Economic governance determines how wealth can be created and spent. It is a network of power relationships between individuals, companies, governments and financial institutions – all of which engage in economic transactions that are subject to regulation. These participants depend upon each other, so they all have some inherent power as necessary components of an economy. They also explicitly wield power in some relationships, where prices are set by negotiation for example.
The power relationships are of two types: some depend upon the possession of authority and others depend upon the possession of money. The acceptability of the Economic Dimension of governance depends partly upon the perceived fairness and competence of those who are in positions of authority, and partly upon the perceived fairness of the distribution of the wealth in a society; it has to be recognised, though, that the meaning of the word ‘fairness’ is contested (2.2).
It is assumed here that people would prefer to have more money rather than less, so it follows that a prime purpose of economic governance is to achieve economic growth – but there are other considerations, such as its environmental impact and public health. Economic governance can therefore be said to have three objectives: to ensure fairness (whatever that is taken to mean), to enable people to increase their wealth, and to ensure that economic activity doesn’t harm other aspects of their lives.
© PatternsofPower.org, 2014