Procedural financial instruments

<p>Treasure resources, of course, like organizational and authoritative ones, can also be used to alter the nature of policy processes. Procedural financial tools are generally used to attempt to alter or control aspects of the interest articulation and aggregation systems in contemporary states by creating or encouraging the formation of associations and groups where this activity might not otherwise occur, or, more prosaically, by rewarding government friends and punishing enemies through various kinds of payment schemes or penalties.</p>
<p>Phillip Schmitter, in his comparative studies of European systems, argued that the interest articulation systems in different countries form a spectrum from ‘free market’, ‘competitive’ pluralism to ‘state-sponsored oligarchic corporatism’ (see Figure 7.1).</p>
<p>In Schmitter’s (1977; 1985) view pluralism is a system of interest articulation in which interest groups are ‘free-forming’, have voluntary membership, and are multiple and non-monopolistic/competitive. That is, more than one group can represent individual members. This closely approximates the situation with network and market governance regimes at the sectoral level. Corporatist regimes are the opposite – they require state licencing, have compulsory membership, and are monopolistic.1 Neo-pluralism is a modern version of pluralism which takes into account some state activity in this area (e.g. the USA, Canada, Great Britain) and can be considered the analogue of legal governance at the sectoral level.2</p>
<p>Olson’s (1965) view of the ‘collective action problems’ interest groups face in these different governance contexts is an important insight helpful to understanding the rationales for the government use of the procedural financial instrument in these situations. Olson argued that in any political system, some individuals have fewer incentives and more disincentives to form and join interest groups than others – for example, someone benefiting from some proposed government action might have a stronger motivation to lobby for it, than would someone who stood neither to gain nor suffer from it. As a result, in a ‘free association’ system, there would be a tendency for specific affected interests – for example, businesses negatively affected by regulation – to form groups and pressure governments, while other more general interests – for example, to retain tough environmental standards on industry – would be poorly represented. Due to this unequal distribution of the costs and benefits of political action, in many issue areas, Olson argued, in pluralist systems groups were unlikely to form, or if they did would be quickly captured by special interests who had more to gain from their existence and activities (Strolovitch 2006).3</p>
<p>Governments, however, can play a major, though little studied, role in affecting interest group behaviour by either encouraging or discouraging interest group formation and activity. These activities are little known, but quite common in many countries. Governments can do this, for example, by creating (or not) systems of associational rights which allow groups to form, using their actions and resources to publicize events and issues, and providing funds for the creation and maintenance of groups. Procedural financial tools are key ones used to affect these kinds of interest group system behaviour.</p>
<p>These tools generally fall into two types, those which are used to create or help support the formation of interest groups and those which help to activate or mobilize them. The latter can be thought as ‘network creation tools’ while the latter can be considered as ‘network mobilization tools’. </p>