Statecraft and Liberal Reform

In his most recent book in English, Statecraft and Liberal Reform in Advanced Democracies, Palgrave MacMillan, forthcoming 2017, Nils Karlson explains how liberal, welfare-enhancing reform may be promoted. He develops a general theory of reform based on a synthesis of previous research about institutional change and an extended comparative case study of Sweden and Australia over the last 30 years. It develops the concepts of the reform cycle, reform strategies and polycentric experiential learning in order to explain successful reform. Policy entrepreneurs, who introduce and develop new ideas, play a key role. Modern statecraft involves a combination of knowing what and knowing how.

Modern statecraft takes place within the reform cycle, where advanced political skills and Popperian, Kuhnian, and Machiavellian reform strategies are used, generating new policy ideas in a polycentric effort of experiential leaning involving a large number of actors, with a critical mass being intrinsically motivated, located in the central zone of the country.

Concrete experiences trigger reflective observation, which in turn leads to the search for new ideas and abstract conceptualizations of the problem, which then enable policy experimentation, in turn leading to new experiences informing the next cycle of learning. The combination of many distinct groups of actors, each with distinct ideas and power resources, often in partially overlapping areas, helped stimulate learning and policy innovation over time.

Modern statecraft, to govern well, is thus equivalent to polycentric governance of welfare enhancing institutional change. In the context of today’s Western democracies and welfare states this often, if not always, means liberal statecraft, i.e., policies or political developments that increase liberty and make society more free.

Such governance is a collective good. Due to the collective action problem, sustained reform, especially if it is to extend over several paradigm waves, requires a critical mass of intrinsically motivated actors. They must be unconditional cooperators, acting for what they believe to be the common good, even if they in the short term will lose from the desired changes.

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“Most developed democracies and welfare states are in need of liberal reform, and this book is the best guide I know on how to do it. It makes critical contributions to public choice, theories of institutional change and public sector entrepreneurship. Strongly recommended, I read it straight through.”

Tyler Cowen, Professor of Economics, George Mason University, USA

Author Perspective:

Statecraft and Liberal Reforms in Advanced Democracies

1. Why do you think statecraft and liberal reforms are important in today’s world?

In a world with rapidly changing economic and social conditions, and plenty of policy failures, there is a continuous need for reform. Existing institutions have to be adapted to new circumstances. Today many advanced democracies face problems such as budget deficits, debt crisis, slow or non-existent growth, and high unemployment levels caused by the over-expansion of public spending and various forms of government regulation.

The lack of statecraft may be one of the most important reasons for the rise of populism, protectionism, authoritarian nationalism and similar creeds in recent years. Even the open society, the rule of law and democracy itself may be under threat if welfare-enhancing institutional change do not come about. That is why welfare-enhancing, liberal reforms are needed.

2. How did you first get involved with this research topic?

I have been interested in the puzzle of how to promote reforms that actually increase welfare in society for a long time.  But I could not find any good theory that could explain how to promote such reforms.

It is striking that even though many or even most politicians realize what they ought to do, or which institutional changes would make everyone better off, many illiberal and welfare-decreasing institutions still exist.

3. So why is reform difficult?

There is a strong bias in favor of the status quo, which conserves undesirable, inefficient social states and creates barriers to reform, some of which are especially severe in advanced democracies and modern welfare states.

Both existing institutions and established ways of thinking work against reforms that increase liberty and welfare in society. It is a lot easier to keep on spending and to focus on short-term measures. Numerous rational, cognitive, and social reasons – involving special interests and public goods traps, negativity biases and ideational traps, and preference falsification – explain why these kinds of reforms are difficult tasks.

4. How do you define “statecraft”?

Statecraft as the skill of developing a country in a welfare-enhancing direction. As such, statecraft is distinguished from institutional change in general —change in a government’s policies, taxes, laws and rules—, which may go in any direction.

5. Why did you choose to study the reform processes of Sweden and Australia?

The general theory of reform that I present is based on a synthesis of the literatures of institutional change and reform strategies, building on the works of Douglass North, Mancur Olson, Elinor Ostrom, Peter Hall, Paul Pierson, Karl Popper, Niccolò Michaiavelli, Thomas Kuhn, Daron Acemoglu, James Robinson and many others. But there were remain puzzles needed to be addressed. Through an extended and comparative case study of the reform processes of Sweden and Australia I could trace how events chain on to one another and develop a more comprehensive theory of welfare-enhancing institutional change.

In both countries the large number of reforms that have been carried out over the last 25-30 years required overcoming tremendous barriers. By studying two cases in which reform would seem particularly difficult, and yet has been achieved in far-reaching, systemic ways, the causal processes by which reform can be achieved should become clear. Their systems of welfare as well as their structures of government are also different enough to make comparing them very fruitful.

Also the cases are interesting in themselves. Few people know that the Swedish model has changed is such a dramatic way that we may speak of a new, more liberal and more efficient model of welfare. And the same is true for Australia. Statecraft in these advanced democracies and welfare states were thus often, if not always, equivalent to liberal statecraft, i.e., policies or political developments that increased liberty and made society more free.

6. So, how can one promote liberal reform?

What I call “modern statecraft”, to govern a country well and to promote reform, requires a combination of knowing what and knowing how. This involves the active use of different reform strategies, but also the development of new ideas, ideas that actually work. Policy entrepreneurs, who introduce and develop these ideas, play a key role.

In other words, in order to promote reform one has to take advantage of changing economic and social conditions, become a dedicated policy entrepreneur, and formulate and articulate new policy ideas that activate power resources and interests, which can influence institutional and policy changes. This requires advanced analytical and political skills, but it is also necessary to engage in the dialectic process of public discussions, coalition formation and experiential leaning with other policy entrepreneurs and other advocates of reform in order to promote the common good of welfare-enhancing, liberal institutional change.

7. Is the theory of modern statecraft applicable to other countries as well?

Yes, I think so. The theory of modern statecraft has the potential of being generally applicable to other advanced democracies and welfare states, and possibly other countries as well, at least as long as they face similar barriers to reform and have the ambition to modernize their economies and societies. The concepts of the “reform cycle”, the “reform strategies” and the “experiential polycentric learning” that I develop may conceivably be used to promote reform despite divergent models of welfare, cultures and democratic institutions.

8. Who do you think is the main audience of the book?

The book should appeal to scholars, including students, of political science, public policy and political economy, but also a wider group of readers such as policy experts and practitioners. It should be of interest for anyone who is concerned about problems such as budget deficits, slow growth, over regulation, social divisions, unemployment and lack of structural reforms.