Decentralization and governance -1998,13p.

This paper studies some of the key structural trends that are transforming our society, and the implications for our ideas concerning how society is being managed. Both traditional liberalism or neo-liberalism, and state-centered left are here considered as unsufficient for the new theoretical challenge. Published by Latin American Perspectives, January 1998 E-mail: [email protected] (L. Dowbor)

Decentralization and Governance

The issue of privatization should be understood more broadly, that is, local government’s role in local civil society, mobilizing players – whether private or community bodies – as a new way to interconnect State and society. IPEA/IBAM

Loss of Governability

Brazil spends badly. About US$80 to US$100 billion are spent each year on social services alone. A great deal could be done with this amount of money. The disproportion between what is spent and the results of spending led the World Bank to make a study of Brazil: “The proportion of Brazilian GDP allocated to social services seems higher than in other middle-income developing countries. Compared to this group of countries, social welfare indicators in Brazil are surprisingly low.” Our resources are insufficient. But, above all, these resources are badly used. It is an illusion to believe that this is a characteristic of the public sector alone. Private expenditures are included in the numbers cited above and the World Bank study showed, for example, that over 75% of health expenditures are on curative care, which is absurd. What experienced social planner would doubt that priority for preventive health care, basic education, decentralization of the administration of social security and a few other measures could save 30% or more for broader investments? This means tens of billions of dollars.

But we could also go to an essentially private sector like banking and see that financial intermediation costs about US$50 billion a year. Let’s clarify that: to stock, administer and invest all of our funds, the banks have costs, ranging from salaries to computers and the bankers’ profits. The cost of this apparatus tops US$50 billion, somewhere between 12 and 15% of Brazilian GDP and more than the value of total agricultural production. To cover these costs, bankers charge interest to companies that borrow money. These companies, for their part, include financial costs in their price calculations and pass them on to their products’ sales prices, which means that the masses of consumers in the country pay, when they buy any product, the corresponding financial costs of maintaining a gigantic machine of financial intermediation.

Let’s take the example of transportation in São Paulo. Four million private cars nudge each other along in the streets of São Paulo and anyone who is caught in a car on a rainy day can see our administrative ineptitude: we are unable to move because we have too many means of transportation. If each car is worth an average of US$5,000, US$20 billion are frozen in this fleet of cars. Obviously we are not calculating the value of the fuel and tyres that are used or of the traffic signs. The value of the cars alone would pay for the construction of 500 kilometers of underground train line in the city, solving all of these problems. But our invisible hand is wise: for more than 10 thousand kilometers of streets, São Paulo only has 35 kilometers of metro, which cost two and a half times as much as, for example, the Montreal metro. Another calculation: the option for a metro on a large scale would save an average of half an hour of transportation time for each worker in the city, at the very least. Five million workers at half an hour a day are 2.5 million hours saved each day. As average productivity per man/hour in Brazil is about US$3, we would save US$7.5 million dollars a day, or US$2.1 billion a year, enough to build double the city’s present metro system every year. But instead, more houses are torn down on Faria Lima Avenue to make more space for cars, while a metro is being built in Brasília where streets are wide and there are no traffic problems.

Decisions on infrastructure are mostly government ones, under the decisive influence of building contractors. Brazil has accumulated an enormous foreign debt of more than 120 billion dollars to develop an atomic energy program that makes no sense, a Transamazonian Highway between nowhere and nothing, a railway for the steel industry that reportedly has more tunnels and bridges than it does normal stretches and a hydroelectric power station that incurred all of the extra costs for being the biggest in the world. Eighteen billion dollars went into this dam alone, money enough to buy land for all of the 10 million landless workers in the country.

In agriculture, so important and underestimated, we have 370 million hectares of good agricultural land, we actively farm about 60 million a year and waste land on an enormous scale through what has been called, rather timidly, extensive cattle ranching (national average of 3 hectares per head); a solid two-thirds of our potential in land is frozen as low-risk investment and its owners neither farm nor allow the land to be farmed. The elaborate systems set up by traders to make agricultural products travel between different markets, simply to pay the middlemen’s toll, make products very expensive, and reduce internal market. We thus have 200 million hectares of good agriculture land without any use, in a country that is trying to launch a national program of voluntary food aid for its 32 million severely undernourished inhabitants. This is a strictly private sector.

As for human resources, Brazil has a total population of about 155 million people, of whom about 90 million are of working age. Of these 90, about 70 million constitute the economically active population: they have jobs or they are looking for work; a little more than 60 million, the employed population, actually work. The numbers show an enormous underutilization of human resources in strictly quantitative terms, without mentioning the fact that half of our labor force has a fourth-grade education or less and forms a huge mass of functional illiterates, which leads to huge losses in productivity.

These examples, taken in isolation, lead to partial explanations and easy blame. Together, they show:

• that the amount of waste is simply gigantic, around US$100 billion or more, a quarter of the annual GDP. As a result, our main problem is not gathering new resources, but correctly using what we have, including underutilized physical resources like land and human resources;
• the problem is not at all typical of the public sector, but can be seen throughout the economy, creating a pervasive situation of low social productivity;
• as the different economic players are not usually perverse enough to want their own disadvantage, the problem results mainly in institutional disorder, decisions taken for short-term advantage and economic cannibalism;
• when many social players seek short-term advantage at any cost, derailing the development process as a whole, solutions should be sought in the recovery of governability in its broadest sense.

This may all seem obvious, but it is important to note that institutional streamlining is part of a broader process that goes beyond the simplifications of privatization. Moreover, the institutional context of our development must be reorganized and the governability of Brazil recovered. So it is not a question of altering organizational charts, but the overall logic of the administrative culture inherited by the nation.

Managing change

The major directions of the changes affecting society at the turn of this century, that define the parameters of the new forms of administration are:

Technological progress: briefly, there are five great areas of change: computer technology, which is revolutionizing all areas, especially those that deal with information; biotechnology, that has not yet invaded our day-to-day lives but will be a mainspring of change in agriculture, the pharmaceuticals industry and other sectors over the next ten years; new forms of energy, especially lasers, allowing applications that are spreading throughout medicine, commerce, the home appliance sector and others; telecommunications, which are going through an even more profound and dynamic change than computer technology, making the transmission of anything – text, images, sound – possible on a large scale and very quickly, especially through the association of computers to telecommunications; and finally, new materials, including new ceramics, superconductors, new kinds of plastic, etc., that open the door to advances in electronics and computer technology, in telecommunications, and so on.

This is probably nothing new to the reader, but it is important to recall how recently the pace of change has accelerated. A study by the European Community found that over the last 20 years our scientific knowledge has doubled what was known in the entire prior history of humanity. As uncertain as this kind of measurement is, we are in the midst of a whirlwind of scientific renewal and this fact should be central to our reflection on new forms of economic and social management. The time has ended when one administered a relatively static situation. And managing change means administering a permanent process of adjusting different segments of social reproduction; we could call this dynamic administration.

Internationalization: the process of globalization or internationalization of the world arena results in large part from the technological advances listed above. Today more than US$1 trillion are transferred between countries every day, by electronic means, showing the extent to which the earth is now a “global village”. Today we see the same images on TV, buy the same cars, read the same articles – or almost – anywhere in the world. The movement for Quality and Productivity affects all economies in the world and no one can afford to ignore its impact.

There is no longer room for cultural or economic “islands”, for isolated “Albanias”. We have to face internationalization, whether we like it or not, and locate our own proposals in this context. International price variations of commodities cause rapid changes in the behavior of economic players in any municipality, no matter how distant. Most countries, starting with the United States, are making efforts to modernize their administration. Delays in this respect are deadly to a country’s comparative productivity.

On the other hand, the spatial reference points for development have moved, nowadays, with the reduction of the role of national governments, the strengthening of “blocs” and of the supranational arena in general and with a new role for cities in the decentralized administrations.

Urbanization: demographic phenomena are regular processes of change that involve a small percentage every year, without calling attention to themselves. But the fact is that in half a century our societies have become dominantly urban. A contry can no longer be viewed as a capital, where the decisions are taken, surrounded by scattered rural masses. We are just beginning to evaluate the gigantic social and political impact of this change. Today, in Brazil, 80% of the population lives in cities, a reversal of the proportions at the beginning of the 1950s.

One immediate implication of this new situation is that we no longer need such a centralized State, since the people who live in urban areas can solve many of their problems locally. This new situation has led many developed coutries to adopt a new structure for the State that is quite different from ours, with broad participation by local government.

So we can no longer allow ourselves to eternally discuss the private/public dichotomy, because the community level of organization is taking on a fundamental role for the future, reflecting the change from traditional representative democracy to decentralized and participative systems, or “participatory democracy”.

Polarizations: the polarization of rich and poor is becoming more defined and is occurring faster than before. Data from the World Bank’s World Development Report for 1992 show that, in 1990, total population was 5.3 billion for a world GDP of US$22 trillion, or US$4,200 per person: the planet produces more than enough for a decent life for all. However, US$16 trillion or 72% of GDP is retained by the 800 million inhabitants of the countries of the “North”, who represent 15% of the world’s population. The practical effect is that our planet has 3 billion people with an average annual income of US$350 each, less than half the Brazilian minimum wage. The citizen of the “North” has an average of 60 times more resources than the 3 billion poor on the planet, though they certainly do not have 60 times as many children to bring up. It is easy to understand how this gap, already catastrophic, is deepening: in 1990, for example, per capita income of the poor increased by 2.4%, or US$8, while that of the rich increased by 1.6%, or US$338. The rich population increases by 4 million a year, while the poor increase by 59 million.

These statistics must be faced dispassionately. The impact on education, for example, is immediate. World expenditures on education in 1988 were US$1,024 billion, about 5.5% of the world’s product. Developed countries spent US$898 billion of this while underdeveloped countries limited themselves to US$126 billion. As underdeveloped countries have a total of more than 4 billion inhabitants, the practical result is that, in 1988, average annual expenditure per student was US$2,888 in rich countries and US$129 in underdeveloped countries, or 22 times less, when we’re the ones who need to catch up. That means that administering our scarce resources rationally is not a luxury, but a vital condition for our development.

On the other hand, internal polarization has created two societies in a single country. The statistics are dramatic: the richest 1% of families in Brazil have 17% of income, about US$68 billion, or about US$45,000 a year for each family member. Meanwhile, the poorer half, 75 million people, survive on 12% of world income, something like US$640 per person. This is an average of one seventieth of the average income of the rich, quoted above, and means in effect US$50 a month. Only complete blindness to society can explain the ease with which those in positions of authority limit themselves to hiring more policemen, when Brazil has reached first place in the world in social injustice. In Rio 21 people are murdered every day, 15 in São Paulo. The 400 cars stolen every day in São Paulo parked end-to-end would stretch over 2 kilometers. These cars are watched over, transformed, documented, resold: that implies an industry involving the police, government bureaucies and banks, besides the thieves themselves. In 1993 there were more than 160,000 watchmen, guards and military police in the state of São Paulo alone, costing us, in unproductive activities, more than a billion dollars, without mentioning other institutional implications.

Pathological forms of economic development lead to perverse mechanisms of survival and we cannot ignore this: the decent reintegration of the oppressed masses of this country is a central objective of any realistic reform of how we govern. A nation cannot be administered as though it were two countries.

A profound change in the context of government is described above. Technological change requires a dynamic administration that is able to adjust to new situations, globalization demands more active interaction with the rest of the world, urbanization opens up prospects for an overall reformulation of the way society governs itself, while economic polarization faces us with inequality in international terms and an explosive domestic situation.

The function of the State

With the natural force of a cliché, the view that the institutional side of modernization can be summed up in privatization has spread. “Privatization is not a panacea,” warns the World Bank itself, an organization that cannot be suspected of “statism”. It presents the data below.

Percentage share of government expenditures in GDP or GNP of industrialized countries, 1880-1985

World Bank, World Development Report 1991, Washington

There is a strong progression of State participation, especially in recent years, in spite of all the discourse to the contrary and even in the United States (after 5 years of the Reagan administration) and in the United Kingdom after almost 10 years under Margaret Thatcher’s government. In developed countries, the government administers about half of the social product today.

This table is important because substantial segments of society have begun to think in terms of a “small and efficient State”, in fact justifying a chaotic process of privatization, shelving the essential issue of how and whom the State serves. What we have to work with, to face the processes of change described above, is a large State, but one that begins to function in a new way.

If developed societies modernized in fact (if not in their discourse) by strengthening the State – and the table does not leave room for doubt about this – the main avenue of action is not cutting out parts of government but making it work better and with other goals. A fat person who can hardly move never has a leg amputated to become lighter: his or her way of living is improved. In our case, more flexible and especially more democratic institutional solutions must be sought.

In terms of the overall efficiency of society’s administration of resources, a director of the ENA (École Nationale d’Administration) in Paris drew a simple lesson from the numbers: if the State in modern societies administers about half of the social product, rationalizing its activities is the most effective way of raising the productivity of society as a whole.

19th-century State, 21st century problems

Brazil became urban very recently. Moreover, unlike most developed countries, where urbanization occurred because of the attraction of jobs in the cities, here the rural population was expelled from the countryside. The rural world was swept by, first, a powerful modernizing current that instituted single-crop agriculture and mechanization, drastically reducing employment, and by a second, deeply conservative current that made agricultural land into a low-risk investment. As such, its owners neither use it nor allow it to be used. Without jobs in the countryside, or at best the seasonal jobs characteristic of single-crop agriculture, and without alternative access to the land for small farming, the population was literally expelled to the cities, giving rise to the destitute suburbs that often grow more than 10% a year during the 1960’s to 1980’s. This process of expulsion has been aggravated in the 1990’s, with a more open economy, by the impact of new technologies on industry and services, forced to cut their labor force. This huge part of the Brazilian population, expelled from agriculture and presently excluded form urban regular employment, survives in the informal sector, working as domestic servants or security guards, watching cars or in other activities in which it is increasingly unclear who is taking care of whom.

This situation implies the emergence of millions of small local dramas all over the country, serious problems of housing, health, pollution, needs for schools, supply systems, special critical poverty programs, basic sanitation projects, and so on.

Hence, our municipalities are on the front line of an explosive situation that requires quick action in areas that go beyond the traditional routines of urban cosmetics: infrastructure projects, sanitation, social policies and job programs that may involve local strategies to activate the local economy.

Municipalities are on the front line of the problems, but on the lowest rung of government. The growth of exploxive problems at the local level, while political-administrative structure continue to be centralized, has created a kind of institutional impotence that makes modernization of local government drastically more difficult, while it encourages the traditional system based on relationships of self-interest and corruption with higher levels of authority.

In Sweden, as seen, the State generates two-thirds of the social product. But government generates very little at the central level. The country has 9 million inhabitants, of whom about 4.5 million are active and of these 1.2 million are public employees in cities and counties. In other words, about one worker in four is a local employee. The practical result is that local government structures that allow much more direct citizen’s participation, control about 72% of the country’s public resources. This compares to 5% in Costa Rica, 4% in Panama and probably 13% in Brazil.

When countries were composed of a capital and a few more towns surrounded by a scattered mass of peasants, it was natural for central government to take all major decisions and control finances. With urbanization, problems changed, but the decision-making system did not. So today we face all the problems of urban poverty and chaotic growth, demanding flexible local response, with a government apparatus that was drawn up for the institutional needs of the beginning of the first half of the century.

A new paradigm for the State

One of the advantages of the disintegration of single-party regimes is that attention has shifted to practical ways of democratizing the State that actually exists, without waiting for the great alternative, for some, or refusing any change because of fear of the great alternative, for others.

There is no novelty in the basic structure of government in executive, legislative and judiciary powers. However, there is clearly a different understanding of the ways in which civil society organizes to guarantee its political foundation.

We are used to a State based on party organization. This party focus of the organization of society’s different interests has usually expressed the interests of large economic groups. In countries of eastern Europe, with the aggravating factor of the single party system, it became more evident still that this party focus is not sufficient to found democratic governments.

The development of trade unions to negotiate access to the social product strengthened another focus of organization, the labor axis, formed in the company environment and focussing on a more just redistribution of the social product. An examination of typical social-democratic countries shows that they managed to develop this second focus, creating more democratic systems. The fact that workers in different areas organize, allows society to become more democratic in practice. The strong traditional presence of business in political parties thus found a democratic counterweight in the trade-unions. In this way, markedly conservative democracies moved towards social democracy.

The organization of professional interests was no doubt facilitated by the grouping together of workers within companies, where they got to know each other and saw what they had in common; it is not surprising that large companies usually have more solid workers’ organizations. We can extend the same reasoning to the impacts of the modern process of urbanization. The history of humanity is essentially rural; the formation of large entrepreneurial environments dates from a little more than a century ago and widespread urbanization is more recent still. When a society is no longer a discontinuous fabric of rural workers and begins to live in a complex pyramid of villages and towns it naturally begins to organize in “local spaces” around the place of residence, in what John Friedmann called “life space”, or living space.

The political impact of the community, the third focus of society as it organizes to pursue its interests, marks the change from a society governed by “representatives” to one in which direct citizen’s participation takes on much more importance.

Contemporary Swedish citizens participate in an average of four community organizations. They participate in school and neighborhood administration, in the decisions of their town, cultural groups, etc. The decentralization of public resources is therefore a step forward in the functioning of the State: when 72% of government funds are allocated at the local level, people actually participate because they do not go to political meetings to clap for a candidate, but to decide where a school should be located, what kinds of health centers should be built, how to use city land, etc.

Obviously it is not a matter of reducing society to the “local space”, taking a poetic policy of small is beautiful, but of understanding the evolution of the political organization that supports the State: modernity requires, besides parties, unions organized around their interests and communities organized to manage our daily life. This “tripod” of support for administering the public interest can be termed “participatory democracy” and is doubtless more firm than the precarious balance of political parties.

In other words, we face a broad process of displacement of the arenas of government and we need to rethink the general form and hierarchy of decisions that affect our development.

Styles of Government

The simplifications implicit in administering what is public as though it were a private company do not make much sense, as the client of government is the legitimate owner of the company. Government must be democratic by definition.

However, it is important to be familiar with current trends in business administration and use positive experiences that can improve the performance of public administration. Like government, business faces a changing world that is increasingly diverse and complex. In business terms, this implies much more flexible systems of administration, able to adapt quickly to new situations. For its part, this requires much greater autonomy of the different sub-systems of the company, broader circulation of information and fewer levels of hierarchy.

In simple terms, administering change in an agile way implies a thorough decentralization of decisions. To avoid the dismemberment and lack of coordination that decentralization can generate, companies work with “teams” that identify with overall objectives, creating a dynamic of participation. Modern companies can no longer make the traditional division between the management that knows and gives orders and the workers that execute tasks.

But companies also work within a more interactive economic web. How is it possible to work with just-in-time systems, for example, with justa day’s worth of stocks, if not through very precisely coordination with its suppliers? In practice, what happens is that the market is gradually complemented by a system of inter-business dependencies that constitutes a new context for the organization of production. The trend is towards a complex system of horizontal relations between companies and business segments, the “intercorporate networks” where formally independent units are part of a complex economic web connected by technological agreements, interlocking stock ownership, joint financing, etc.

The enormous potential of this kind of transformation for government has been studied in detail in two recent publications, Empowerment by John Friedmann and Reinventing Government by David Osborne and Ted Gaebler. Both include studies of practical experience with the new administrative trends in a variety of fields.

Evidently, it is a question of passing more public resources to the local level. But society must be allowed to administer itself more flexibly, in accordance with the characteristics of each municipality. The new style requires simpler and more direct mechanisms of participation by key players in the municipality – businessmen, unions, community organizations, scientific and information institutions and others. It also requires new, more rapid mechanisms for communication with the population, because a society has to be well informed to be able to participate. It requires flexibilization of financial mechanisms, with fewer rules and auditors and more direct control by committees and councils of the communities involved. It requires that local government’s field of interest be broadened beyond urban cosmetics and some social issues, to become a catalyst of economic and social forces in the area. Finally, it requires the formation of horizontal networks of coordination and cooperation between municipalities, both at the general level and, especially around sectoral programs.

It is not enough to discuss privatization. The debate should be broadened along the lines of the excellent phrase from the IPEA-IBAM study: “The issue of privatization should be understood more broadly, that is, as the role of local government in mobilizing players of local civil society – whether private or community bodies – as a new way to interconnect State and society. In this approach, democratization and privatization of services at the local level become basic avenues to decentralization and municipalization.”

In sum, the main features of the focus proposed here are:

1. The principle of decentralization: except under clearly defined circumstances where they must be taken at higher levels in the pyramid of administration, decisions should be taken at the closest possible level to the population involved. We refer here to real decision-making capacity, with decentralization of taxes, allocation of resources and flexibility of investment. This principle of “closeness” is valid both for government and for autarchies and the private sector. This does not mean giving central government “longer arms” by opening local offices, but letting the local authority effectively administer activities.

2. The mobilizing role of local government: independently of its own duties in basic services like street-cleaning and social services, the local authority must take the role of catalyst of social forces around the community’s major medium and long-term objectives. For example, Rio de Janeiro lost ground in three key areas of its economic survival: federal government offices (when the capital was moved to Brasília), industry (which nowadays seeks smaller towns), and reduced port activities, as a result from the former changes. Now Rio faces an enormous demographic mushroom with a shrinking economic base. Well before the present social explosion that makes any solution difficult, the city should have made long-term investments and mobilized society to become a great tourist capital, paving the way for long-term economic development. Local authorities cannot continue to limit themselves to urban cosmetics and some social services. They must consciouly contribute to the organization of their economic space.

3. Organization of social players: it is naive to believe that town councils can effectively represent complex interests in the midst of a process of transformation of the main social and economic activities in the municipality. Local administrations should create specific forums to generate consensus on key problems of local development. The forums should include representatives of business, unions, community organizations, non-governmental organizations, research centers and the various levels of government present in the municipality, in order to ensure that management be more participatory. Successful examples of local governments show more than anything a great capacity for “social engineering”, in setting up flexible systems of partnership at various levels.

4. Focus on innovation: at this fin-de-siècle, with its profound technological changes, innovations in computer technology that allow government to modernize and become transparent, computer and telephone technology that can give instant access to information about how the city is being managed, digitalized satellite photographs to monitor the situation of the environment, new technologies for recycling solid waste and biodegrading sewage, new approaches to management that are more horizontal and flexible – the authorities should lose their fear of innovating, and even introduce experimental solutions to let society decide whether certain innovations hit the mark.

5. Focus on critical lines of action: besides sectoral routines that ensure delivery of basic services, it is important that local authorities define critical lines of action that catalyse action by a society to defend its medium and long-term interests. This catalytic action can be seen in Santos, where cleaning up the beaches and beachwater has stimulated society to modernize tourism and the local economy; in Penápolis, with the formation of a health consortium by several municipalities; or in Curitiba where the environmental program has led the main social players in the city to form ranks behind urban modernization as a whole.

6. Focus on underutilized resources: if we have 370 million hectares of agricultural land but cultivate about 60 million each year, we underutilize land for permanent crops and livestock. This can be seen municipality by municipality. A systematic effort to identify natural and human resources and capital that could be better used at the local level can open up important perspectives for local developement, and is an essential line of work for many local governments.

7. Research and information on local potential: the use of underutilized resources and overall rationalization of local activities implies a systematic effort to study and organize information about existing potential, focussing on the full cycle of activities that ensure economic and social development. The subjects of such research would be productive activities; the services of commercial and financial players whose rational organization ensures clear advantages to the local economy; infrastructure that generates external economies (transport, telecommunications, energy and water); social infrastructure like health, education, culture, communication and leisure, allowing adequate investment in man and in the quality of life, as these are currently the most productive investments of all; and the government’s own capacities to administer development, identifying bottlenecks, areas of administrative inertia, and so on. The solid organization of the community’s knowledge about itself can exercise powerful leverage for development and is one of the most underestimated actions.

8. Working on the decision-making matrix: it is time to leave behind the simplified dichotomy of government ownership-planning vs. privatization-market. For example, education is presently a complex system with diversified areas such as corporate trining, now rapidly growing and allowinf for public-private sector partnerships; training in emerging technologies, with courses in computer programs, total quality, etc. These courses are of growing importance in the present dynamic of innovation. They need to be applied in a flexible way, perhaps through university-private sector partnerships. Community education, especially to integrate poor neighborhoods into the city’s urban structure, calls for training in organizational skills, alternative technologies, courses for home working and reintegration into the job market. This is a fundamental way of “teaching how to fish” and is an important area for partnerships between municipal authorities and community organizations, NGOs and nationwide programs like the Brazilina national campaign against hunger and others. The creation of local media, following the modern tendency involving local television stations and other modern means of coordination, communication and education, require partnerships between the municipality and colleges, schools and communicators. Formal education should no longer be so centralized, and should be increasingly based on participatory administration by communities, along the lines, for instance, of the system already set up in the city of São Paulo, by Paulo Freire. Like education, other areas can be broken down into different types of actions that demand different forms of decision making, partnerships and social engineering. All of them require flexible coordination of public, private and community interests and of all three levels of government.

9. Focussing on intergovernment management: several government structures intersect in the municipality, each reporting to its own center. It is common nowadays for 30 to 40% of all public servants that work in a muncipality to belong to other levels of government without the mayor being able even to be informed about what the agencies have planned for the municipality, and without any coordination system between agencies. Inter-agency administration must be rationalized under the coordination of the authority effectively elected by the local population, the mayor. Decisions taken by independent bodies and different levels of government cannot be expected to spontaneously form coherent programs at the local level. As it is, possible synergies are lost, for example, between basic sanitation projects and environmental education or local health programs, while participation by the local communities is discouraged as they become passive spectators.

10. Recentering activities on human objectives: The 1992 Human Development Report states the problem clearly: “Markets may be impressive from an economic and technological viewpoint. However, they have little value if they do not improve human development. Markets are means. Human development is an end.” Obviously, all our professional and administrative activities and the efforts of communities represent nothing if they do not generate, in the last analysis, improved quality of life, social harmony, richer social life, or what has sometimes been called Gross Domestic Happiness, as opposed to GDP. Development can no longer be summed up in economic and technological factors, leaving businesses free to do what they think best, expecting the interests of human beings to be taken care of by government compensatory action like garbage collection, repressive policing and welfare work. To organize social partnerships to manage our development, all social actors must seek the greater human objective, sharing management efforts from the start.

12. Focussing on communication and information: information, culture, education, the media and different forms of access to knowledge constitute an essential avenue to democracy. Effective participation cannot be expected from a population with no access to the necessary tools – education and information. In other words, all of the new areas of education and information should have an essential role in modern government and should be the object of active and dynamic programs.

This paper tried to show some of the broader implications of simplified proposals for privatization. Modernity is not charmed into being with a magic wand. It involves a political vision that participating in the construction of one’s living space, more than receiving presents from the “authorities”, is essential for citizens. It involves an institutional view, less focussed on “pyramids” of authority and more open to cooperation, networks, working for consensus and horizontal processes of interaction. It involves, finally, a vision based on man, quality of life, happiness in daily life and less concern with immediate rates of return.

We are experiencing a profound technological revolution. On the one hand, this advance provides access to new tools for modernization, if we are able to direct it. On the other hand, the current political disorder cannot be maintained when human beings have technologies with planetary impact, like chainsaws, pesticides, nuclear weapons, the ability to manipulate genes, fine chemicals that can be made into deadly drugs in back yard sheds, fishing ships able to over-fishing gigantic maritime regions, media empires able to reach billions of children with any message in their homes. Without a solid reinforcement of our capacity for social organization, the planet itself will become unviable. In other words, human beings, who have shown enormous technical capacity and an equally impressive incapacity for civilized cohabitation, need to find in organized local areas the political reserves that will allow them to take the reins of their development once again.

LADISLAU DOWBOR, an economist, has a PhD from the University of Warsaw and teaches at the PUC (Catholic University) of São Paulo. He was Secretary for Extraordinary Relations under Mayoress Luiza Erundina, of São Paulo. Author ofLocal Space and other publications.