Communities for Democracy and Free Enterprise
Glocal Action & Incentive Networks
Benjamin Hofmann (Germany), University of St. Gallen

The Disease: Demise of Liberal Democracy and Free Enterprise

The world is currently experiencing the demise of liberal democracy and free enterprise – institutions which used to be so appealing in the past quarter century. Authoritarianism is pushing back democratic institutions in many countries. Fading belief in economic freedom and rising protectionist sentiments are threatening free trade. Growing nationalism is undermining regional integration, as illustrated by dwindling enthusiasm for European integration. These developments are likely to have serious long-term consequences.

Source: Pixabay

The Sequela: Return of History

The demise of liberal democracy and free enterprise implies the return of history. The world is moving away from a prosperous and peaceful “end of history” that Francis Fukuyama famously predicted after the end of the Cold War.

Manifestations of returning history have been proliferating in the illiberal Eastern and Southern peripheries of Europe in recent years.

First, the growing number of countries switching from democratic to more nationalist-authoritarian government will increase the probability of armed conflict and war in the international system. Second, the resort to protectionism will trigger trade wars and economic recessions. This return of history is an alarming vision because it will make the world less prosperous and less safe.

Source: Pixabay

The Diagnosis: Globalization and its Governance Gap

At the root of this crisis is a gap in the governance of globalization. Attempts to steer globalization have mainly relied on the nation-state. This is a misfit because globalization is spatially differentiated within nation-states. Forerunners are highly adaptive communities with progressive lifestyles. Also-rans, in contrast, are less adaptive communities experiencing the erosion of traditional lifestyles without viable substitutes available.

A topical example of disparities within nation-states is the “digital divide” among US communities in access to fast broadband internet.

These disparities amplify value cleavages which neither nation-states nor international organizations can accommodate. The result is that forerunners often get blocked by national policies, while also-rans are left behind. We need a governance structure that creatively moves us beyond this misery.

One disparity of many: Average internet speeds by US congressional districts
Source: Gizmodo, http://gizmodo.com/americas-internet-inequality-a-map-of-whos-got-the-b-1057686215

The Disruptive Cure: Glocal Action & Incentive Networks (GAINs)

I propose Glocal Action & Incentive Networks (GAINs) to fill this governance gap. GAINs are a new form of partnership among cities and regions to develop joint policies on shared global challenges. GAINs reinterpret the role that different communities can play. They thereby make governance more flexible, dynamic, and inclusive.

Glocal. GAINs connect local jurisdictions – cities, counties, or regions – to develop joint policy responses to global challenges based on shared interests and specialties.

Glocal cooperation already exists. Next Century Cities brings together 170 US cities to expand broadband internet access. C40 fosters the exchange of best practices in energy and climate policy among 40 global megacities. Yet, these cooperative efforts are too soft for reducing disparities among communities.

GAINs go beyond existing collaborations. GAINs develop joint policies and regulations, pool resources, and foster policy experimentation. They also reinterpret the constructive roles communities can play: Forerunners can serve as facilitators by setting policies that go beyond national frameworks and by supporting development in other communities. Also-rans need not be passive recipients of support, but can become laboratories by providing room for active policy innovation, experimentation, and learning.

Source: Pixabay

Action & Incentives. GAINs use differentiated political and economic incentives for communities to engage in complementary actions as facilitators and laboratories.

Partnerships between diverse jurisdictions can work. An instructive example are the public administration partnerships after German reunification. West German states successfully mentored the five newly formed East German states in building up their public administrations. However, the formation of such partnerships requires proper incentives.

GAINs create incentives for all involved actors. The national level encourages GAINs by transferring limited authority to GAIN facilitators and laboratories. The expected value added for the national level is a more dynamic and geographically broader development that strengthens the country as a whole. Additional competences enable facilitators to set own policies above national standards. In exchange, facilitators pledge to support other communities in acting as laboratories. Laboratories use this support and their room for maneuver to explore ways for building a more fertile economic and social environment in their own communities.

GAINs explained in 5 steps
Icons by Freepik from www.flaticon.com

Networks. GAINs take the form of flexible, issue-specific networks.

Networks have proven successful in history. A role model is the Hanseatic League. The Hanse was a confederation of merchant towns in Northern Europe between the 12th and 17th century. It provided public goods, including trade, commercial exchange and transport development, and dominated Northern European trade. However, network structures have to be developed in ways that fit today’s world.

GAINs are competing, partially overlapping, and democratic. The formation of multiple GAINs with different memberships in the same issue area fosters competition about the best and most innovative policies. Moreover, communities can join GAINs in other issues areas, creating a pattern of overlapping membership as an alternative to regional territorial integration. Finally, democratic votes on all GAIN decisions in each member community can prevent an executive bias in policy-making.

Source: Pixabay

The Prototype: GAIN Digital 1.0

I propose to launch a GAIN pilot project on digitalization. Digitalization offers new opportunities for growth and jobs, but due to the “digital divide” also risks amplifying economic and social disparities among communities. GAIN Digital will help to seize these opportunities and to reduce disparities by bringing together cities and regions that can act as facilitators or laboratories.

The national level will grant additional authority to partnering facilitators and laboratories. In return, it can expect a boost in digitalization inside and outside of the established digital hubs. It will also see new economic and social interaction among previously separated communities.

Who does what and why: National level and GAIN communities

Facilitators will use their additional legal competences to develop more far-reaching digitalization policies that reinforce the digital sector in these communities. Policies may address various fields.

Education: coding as mandatory foreign language in school, vocational and higher education curricula.
Technology: standard-setting.
Funding: research grants, public tenders.
Migration: free movement of skilled labor in IT & digital sector.

Laboratories will use their legal room for maneuver to kick-start policy experimentation. Policies and their support by facilitators can take different forms.

Infrastructure: low-cost broadband access solutions.
Education: trainings in coding skills, exchange programs with digital hubs.
Technology: preliminary regulatory frameworks for pilot applications and emerging issues.
Funding: start-up grants, research & development premiums.

Benefits for facilitators are faster progress in comparison to national policy-making and opportunities for learning from laboratories. Laboratories benefit from the creation of an economically and socially conducive environment without losing control over community development.

Source: Pixabay

GAIN Digital 1.0 will encourage the formation of competing GAINs. Further GAINs will emerge around additional issues that matter for communities, including, for example, renewable energy, sustainable transport, biotechnology, social cohesion, and trade in services. Importantly, successful GAINs will restore public support for liberal democracy and free enterprise in their member communities.

Governments · Policy Makers · Public Admins · Mayors · Media
Benjamin Hofmann
Benjamin is a researcher and Ph.D. candidate in International Relations at the University of St.Gallen. He previously served as policy officer in an intergovernmental organization. He now wants to support democracy and free enterprise by creating Glocal Action & Incentive Networks (GAINs).