportunism and corporate self-interest would severely distort the alleged smooth adjustment process of supply and demand. Countering this position is the long tradition (dating back to Aristotle and Scholastic philosophy) of the just price, according to which ethical or moral principles would sometimes (if not always) require that goods be exchanged at a price above or below that which would have been reached through imperfect markets (Friedman 1980; Lowry 1974). The Ancients and Scholastics also suggested that usury should be banned even if market exchange would have allowed it.

These and other complexities make it hard to decipher what competition might mean as a principle of economic, let alone societal, organization even as it is promoted as an ideal (and idealized) mechanism of governance both within and far beyond the economy. As emergent effects of generalized exchange, market forces and competition are expected (cognitively and normatively) to steer economic activities and social life more generally. The recent notion of competitiveness is also conceptually ambiguous, politically controversial and ideologically charged. As Robert Reich remarked, somewhat unfairly, the idea of national competitiveness moved from obscurity to meaninglessness without any intervening period of coherence.[endnoteRef:1] Certainly, as we shall see below, it has no place in neo-classical economics; but it does have a potential role in heterodox economics and has been mobilized to inform economic, political, and societal strategies. In these terms it comprises the key set of resources and abilities that underpin competition, whether or not this capacity is fully realized. As such, competitiveness varies with the forms and modalities of competition. There are many ways to define and measure it, and past and current economic, legal, political and policy debates over its nature indicate the many issues that are at stake. [1: Endnotes Cited Reinert (1994)]

1. Competition and the Capitalist World

The workshop proposal cites a claim that competition is the most important organizing principle in the capitalist world (Cini and McGowan 1998: 2). This was advanced in a work on European competition policy and is questionable even in this context. More generally, it can be contested on several grounds:

(1) If capitalist world denotes world society as the horizon against which to explore the relative importance of societal organizing principles, or principles of societalization (Vergesellschaftsprinzipien), then we might counter this claim by citing Luhmann to the effect that modern societies are characterized by functional differentiation and can have no master organizing principle at best there would be competing societalization principles, processes, and projects, associated with efforts to extend the code and programme of one functional system at the expense of others, none of which could be regarded as the most important.[endnoteRef:2] [2: Other functional systems such as juridification, medicalization, militarization, sacralization, politicization, or scientization or, indeed, with identities and values anchored in civil society (or the lifeworld rather than system-world) such as ethnicity or race (apartheid), gender (patriarchy), generation (gerontocracy), or nationality (nation-statehood).]

(2) If it refers to the organization of different functional systems in world society rather than world society as a whole, then each functional system has its own codes and programmes. If competition is the dominant principle of organization within each system, then it will have a different logic in each (e.g., for profit, for scientific reputation, educational certification, for artistic acclaim, for government office or favourable policies, or for positive legal judgements). Whether some common competitive principles or subjective orientation unifies these logics is questionable. At most, competition and competitiveness would become a trope or one among several competing self-descriptions of contemporary society. If competition were to be the dominant principle of the capitalist world, it would occur through the contingent subordination, colonization, or penetration of the logic of economic competition into other spheres (see below for further discussion).

(3) If capitalist world is restricted to the organization of the economy, then, following Weber, there are several modes of orientation to profit, not all of which rest on profit-oriented, market-mediated competition that might (conceivably) ensure the efficient allocation of resources to competing ends. Weber identified three kinds of political capitalism as well as traditional commercial capitalism in addition to the rational organization of capitalist production and financial speculation. In these terms, it is by no means obvious that competition depends on rationally organized, profit-oriented, market-mediated accumulation. Even within the economy, there are other modes of competing for gain (Erwerb), including force and domination, financing of political enterprises, and unusual deals with political authority. Interestingly, these are also part of the wider neo-liberal project, based in part on accumulation through dispossession (e.g., privatization) as well as lobbying to promote rent-seeking via deregulated, desupervised, and decriminalized financialization (cf. Black 2014).

(4) If capitalist world refers only to the rational, capitalist organization of production and the law of value, then the nature of the capital-wage relation is prior to competition. As Marx noted, competition is the external expression of the internal drive of capital as capital to expand, to produce surplus value, and realize it in the form of profit (1973b: 414). As such, it is not the primary organizing principle of the capitalist world but one of its crucial mediations. Thus, whereas classical political economy focused, and neo-classical economics still focuses, on competition in the sphere of exchange, the historically specific nature of capitalist production based on wage-labour provides the starting point for the Marxist analysis of competition. It therefore considers capitalist competition to reduce costs of production and boost return on capital invested before it considers market price competition and exchange. In this context, bases of competition could include competitive reduction in socially necessary labour time, socially necessary turnover time, and naturally necessary reproduction time (see below). These can vary in importance in different stages of capitalist development as well as among so-called varieties of capitalism.

Following these preliminary remarks, my contribution will proceed in six steps. Section two considers how competition (exchange) might become privileged as a principle of organization; section three demonstrates some of the complexities of competition in the actually existing capitalist world; section four considers the more idealized versions of competition represented in liberalism and neoliberalism regarded as economic, political and ideological imaginaries; section five considers the governance of competition in the light of the competition state and competition law (as two among several ways to steer competition); section six puts exchange/competition in their place alongside other modes of governance and identifies limits to exchange as a mode of governance; section seven introduces the idea of metagovernance as a response to the limits of competition as a mode of governance/societalization; and, finally, section eight comments on the fetish of competition as a means of subsuming society under the logic of profit-oriented, market-mediated accumulation as the dominant principle of societalization [not all steps are realized in the first written draft, I hope to present them in my PowerPoint].

2. Economization and Competition

To establish competition as a principle of societal organization presupposes a field of social relations that is not yet (or is no longer) oriented to economic activities and/or is not yet organized along market (or quasi-market) principles of one kind or another. Such a field could exist because the (market) economy is not yet disembedded from the wider ensemble of social relations and therefore organized according to non-market principles and/or because there are sets of social relations that are organized according to the codes/programmes of other functional systems. An additional issue, to be explored below, is the extent to which civil society can be colonized by system logic(s) and/or subsumed within one or another functional system. The notion of societalization (Vergesellschaftung) is useful here. Luhmann distinguishes three successive modes of organizing social formations (or producing society effects): segmentation, centre-periphery relations (linked to stratification), and functional differentiation. I suggest that these three principles are not mutually exclusive and that each can have its own role in organizing world society and, in addition, that the codes and programmes associated with particular functionally differentiated systems can be more or less (ecologically) dominant in world society. This can help to frame an analysis of the development of economic exchange as a principle of societal organization and the forms that competition might take as this development unfolds.

Possible steps towards market completion (and, on this basis, the generalization of competition as a principle of economic organization) in the capitalist world can be identified and each is associated with different modes of competition, if any:

(1) The development of an exchange economy in which want-satisfying material means are distributed, reallocated, or circulated through exchange, whether through barter, a separate medium of exchange, or debt relations. Exchange replaces other principles of economic organization: householding, reciprocity among similarly organized economic units, and redistribution through an allocative centre linked to a political regime, and so on (Polanyi 1982). This step does not require that exchange becomes central to social organization; indeed, historically, markets existed on the borders of households, redistributive communities, reciprocity-based networks, and so on (cf. Marx, Weber, Polanyi).

(2) The development of commodification and monetization such that, to a greater or lesser extent, material provisioning acquires the form of commodity production and/or some economic agents seek to derive monetary revenues from material provisioning or immaterial activities that were not previously subject to monetary exchange. Where this becomes a general feature of economic organization, we can talk of the rise of a commercial economy. This is not necessarily a competitive society, however; monopolies, limits on competition, principles of fair exchange, just price, etc. could constrain the degree and forms of competition.

(3) The development of the market economy as the site of free trade in commodities, the rational organization of production, and trade in money and credit instruments (Webers two main forms of rational capitalism, with the rationality of production defined in terms of its organization according to book-keeping principles). Weber (1968, 2003) distinguishes this form of economic organization from three internally heterogeneous forms of political capitalism in which profits are sought in ways that contradiction the principles of free trade and rational accounting (e.g., through force and domination, unusual deals with political authority, or the financing of political adventures and enterprises). The rational organization of commodity production and exchange may introduce competition but also be subordinate to non-competitive principles (e.g., monastic production).

(4) The development of a capitalist economy based on the extension of the commodity form to the fictitious commodities: land, labour-power, money, and knowledge (cf. Marx 1963a; Polanyi 1944; see also appendix 1). This could result from a quantity-quality shift in which the continuing extension and consolidation of the three preceding changes interact to produce a distinctive mode of production. This development affects many areas of social life. The resulting extension of property rights, contracts, and markets to include labour-power leads to distinct tendential laws (in the descriptive-sociological sense rather than normative-legal sense) of competition that distinguish capitalism from other modes of production. It is in this context that competition becomes the external expression of the immanent nature of the self-valorization and expanded reproduction of the capital relation.

(5) The organization and dynamic of the capitalist economy is subordinated to the circuits of capitalist credit-money and the circulation of capital as property rather than functioning capital. The development of a competitive financialized economy intensifies competition by enhancing the equalization of profit rates and the equalization of interest rates. This occurs, respectively, as finance capital qua functioning capital is reallocated among competing profit-generating investments and as finance capital qua property (fictitious capital) is re-allocated to alternative asset classes (e.g., government bonds, derivatives, gold, or fine art). This involves a qualitative transformation in the form and functions of money and credit relations such that other economic activities are subordinated to the perceived need to maintain liquidity. This leads to a permanent tension between maintaining the liquidity of economic agents and the economic system as a whole (cf. Amato and Fantacci 2011).(6) The development of a full-fledged finance-dominated capitalist economy based on a strategy of ever-increasing market completion facilitated by ever more rarefied forms of fictitious capital (notably derivatives) and associated forms of leverage oriented to a search for super-profits. This involves the growing dominance of finance capital qua property over functioning capital and is the most extreme form of marketization, promoted in the name of market completion, and, in consequence, universalizing and intensifying the competition for gain.

There is nothing automatic in movement across these forms of economization and much effort is required on the part of different social forces to extend market principles along capitalist lines and to compensate for the contradictions, crisis-tendencies, and market failures entailed in this movement. It is worth noting here that competition has several effects with the development of capitalism as a mode of production: in addition to its role in the equalization of profit rates and interest rates, it also facilitates the concentration and centralization of capital (in competition, one capital kills many), promotes the treadmill of competition through the generalization of best practice, reinforces the logic of differential accumulation based on a political economy of time realized in space, and thereby contributes to the completion of the world market. The three forms of marketization, capitalization, and financialization respectively are strongly associated with liberalism and, especially, neo-liberalism and the fetishization of competition as a principle of social organization.

3. The Complexities of Competition

The laws of supply and demand and their mediation through market competition are foundational to classical political economy (Smith 1776). As John Stuart Mill noted:

Only through the principle of competition has political economy any pretension to the character of a science. So far as rents, profits, wages, prices, are determined by competition, [sociological] laws may be assigned for them. Assume competition to be their exclusive regulator, and principles of broad generality and scientific precision may be laid down, according to which they will be regulated (Mill 1848: Book II: chapter IV, section 1).

Classical political economists initially examined how market exchange was organized and regulated through competition. But they neglected the role that changes in the labour process and/or the organization of production played as bases of competition. In this way, they reflected the mercantile capitalists concern with price formation as the basis for profit and loss and regarded competitive in price formation as the key to efficient markets. Following the introduction of the idea of perfect competition by Nassau W. Senior (1836), classical political economists also explored the role of competition in allocating capital among alternative investments and thereby helping to form the general rate of profit. On this basis they criticized firms that took action, alone or in collusion, to hinder this crucial role of competition. Such actions indicated a tension between the interests of particular capitals to secure above average rates of profit at the expense of other capitals through what we might call anti-competitive forms of competition, such as the formation of cartels or monopolies, and those of capital in general in securing the free play of market forces on a level playing field so that no particular capitals are disadvantaged. This prompted many studies of different forms of competition, whether pro- or anti-competitive.

In contrast, neo-classical economics began to treat perfect competition as an abstract, idealized benchmark to define and defend the allocative efficiency of markets and argued, on this basis, that, insofar as it existed, perfect competition ensured that no firm could secure a long-term competitive advantage (Horverak 1988). It has been on this basis that neoclassical economists have tended to dismiss interest in promoting competitiveness and/or securing long-term competitive advantages as another form of nonsense on stilts (for a critical discussion of this dismissal, see Reinert 1994). Consequently, as Hayek put it, if the state of affairs assumed by the [neo-classical] theory of perfect competition ever existed, it would not only deprive of their scope all the activities which the verb to compete describes but would make them virtually impossible (Hayek 1948: 96).

In addressing the complexities of actually existing competition in the capitalist world, I draw on classical political economy, the critique of classical (and vulgar) political economy developed by Marx, and the historical analyses of Polanyi on the limits to fictitious commodification in the dynamic of profit-oriented, market-mediated accumulation. I will return to neo-classical (or theo-classical) economics, with its fetishistic worship and one-sided treatment of the market in subsequent sections.

It is through competition that the contingent necessities of the differential accumulation of particular enterprises, clusters, or sectors and the differential growth of particular economic spaces are realized. Competition takes many forms and plays out in many ways. It is not confined to any particular type of economic activities although, in todays world, financial innovation and competition are especially significant. The ultimate horizon of competition is the world market but the world market is not a constant. It changes not only through the anarchic effects of market-mediated competition (and the crises that this periodically produces) but also through competing hierarchical or heterarchic efforts to redesign its rules and institutional architecture, and to govern the conduct of the economic (and extra-economic) forces with stakes in the competitive game. Taking account of the metamorphosis of capital as it travels through the circuit of production, distribution, and exchange, Marx showed that capitalist competition is not simply for market share or for sales but for profit earned on investment. Thus the capitalists key strategic decision is where to invest and the defining feature of competition thus lies in the mobility of investment, both among different commercial/financial/industrial activities and across space-time.

Profit-oriented, market-mediated competition occurs in two main ways. Merchant capital continually compares purchase and sale prices for its merchandise because mercantile profit is based on the principle of buying cheap and selling dear. This principle also shapes more refined forms of arbitrage (including the activities of interest-bearing capital) and can be generalized to regulatory and other kinds of institutional arbitrage too. In contrast, '[t]he industrial capitalist always has the world-market before him, compares, and must constantly compare, his own cost-prices with the market prices at home, and throughout the world (Marx 1963b: 336). This puts the organization of production at the heart of competition for profit-producing[endnoteRef:3] fractions of capital and this competition becomes the more intense, the more integrated is the world market. In a consolidated capitalist economy, however, we should also note the vital role of the credit system and interest-bearing capital in promoting competition on the world market (Marx 1967c: Part V) and, on this basis, reinforcing the treadmill of competition, the concentration and centralization of capital, and the equalization of profit and interest rates. [3: Profit-producing identifies the place of a particular capital or capital fraction in the circuits of capital; it does not entail that every profit-producing capitalist always makes a profit.]

Related to the distinction between competition in market exchange and competition in the organization of production is that between competition in the routine activities of firms in a stable competitive market oriented to price competition and competition in the disruptive, creatively destructive, effects of entrepreneurship in dynamic markets. This distinction is conventionally associated with Joseph Schumpeter (1934, 1943) but was anticipated in Marxs critique of political economy. Schumpeter rejected the notion of perfect competition both in reality and as an abstract reference point for analysing imperfect competition. He also disputed the idea that markets tended towards equilibrium. He argued that entrepreneurship disrupts equilibrium through the creative destruction of innovation, and that that is constantly altering the pace and direction of economic growth.

Schumpeter identified five areas of innovation. These are: (1) the introduction of a new good or a new quality of a good; (2) the introduction of a new method of production or a new way of commercially handling a commodity; (3) the opening of new markets for ones own products; (4) securing a new source of supply of raw materials or half-finished goods; and (5) the reorganization of an industry, e.g., the creation of a new cartel or monopoly position, or the breaking up of existing cartels or monopolies (Schumpeter 1934: 129-35). Successful competition in these areas allows, in the short-term, monopoly profits. But in a well-functioning market, these higher profit-levels will eventually be competed away as other firms adopt these innovations or seek to counter them with their own innovations (whether competitive or anti-competitive). Without directly following Schumpeters arguments, the Austrian School of Economics, which also rejects the ideal of a perfect competition (see Hayek above), is another theoretical paradigm that emphasizes the importance of dynamic competition as opposed to static, price and production cost competition.

These considerations become all the more significant the more integrated the world market becomes in real time. For this integration tends to universalize competition to rebase the modalities of competition and reinforce its treadmill effects for all forms of competition, and to intensify the contradictions of capital accumulation that exist on a world scale. Indeed, the recent ascendency of financialization over industrialization, together with the enormous expansion of liquidity associated with derivatives and securitization, has enhanced the primacy of financial capital over productive capital. This pressures other capitals to achieve rates of return obtained by financial capital (or expected by financial capital on the basis of maximizing shareholder value), and establishes a new form of commensuration that allows for the further universalization and standardization of competition (cf. Bryan and Rafferty 2006).

4. Competition, Liberalism, and Neoliberalism

An idealized account of competition became a key element in the promotion of liberalism and has become even more important in the ideological justification of neoliberalism. But competition is only one of several organizing principles in liberalism and neoliberalism and its importance for both varies across different spheres of societal organization. I show this first for liberalism, then neoliberalism.

Economically, liberalism endorses the expansion of the market economy that is, spreading the commodity form to all factors of production (including labour power) and formally free, monetized exchange to as many social practices as possible. Politically, it holds that collective decision-making should involve a constitutional state with limited substantive powers of economic and social intervention, and a commitment to maximizing the formal freedom of actors in the economy and the substantive freedom of legally recognized subjects in the public sphere. Competition for votes should be confined within the limits of a state based on the rule of law to prevent the tyranny of the majority at the expense of minorities. The latter is based in turn on spontaneous freedom of association of individuals to pursue any social activities that are not forbidden by constitutionally valid laws. Ideologically, it claims that economic, political, and social relations are best organized through formally free[endnoteRef:4] choices of formally free and rational actors who seek to advance their own material or ideal interests in an institutional framework that, by accident or design, maximizes the scope for formally free choice. These three principles may conflict regarding the scope of anarchic market relations based on (perfect) competition, collective decision-making, and spontaneous self-organization as well as the formal and substantive freedoms available to economic, legal, and civil subjects. And, as Marx (1996: 243) noted, Where equal rights exist, force decides. In other words, within the matrix of liberal principles, the relative balance of economic, political, and civic liberalism depends on the changing balance of forces within an institutionalized (but changeable) compromise. A fortiori, this means that the role of competition also changes its meaning across these fields, and, if it is the most important principle of organization of a liberal capitalist world, it is one that is internally heterogeneous and even incoherent. [4: I use the concept of formal freedom here to draw an implicit contrast with the lack of full substantive freedom due to the multiple constraints that limit free choice. The institutionalization of formal freedom is a significant political accomplishment and a major element in liberal citizenship, as well as a precondition for market economies.]

Neoliberalism is a more complicated phenomenon and has taken many forms. The core set of neoliberal economic policies can be summarized as: liberalization (making markets more competitive), deregulation (reducing state intervention in the operation of the market), privatization (bringing state-owned or state-funded activities into the private profit-oriented, market-mediated sector), the use of market proxies in the residual public sector, internationalization (to promote competition and the spread of best practice), and reductions in direct taxes (to enable consumers greater freedom to spend their money and thereby enhance consumer sovereignty in a global market economy). The initial starting point for pursuing these policies, their sequencing, the manner in which they are implemented, and the political and social contexts in which they are implemented are quite varied and this explains the different forms of neoliberalism and the variegated nature of neoliberalization seen as a process rather than a one-off accomplishment (on this see, for example, Jessop 2002; Peck 2010). The political and ideological aspects of neoliberalism also vary.

The resurgence of liberalism in the form of neoliberalism is often attributed to a successful hegemonic project that articulated the interests of financial and/or transnational capital and that resonated with social forces discontented with Atlantic Fordism and/or disoriented by its crisis and seeking an alternative, post-Fordist future (possibly involving a return to a liberal golden age). The appeal of neoliberal regimes in the 1980s and 1990s undoubtedly depended on the successful exercise of political, intellectual, and moral leadership in response to the crisis of Atlantic Fordism -- a crisis that the rise of neoliberalism and neoliberal policies had helped to exacerbate. More interesting is the question of the survival power of neoliberalism in the aftermath of the North Atlantic Financial Crisis. Among other explanations, I suggest that this can be explained in part in terms of inherent features of the capitalist world. Liberalism can be seen as a more or less spontaneous philosophy within capitalist societies -- that is, as a seemingly natural, almost self-evident economic, political, and social imaginary that corresponds to specific features of bourgeois society. In particular, it is consistent with four such features.

The first of these is the institution of private property -- that is, the juridical fiction of private ownership and control of the factors of production. This encourages individual property owners and those who dispose over fictitious commodities such as labour-power and natural resources to see themselves as entitled to use or alienate their property as they think fit, without due regard to the substantive interdependence of activities in a market economy and market society. In this realm rule Freedom, Equality, Property and Bentham, because both buyer and seller of a commodity, say of labour-power, are constrained only by their own free will (Marx 1996:186). Second, and relatedly, there is the appearance of free choice in consumption, where those with sufficient money choose what to buy and how to dispose over it. Third, the institutional separation and operational autonomies of the economy and state make the latters interventions appear as external intrusions into the activities of otherwise free economic agents. This may initially be an unwelcome but necessary extra-economic condition for orderly free markets, but if pushed beyond this minimum night-watchman role it appears as an obstacle to free markets and/or as direct political oppression. Fourth, there is the closely related institutional separation of civil society and the state. This encourages the belief that state intervention is an intrusion into the formally free choices of particular members of civil society once the conditions for social order have been established.

Opposition to liberalism may also emerge spontaneously on the basis of four other features of capitalist social relations that are closely related to the former set. First, growing socialization of the forces of production despite continued private ownership of the means of production suggests the need for ex ante collaboration among producer groups to limit market anarchy, through top-down planning and/or various forms of self-organization. Second, there are the strategic dilemmas posed by the shared interests of producers (including wage-earners) in maximizing total revenues through cooperation and their divided and potentially conflictual interests over how these revenues are distributed. Various non-market governance mechanisms may help to balance cooperation and conflict in this regard. Third, contradictions and conflicts are posed by the coexistence of the institutional separation and mutual dependence of the economic and state systems. This leads to different logics of economic and political action, at the same time as it generates a need to consult on the economic impact of state policies and/or on the political repercussions of private economic decision-making. Fourth, there are problems generated by the nature of civil society as a sphere of particular interests opposed to the states supposed embodiment of universal interests. This indicates the need for some institutional means of mediating the particular and universal and, since this is impossible in the abstract, for some hegemonic definition of the general interest (on the always imperfect, strategically selective nature of such reconciliations, see Jessop 1990).

This suggests that, if liberalism can be interpreted as a more or less spontaneous philosophy rooted in capitalist social relations, one should also recognize that it is prone to spontaneous combustion due to tensions inherent in these same relations. This has clear implications for the limits of freedom and competition as bases of economic, political, and social organization. Polanyi emphasized this in his critique of nineteenth-century liberalism. He argued that, in response to crisis-tendencies in laissez-faire capitalism, many social forces struggled to re-embed and reregulate the market. The eventual compromise solution was a market economy embedded in and sustained by a market society (Polanyi 1944). This result broke down in the 1920s and 1930s, however, leading to a range of reactions, including the New Deal, fascism, and state socialism. The limits to marketization without a market economy are also seen in neoliberalism. Thus, after the efforts of roll-back neoliberalism to liberate a neoliberal market economy by disembedding market forces from various corporatist and statist impediments, attempts were made to secure its medium-term viability by embedding it in a neoliberal market society. This involved third way measures to flank, support, and sustain the continued dominance of the neoliberal project but, as the neoliberal regimes came to be associated with finance-dominated accumulation, these also broke down, precipitating financial crises.

This line of argument should not be restricted to liberalism and neoliberalism. Other modes of governance in capitalist social formations are also contradictory and tension-ridden. Indeed, there are strange complementarities here. On the one hand, liberalism tends to regenerate itself spontaneously on the basis of key features of capitalist societies; regeneration also meets obstacles from some of its other key features. On the other hand, while the latter features provide the basis for the resurgence of other discourses, strategies, and organizational paradigms, such as corporatism or statism, their realization tends to be fettered in turn by those features that generate liberalism. Overall, these mutually related tendencies and countertendencies produce oscillations in the relative weight of different kinds of co-ordination and modes of policymaking. I explore the implications of this unstable configuration for competition as a mode of regulation and/or governance below.

5. Governance of Competition

So far, I have examined competition from two perspectives: (1) the complexities of actually existing competition and their role in differential accumulation; and (2) its representation in the doxa of liberalism and neo-liberalism considered in terms of a rough threefold distinction among economic, political, and ideological imaginaries. This section considers competition from two further perspectives: (3) how to regulate or govern competition from the viewpoint of its purported role as a public good; and (4) the role of competition as a direct principle of governance. Ad (3), while there is a rational kernel to the perspective of competition itself as a public good (namely, in the contradictions between particular capitals and the interests of capital in general), it is typically interpreted in ways that merit at least a sceptical interrogation, if not a more radical ideological critique. Ad (4), as the preceding discussion suggests, actually existing competition is so heterogeneous and complex a process that efforts to promote it as a principle of governance must involve serious cognitive and normative simplification, if not fetishism and ideological mystification.

Two among many useful entry points into the governance of competition are the competition state and the competition law. Although competition figures in both terms, it has different connotations that reveal, yet again, the complexities of this phenomenon. Whereas the competition state attempts to promote competitiveness, competition (or anti-trust) law attempts to regulate competition. These efforts at governing also tend to rest on different understandings of competition and competitiveness. Thus the competition state draws on the other canon, i.e., heterodox analyses of competition that justify strategies and policies to promote competitiveness at various scales from micro- through meso- and macro- to meta-competitiveness). The definition of competitiveness, the target variables, and the strategies adopted are all discursively constituted and will vary from case to case. The rationale for promoting competitiveness can also vary (including, for example, perceived military threats from rivals or enemies as well economic challenges).[endnoteRef:5] In contrast, competition law draws mainly on orthodox analyses of (perfect) competition and/or on institutional analyses of contestable markets (e.g., in the law and economics movement). It is also concerned largely with micro-economic competition and may be supplemented by efforts to remove or control tariff- and non-tariff barriers to trade (extending into questions of new constitutionalism, and so on). One consequence of this is that the policies pursued by competition states (e.g., in the field of industrial policy) may well be ruled illegal under competition law. [5: Concerns about the communist military threat and the economic threat posed by allies catch-up and potential overtaking of the USA were the twin angst-ridden justifications for state intervention in USA almost as soon as it became the undisputed hegemonic power in the capitalist world after WW2 (cf. Belabes 1999).]

The competition state

Once competitiveness is accepted as a real phenomenon that varies at different scales of economic (and extra-economic) organization and affects capacities to compete in a world market characterized by a stratified terrain of competition, uneven development, centre-periphery relations, and so on, then it can become the target of strategies and policies to enhance, neutralize, or undermine competitive capacities. As the forms of competition and the sources of competitiveness change (partly in response to changing forms of regulation and the opportunities for regulatory arbitrage), we also observe changes in the modes of governance and regulation, whether through legal or extra-legal means.

Definitions and discourses of competition and competitiveness date back centuries and are linked to different economic imaginaries at different times and in different contexts. Thus mercantilist notions from the 17th century tied to state policies to control trade and increase financial reserves can be contrasted with 1890s imperialism oriented to state enclosure of territory for military-political as well as geo-economic goals. Following the transition from classical imperialism to a more liberal post-war order (in the shadow of US hegemony), competition focused more on domestic growth and multinational foreign investment, leading to conflicts between techno-nationalism and techno-globalism (Ostry and Nelson 1995; Ruggie 1982). Further, with the rise of the current neo-liberal transnational financial order and the theoretical and policy interest in the globalizing knowledge-based economy, competition has refocused on innovation (including in finance and securitization) and how best to link extra-economic factors to the 'demands' of economic competition.

In short, since at least the fifteenth century, there has been a succession of state strategies to promote catch-up competitiveness on the part of laggard economies that have been resisted by other states that seek to maintain their advantages by promoting free trade (cf. Reinert seriatim).although the notions of developmental and/or competition state are new and competitiveness is also a new concept, there have been significant historical analogues that have guided state policy in the capitalist world for almost 600 years.

In general, the competition state is one that aims to secure economic growth within its borders and/or to secure competitive advantages for capitals based in its borders, even where they operate abroad, by promoting the economic and extra-economic conditions that are currently deemed vital for success in economic competition with economic actors and spaces located in other states. As such the competition state prioritizes the pursuit of strategies intended to create, restructure, or reinforce as far as it is economically and politically feasible to do so the competitive advantages of its territory, population, built environment, social institutions, and economic agents. The same idea is sometimes expressed in the notion of entrepreneurial state. The same tendency is equally evident in the leading Western economies in terms of the organization of regional and global outsourcing, regional and global commodity chains, and in the organization of global finance. Paradoxically, offshore, more peripheral national economies can themselves be an element in this struggle for competition, insofar as they can be sponsored (or tolerated) by the competition state in order to secure competitive advantages for domestic or international capitals based in their own territories (such as via transnational supply chains) (Palan 1998; Hudson 2000). Just as there are different forms of competition, so too are there different forms of competition state (among types distinguished are neo-liberal, dirigiste, and social democratic competition states: see Cerny 1997; Jessop 2002).

Although developmental and competition states have been analysed primarily at the national level, this is not justified by the historical record. Catch-up competitiveness has been pursued at different scales from the city through regions and provinces to national states and international or supranational blocs (imperial blocs, the capitalist and communist camps, the European Union, etc.). It has also targeted actors, factors, and mechanisms that promote competitiveness that operate below the national scale, across borders, or beyond the direct reach of national institutions. In addition, and self-evident nowadays, many leading firms and banks are transnational in their manifestation, with complex internal divisions of labour and with complex forms of embedding into global production chains and financial flows that may nonetheless be regarded as important for national or bloc competitiveness, especially where these firms and banks have significant bases within a national state (contrasting examples are the USA and the European Union).

Understandings of competition and competitiveness are discursively shaped by specific frames, categories, strategies original, mimetic, or imposed that simplify what would otherwise be too complex to observe, calculate, manage, regulate, or otherwise govern. Different framings of competition and competitiveness involve different forms of action with uneven impact on positioning of firms, sectors, regions, nations, and continents, as well as on the balance of economic and political forces in and beyond the state system itself.

Unsurprisingly, then, a wide range of factors has been identified in different economic imaginaries, theoretical and policy paradigms and at different times as relevant to competitiveness. Definitions and discourses of competitiveness are prone to change: mercantilist notions from the 17th century can be contrasted with 1890s imperialism or recent worries about structural competitiveness vis--vis emerging market economies. In the 1980s, for example, the OECD listed the following factors that affected macro-economic competitiveness: the size of domestic markets, the structure of domestic production, relationships between different sectors and industries ... the distribution and market power of supplier firms ... the characteristics and size distribution of buyers, and the efficiency of non-market relations between firms and production units. It might further depend on no exaggerated conflict in the field of income distribution, price stability, flexibility, and the adaptability of all participants in the market ... a balanced economic structure based on small, medium-sized, and big companies ... the acceptance of new technology, favourable scientific and technological infrastructure and realistic requirements for risk containment and environmental protection. (OECD 1986: 91-2; cf. Messner and Meyer-Stammer 1993; Pedersen 2010; Campbell and Pedersen, seriatim; see also Figure 1).

Figure 1. Systemic Competitiveness and the Competition State

Competition in modern capitalist economies is said to depend increasingly on extra-economic factors, and this is leading tendentially to the subordination of the whole social formation to the imperatives of accumulation and competition. This occurs because of the growing importance that is attached to structural or systemic competitiveness and to cultivating the knowledge-base as a critical source of dynamic competitive advantage. It extends economic competition to a virtual competition between entire social worlds, as mediated through the audit of the world market, and it increases pressures to valorize a wide range of previously social and extra-economic institutions and relations. Among many examples, consider the importance that that social capital, social trust, collective learning, institutional thickness, untraded interdependencies, local amenities, and even culture are now said to play in global competitiveness. Likewise, discourses and strategies of structural or systemic competitiveness now emphasize not only firm-level and sectoral-level factors, but also the role of an extended range of the social and extra-economic institutional contexts and socio-cultural conditions in which economic actors also compete. They are linked to the rapid expansion of (competing!) benchmarking exercises and services concerned to construct league tables and offer recommendations on how to enhance such competitiveness. This is reinforced by the growing importance attached to the knowledge-base in post-Fordism and thus to knowledge production and transfer in the wider society. This has also been extended to encouragement of financial innovation (and tacit acceptance of financial criminnovation) as means of competitive advantages sometimes linked to a regulatory race to the bottom (which London has won vis--vis New York).

Although the competition state's strategies may target specific places, spaces, and scales and even directed against particular competitors it is always mediated through the operation of the world market as a whole especially as efforts are made to widen and deepen the latter through strategies of neoliberal globalization. This also extends the importance of the three main forms of capitalist competition: reducing socially necessary labour time, reducing socially necessary turnover time, and reducing naturally necessary reproduction time. This also interacts with competition around extra-economic factors bearing on competitiveness and profitability (such as tax competition, regulatory arbitrage, capacities to exploit offshoring, and so on). [It may also be relevant to include other forms of competition, e.g., through force and domination, unusual deals with political authority, lobbying for favourable, anti-competitive legislation, deregulation, de-supervision, and de-criminalization.]

Competition law

This subsection examines competition law from three aspects. The first is in terms of the complexities of its object, rather than in terms of its mechanisms, its institutional architecture, its advocates, facilitators, coordinators, targets, and agents. Without attending to these complexities, there is a tendency to blame regulatory failure on the design of competition law rather than on the inherent ungovernability of its object. This obviously poses interesting questions for competition law. Should it be oriented to governing competitive behaviour in dynamic markets, or to achieving the conditions for perfect competition? And how has the balance between these goals changed as competition and anti-trust law have been modified over the years? A second interesting aspect of competition law is its place as one among several means in which economic and political forces seek to design social modes of regulation to promote the differential accumulation of some capitals at the expense of others. And a third aspect is the problems of governing competition and at the same time boosting competitiveness in a world market that is becoming more integrated.

Traditionally, competition law seeks to regulate micro-economic competitiveness, i.e., competition in the structure and behaviour of firms. This is often measured through market share, profits, and growth rates. There is an extensive body of managerial and industrial economics literature that argues that firm-specific advantages i.e., factors that unavailable in the short-term to competing firms are the key basis for this kind of competitiveness. Such advantages are the basis of monopolistic competition. They might originate in factors of production (patent rights, know-how, research and development capacity) or in marketing capacity (design, image, knowledge of likely demand, sales networks). But they can also derive from extra-legal or illegal activities (e.g., predatory pricing, political deals, mafia-like conduct). This is the level of competitiveness in which the paradox discussed in section 4 between the interests of particular capitals in securing above average profit rates (facilitating their differential accumulation at the expense of less profitable firms) and the interest of capital in general in the formation of an average rate of profit, an average rate of interest, and so on, is located.

The relative importance of static competition focusing on the formation of market prices on the one hand and dynamic competition focusing on innovation on the other varies significantly. Competition, as an actual rather than idealized process, is inherently disequilibrating and, when it takes a Schumpeterian form, is creatively destructive. The latter is especially important during those punctuated evolutionary periods in which a previously dominant form of productive technology and/or associated forms of firm organization and finance is overtaken by some other. Such transitions tend to disrupt competition law, which lags behind changes in products, processes, marketing, sourcing, and corporate organization. A particular system of competition law can weather the relatively minor disruptions and crises associated with contiguous day-to-day developments, the more serious crises that accompany the punctuated transitions from one technological epoch to another will sooner or later trigger a corresponding search for new regulatory system.

Efforts to regulate competition are further complicated by the fact that competitiveness has many bases, many of which (notably extra-economic ones) are unsuited to competition law. The expanding world market and the plurality of states create further regulatory problems, regarding, for example, the role of international private law, how to handle conflicts of laws, and the reach of extraterritoriality. Competition occurs not only between economic actors (for example, firms, strategic alliances, networks) but also between political entities representing specific spaces and places (for example, cities, regions, nations, triads). Likewise, competition and competitiveness depend on extra-economic as well as economic conditions, capacities, and competencies. It follows that, if competition is hard to regulate through law, it is impossible to govern the factors making for the competitiveness as a set of real capacities/powers that affect the ability of agents to engage in competition and prevail in struggle over differential accumulation.

[Two points to be integrated:

1. Competition law cannot fully eliminate anti-competitive behaviour. For example, it cannot address problems with competition as it operates within corporations: in the allocation of capital to different activities within the corporation in the expectation that this will increase profits of enterprise. This is an example of what is sometimes termed dynamic allocative efficiency, a form of competition that is often thought to be difficult to regulate through the lever of competition law (cf. Graham and Smith 2004) (although the principles of shareholder value make a valiant effort to substitute for it).

2. The growing transnationalization of competition law (Gerber 2010) and the emergence of new, state-centred structures of global competition law (Dowdle 2013). These include transnational networks that link together national competition agencies; treaty arrangements affecting state-level responsibilities for implementing competition policy; and inter-state arrangements for the transnational enforcement of national competition law regimes.]

6. Competition as Governance

According to Polanyi, the economistic fallacy assimilates the properties and dynamics of non-capitalist economies to those of market economies and employs categories specific to the latter to (mis)describe the former and seek to explain their operation in terms of maximizing behaviour. It also mistakes the useful fiction that land, labour, money, knowledge are commodities for reality and then fetishizes and generalizes market principles to society as a whole. This is one more example of the tendency in the competitive paradigm of neoclassical economics to strip commodities (and fictitious commodities) of their specific properties and to assume that they can all be organized in the same way to produce efficient market outcomes. (cf. Alam 2014). This tends to produce such powerful contradictions and crisis-tendencies in market economies that society eventually fights back against their environmentally and socially destructive effects. Neglecting this set of problems is the basis for extending market principles and competition in particular beyond the formal market economy organized in the shadow of profit-oriented, market-mediated principles to the operations of the state and civil society. This is the ambition of neo-liberal economic policy to the extent that the public sphere cannot be privatized.

Different principles of governance seem more or less well-suited to different stages of capitalism and/or its contemporary variants. Thus, liberalism was probably more suited to the pioneering forms of competitive capitalism than to later forms -- though Polanyi and others note that it has clear limitations even for competitive capitalism; and students of varieties of capitalism suggest that it characterizes uncoordinated rather than coordinated market economies, for which statism and corporatism may be better (Coates 2000; Hall and Soskice 2001; Huber and Stephens 2001; Schmidt 2002). Thus, different stages and forms of capitalism may have distinctive institutional attractors (or centres of gravity) around which the oscillation of regulatory or governance principles occurs. Neo-liberalism, more than liberalism, privileges the market and, in this context, market forces and competition, as an organizational principle. Indeed, neo-liberalism idealizes the market mechanism and this leads to neoliberal attempts to extend it as far as possible. This was evident in the efforts of the Thatcher and Reagan regimes to maximize the scope for the operation of market forces in economic systems, to promote popular capitalism, to develop an enterprise culture, and to make civil society more market-friendly. Such projects also operate on supra-national scales, such as the Single European Market, or even globally, as with the World Trade Organisation, the proposals for a Trans-Pacific Partnership (TPP) and a Transatlantic Trade and Investment Partnership (TTIP).

Neo-classical economists and (neo-)liberals tend to assume that the 'procedural rationality' of perfect markets guarantees efficient allocation of scarce resources to competing ends to produce a Pareto- optimal outcome. Market competition is an essentially 'trial-and-error' discovery mechanism steered through the profit-and-loss accounts of economic actors so that agents learn and innovate. It provides the most flexible and least disastrous coordinating and adaptive mechanism for economic activity and it operates best when it is least regulated by government or other extra-economic forces. The market knows best and government cannot know the market. Thus, for many advocates of the market, the initial response to market failure is 'more market, not less'. They see market forces as a self-correcting learning mechanism. In contrast, the state is deemed inherently incorrigible and ineducable. Needless to say, this is a specious account of markets and the state alike and is contradicted even by neo-classical work on many kinds of market failure, let alone by the historical record.

Exchange based on the anarchy of the market or quasi-market arrangements is one of the four principal modes of governance of complex reciprocal interdependence. The other three modes are command based on hierarchy; networks and partnerships based on heterarchy; and solidarity based on unconditional commitments. There are also hybrid forms. Historically all four principles have co-existed albeit with different weights across different social fields and in different time-space envelopes. As noted above, neoliberalism favours the market as a principle of governance even more than liberalism. Thus it supports the extension of the market based on liberalization, deregulation, and privatization and the introduction of market proxies in those social areas, in the state or public sphere and in civil society, where the formally rational procedures of profit-oriented, market-mediated do not exist and/or are deemed inappropriate. These procedures presuppose the centrality of the commodity form, price form, and money form and, to the extent that these do not exist, then competition depends on functional equivalents to these social forms.

Market failure is usually seen as the failure of markets to provide economically efficient allocations in and through pursuit of monetized private interests (as would, presumably, occur if the market functioned according to the standards of an imaginary perfect market). Those who believe in the beneficence of market forces regard state failure as normal and market failure as exceptional; they generally respond to market failure by calling for more market, not less! Conversely, those who believe in the rationality of the state and its embodiment of the public interest, typically consider market failure as inevitable and state failure as something that, if not exceptional, is at least conjunctural. They therefore conclude that it can be solved through improved institutional design, knowledge, or political practice. For those who recognize at least the formal procedural rationality of markets, it might still be possible to adjudge market outcomes as failures in terms of substantive (political) criteria, such as an unjust distribution of life-chances. Likewise, even if one accepts that state elites are motivated by the public interest, political outcomes might still be seen as failures in terms of formal (economic) criteria, such as the oversupply of poor quality, high priced public goods (cf. Mitchell and Simmons 1994). It is this respect that market proxies are considered worth introducing.

At this point 3-4 paragraphs are needed on (1) the different forms of market proxies; (2) the difficulty of applying market proxies to non-standard goods and services produced in different kinds of labour process and with different turnover times; (3) the role of market proxies and competitive treadmill of best practice as a disciplinary mechanism; (4) the role of privatization and market proxies in generating crisis-tendencies in neo-liberal regimes and regimes undergoing neoliberal policy adjustments; and (5) pressures from international agencies tied to Washington and post-Washington Consensuses including, most recently, proposals for TPP/TTIP.

7. Metagovernance

One response to the growing recognition of the failures of all forms of governance (market anarchy, hierarchical command, networked heterarchy, the social solidarity of collective commitments) has been interest in metagovernance or collibration. This is an approach to governance that involves the judicious mixing of market, hierarchy, networks, and solidarity to achieve the best possible outcomes from the viewpoint of those engaged in metagovernance (Dunsire 1996; Jessop 1998; Kooiman 2003; Scott 2006). Governments have a key role to play here, but even this kind of meta-governance is fallible. The emerging system is a complex, multi-scalar, hybrid, and tangled system of meta-governance. Yet the very complexity of the interweaving of different forms of governance and government on different scales means that the resulting system is more complex than any state, or political or social entity, can understand, and its overall evolution lies beyond the control of a state or its society.

The idea of metagovernance or collibration should not be confused with a super-ordinate level of government to which all governance arrangements are subordinated. It involves instead the design of institutions and generation of visions that can facilitate not only self-organization in different fields but also the relative coherence of the diverse objectives, spatial and temporal horizons, actions, and outcomes of various self-organizing arrangements. Meta-governance has institutional and strategic dimensions. Institutionally, it provides mechanisms for collective learning about the functional linkages and the material interdependencies among different sites and spheres of action. Strategically, it promotes the development of shared visions that might encourage new institutional arrangements and/or new activities to be pursued to supplement and/or complement existing patterns of governance. In both respects it involves the shaping of the context within which heterarchies can be forged rather than developing specific strategies and initiatives for them. States have a major role here as the primary organizer of the dialogue among policy communities, as an institutional ensemble charged with ensuring some coherence among all subsystems, as the source of a regulatory order in and through which they can pursue their aims, and as the sovereign power responsible in the last resort for compensatory action where other subsystems fail (e.g. where markets, unions, or the science policy community have failed). This involves almost permanent institutional and organizational innovation in order to maintain the very possibility (however remote) of sustained economic growth.

Meta-governance does not amount to the installation of a monolithic mode of governance. Rather, it involves the management of complexity and plurality. Thus markets, hierarchies, and heterarchies still exist; but they operate in a context of negotiated decision-making. Thus, on the one hand, market competition will be balanced by cooperation, the invisible hand will be combined with a visible handshake. On the other hand, the state is no longer the sovereign authority. It becomes but one participant among others in the pluralistic guidance system and contributes its own distinctive resources to the negotiation process. As the range of networks, partnerships, and other models of economic and political governance expand, official apparatuses remain at best primus inter pares. For, although public money and law would still be important in underpinning their operation, other resources (such as private money, knowledge, or expertise) would also be critical to their success. The states involvement would become less hierarchical, less centralized, and less dirigiste in character. The exchange of information and moral suasion become key sources of legitimation and the states influence depends as much on its role as a prime source and mediator of collective intelligence as on its command over economic resources or legitimate coercion (cf. Willke 1992).

In exercising this meta-governance role, the state provides the ground rules for governance, ensures the compatibility of different governance mechanisms and regimes, deploys a relative monopoly of organizational intelligence and information with which to shape cognitive expectations, acts as a court of appeal for disputes arising within and over governance, serves to re-balance power differentials by strengthening weaker parties or systems in the interests of system integration and/or social cohesion, etc.. This emerging meta-governance role means that networking, negotiation, noise reduction, and negative coordination take place in the shadow of hierarchy (Scharpf 1994: 40). The need for such a role is especially acute in the light of the wide dispersion of governance mechanisms and the corresponding need to build appropriate macro-organizational capacities to address far-reaching inter-organizational changes without undermining the basic coherence and integrity of the (national) state. This role tends to fall to the state because of its heightened paradoxical position as an institutional subsystem that is simultaneously merely part of a wider, more complex society (and thus unable to control the latter from above) and also a part normatively charged (notably in the last resort) with securing the institutional integration and social cohesion of that society (Jessop 1990).

Metagovernance involves not only institutional design but also the transformation of subjects and cultures. Whereas there has been much interest in issues of institutional design appropriate to different objects of governance, less attention has been paid by governance theorists to reforming the subjects of governance and their values. Yet the neoliberal project, for example, clearly requires attempts to create entrepreneurial subjects and demanding consumers aware of their choices and rights as well as needing actions to shift the respective scope and powers of the market mechanism and state intervention. This is an area where Foucauldian students of governmentality offer more than students of governance. They have been especially interested in the role of power and knowledge in shaping the attributes, capacities, and identities of social agents and, in the context of self-reflexive governance, in enabling them to become self-governing and self-transforming (cf. Miller and Rose 2008). This raises important questions about the compatibility of different modes of governance insofar as this involves not only questions of institutional compatibility but also the distribution of the individual and collective capacities needed to pursue creatively and autonomously the appropriate strategies and tactics to sustain contrasting modes of governance.

7. Notes For A Conclusion (to be redrafted following discussion)

The market is: (1) a simplifying self-description for the interactions among profit-oriented economic agents and, as such, enables actors to orient their economic strategies without having to fully comprehend the economy in real time in all its complexity. It is, then, a social construct and can be linked to very different technological and economic imaginaries and very different sets of institutions, social practices, and dispositives. (2) It is also the actual form of movement of a complex material substratum of economic interactions that are more or less embedded in a wider nexus of social relations. In these terms, we can also see competition as a simplifying reference point for orienting economic action that can never fully grasp all of the factors that shape the competitive process and its outcomes and as a real process that works behind the backs of the producers (and other economic actors) through the metaphorical invisible hand of the market (and other processes that bear on the outcome of competition). The capacity to compete is grounded in turn in diverse sources of competitiveness, both economic (broadly considered) and extra-economic.

This distinction is one way to make sense of the simultaneity of the invisible hand metaphor and the recurrent efforts of social actors to shape the ways in which markets operate and to enhance their chances of success in competition. The factors, actors, and forces relevant to economic competition and economic competitiveness are essentially contested, inherently relational, and often politically controversial notions. It is impossible to regulate the market and/or competition in this second sense. This sets limits to the role of competition in governance.

But it should be recognized that markets, states, governance, and solidarity are all prone to fail. This is not surprising because failure is a central feature of all social relations. Indeed, there is no such thing as complete or total control of an object or set of objects -- governance is necessarily incomplete and as a necessary consequence must always fail (Malpas and Wickham 1995: 40). Given the growing structural complexity and opacity of the social world, indeed, failure becomes the most likely outcome of most attempts to govern it with reference to multiple objectives over extended spatial and temporal horizons -- whether through markets, states, partnerships, or some other mechanism.

This is often recognized. However, whilst failure in the other three modes of coordination is regarded as inevitable, in the preferred mode of coordination it is typically seen as exceptional and corrigible. For example, for liberals, although the state is prone to failure, a turn to the market will solve the problem. If the market fails, however, it can be improved. Conversely, for statists, the response to market failure is government. If government fails, however, then it should be improved. This polarization is reflected both in the succession of governments and in policy cycles within governments in which different modes of policy-making succeed each other as the difficulties of each become more evident. The challenge is to develop strategies for combining (and recombining) modes of governance to produce desired outcomes in full recognition that this is a contested process with winners and losers.

1

Appendix 1:

There are different commodity forms. First, a simple commodity is a product (a good or service) that is offered for sale perhaps with only a surplus beyond the immediate needs of the producers being offered for sale rather than the entire production being produced in order to sell it. Goods and services offered for sale can arise from peasant, petty commodity, state production, cooperative production, or social enterprise as well as capitalist production. Second, a capitalist commodity is one produced in a labour process subject to capitalist competition. This creates pressures to reduce the socially necessary labour-time involved in its production and the socially necessary turnover time involved in realizing the surplus-value that it embodies. This generates a dynamic relation between the organization of production and the capitalist commodity form. Third, a fictitious commodity has the form of a commodity (can be bought and sold) but is not produced in order to be sold. In particular, it does not originate in a profit-oriented labour process subject to the competitive pressures of market forces to rationalize its production and circulation. This concept is important because analysing land, money, labour-power, and knowledge (as intellectual commons) as simple and/or capitalist commodities would obscure the conditions under which they enter the market economy, get transformed therein, and so contribute to the production of goods and services for sale.

As fictitious commodities, land, labour, and money would comprise: (1) land that has been enclosed and appropriated and then sold or rented in a private commercial transaction with its price reflecting its productive potential and/or market demand; (2) the capacity to perform useful labour reproduced outside the market economy and entering the labour-market from outside in return for a wage; and (3) money as a marketable store of value and medium of exchange, with competing commodity monies (e.g., gold, silver), fiduciary monies (tokens, paper money, bank credits, fiat money), or tradable currencies (e.g., dollars, euros, yen). In each case, what is crucial to their status as fictitious commodities is that they are not produced in order to be sold but have entered into exchange relations because markets in land, labour-power, and monetary tokens have been established. They could also be redistributed in other ways, e.g., territorial conquest, enslavement, requisition or confiscation, direct or indirect reciprocity, and so on. Similar arguments apply to knowledge as a fictitious commodity, when it is transformed from an aspect of the intellectual commons into one or another form of intellectual property (cf. Jessop 2007). A fundamental limit to the extension of competition as a principle of economic governance is found in the fictitious nature of the commodity form of land, money, labour-power and knowledge.

Fictive CapitalSecuritization of absolute and differential rentsHuman capital asdiscounted revenue streamInterest-bearing capital, derivative markets in interest-rate futuresSecuritization of Intellectual Property RightsTable 1: Non-Commodities, Quasi-Commodities, Commodities, Fictitious Commodities, Fictive Capital

Fictitious-CommodificationLand reclamation, biofuels; genetically engineered organismsBreeding farm and laboratory animals. Limit case would be cloning slave labourfor profitCommodity money (e.g., silver, gold) produced in capitalist labour processNew drugs produced entirely within capitalist labour process for sale

QuasiCommodificationProfit-oriented improvements in land/nature(Re-)skilling labour-power, shapinglabour supplyPrivate/central bank action to raise relative price & performance of money, credit, etcFormal subsumption of intellectual labour to sell creativity

Pre-CommodificationAppropriated and transformed land/natureCapacity for concrete labour offered for saleSymbolic tokens for exchange of goods/ services, payment of taxes, tithesPrivate enclosure of intellectual commons for sale at a profit

Pre-CommodificationVirgin land/raw natureGeneric capacity for human labourHouseholding, Reciprocity,Redistribution,EtcKnowledge as cumulative collective resource

LandLabour-PowerMoneyKnowledge

Appendix 2

EXCHANGECOMMANDDIALOGUESOLIDARITY

RationalityFormal and proceduralSubstantive andgoal-orientedReflexive and proceduralUnreflexive and value-oriented

Criterion of SuccessEfficient resource allocationEffective goal-attainmentNegotiated consentRequited commitment

Typical exampleMarketStateNetworkLove

Stylized mode of calculationHomo economicusHomo hierarchicusHomoPoliticusHomofidelis

Spatio-temporal horizonsWorld market, reversible timeOrganizational space, planningRe-scaling, path-shapingAny time,any where

Primary criterion of failureEconomic inefficiencyIneffectiveness'Noise','talking shop'Betrayal,mistrust

Secondary criterion of failureMarket inadequaciesBureaucratism,red tapeSecrecy, distorted communicationCo-dependencyasymmetry