DISKUSSIONSSCHRIFTEN
AUS DEM
INSTITUT FÜR FINANZWISSENSCHAFT
DER
UNIVERSITÄT HAMBURG
Nr. 37/1995/96
„Symbiotic Arrangements“ in Metropolitan
Government – Third-Sector Interaction*
(English Version 1996)
by
Gunther H. Engelhardt
* Paper presented at the 2 nd . World Conference of the International Society for Third-Sector Re-
search (ISTR), El Collegio de México, Mexico City, Mexico, July 18 – 21, 1996.
CONTENTS
Page
1. „S YMBIOSIS“ – ECOLOGICAL METAPHORS IN ECONOMIC INTERPRETATION:
ISSUE AND O UTLINE OF THE PAPER
3
1.1. The Issue
3
1.2
5
Outline of the Paper
2. S YMBIOTIC ARRANGEMENTS IN A NIE PERSPECTIVE
2.1
Symbiotic Arrangements as Institutional and Organizational Devices
to Provide for Interpersonal Cooperation
2.2. NIE Concepts and Criteria for Analyzing Cooperative Behavior
6
6
9
(1) Specificity
11
(2) (Information and Communication) Technology
11
(3) Uncertainty
12
(4) Entry barriers
12
(5) Resource Interdependence (Synergy)
14
3. SYMBIOTIC ARRANGEMENTS IN THE OVERLAP OF LOCAL LABOR MARKET,
EMPLOYMENT, AND WELFARE POLICIES
15
3.1. Problems of Applicability in the Public Sector
15
(1) Efficiency and Public Task Performance
15
(2) Overlapping Fields of Local Labor Market, Employment,
and Welfare Policies in Germany
17
3.2. Selected Examples
18
(1) Job Mediation
18
(2) „Employment plus ...“ Associations and Related Initiatives
21
4. S YMBIOTIC ARRANGEMENTS: S UMMARY AND O UTLOOK
26
4.1. „Metaphors“ as Analytical Concepts: Summarizing Remarks
on Symbiotic Arrangements
26
4.2. Symbiotic Arrangements in a „Reflexive“ Perspective: Outlook
on Prospective Research, Teaching, and Consulting Networks
for Providing Public Goods and Services
26
ANNEX
28
1. REFERENCES
28
2. ABSTRACT
32
3. DISKUSSIONSSCHRIFTEN AUS DEM INSTITUT FÜR FINANZWISSENSCHAFT
33
–2–
1. „SYMBIOSIS“ – E COLOGICAL METAPHORS IN ECONOMIC
INTERPRETATION: ISSUE AND OUTLINE OF THE P APER
1.1. The Issue
„Symbiotic Arrangements“, an analytical concept broadly discussed in New Institutional Economics (NIE)1 these days, is derived from the ecological term „symbiosis“, denominating close
interrelations between the individuals of two or more species, usually proving beneficial for
either and thus establishing a lifelong partnership between them. To present but one popular
example2: From our school biology lessons, we probably all recall the impressive story of
cohabitation between the hermit crab (eupagurus) and the sea anemone (calliactis parasitica).
The hermit crab slips into the empty shell of a snail or another univalve mollusk. It does so
solely for its own shelter and protection, for the former inhabitant of the shell does not benefit from that habit – it is dead anyway. The anemone, discovering the new inhabitant hurries
to settle down on that very shell; for living in or on a „camper“, so to speak, provides mobility and thus a larger territory for gaining food, which in addition is also provided by the crab’s
whirling up bits and pieces of its own meal every so often. The rent for the camper, to be
paid by the anemone, is provided in kind by granting additional camouflage and protection to
the hermit crab by its body and nettling tentacles, covering and surrounding the formerly
empty shell.
What does all this have to do with economics, not to mention Third-Sector activities as the
overriding topic of our conference, you may feel inclined to ask. My spontaneous answer
would be that modern economics, and NIE in particular, tend to go back to their very roots.
They recall that the term economics is derived from the ancient Greek word oikos, the house,
or oikonomía, the art of good house-keeping, and that includes looking for and organizing
one’s shelter, doesn’t it?
Speaking more seriously, the modern view is indeed that economics has to do or rather is
all about dealing skillfully with one’s resources so as to optimally handle problems of scarcity
in a world of abundant wants, needs, and demands. Thus wherever and whenever the resources or means, be they monetary, in kind, or even immaterial, are to be considered scarce in
relation to the ends to be met, the problem at hand is not solely, but essentially also an economic problem. NIE, for that matter, has opened up and extended the range and scope of economic analysis far beyond the phenomena of the economy proper into almost all areas of
(socio-)biological, social, and even cultural life, confronted with scarcity problems – to an
extent even that the neighboring social sciences have increasingly become concerned about
what they fear already is or might develop into an „economic imperialism“3.
1
2
3
New Institutional Economics, subsequently abbreviated as NIE, is an offspring and further development of
neo-classical microeconomics. In contrast to that orthodox variant of economic thinking, NIE endogenizes
the analysis of the evolution and comparative efficiency of the institutional arrangements of economic behavior. For summary presentations cf., e.g., Eggertson (1990), Furobotn/Richter (1991), and, published in
German, Richter (1994), Furobotn/Richter (1996). For the concept of symbiotic arrangements within a NIE
approach cf. Schanze (1993).
Taken from Bertelsmann (1985), vol. 14, p. 96.
To my knowledge, the term was originally coined by Boulding (1969), later to be utilized in both a much
more extended and yet also more rigid sense by, among others, Radnitzky/Bernholz (1987). Interestingly, all
three authors are considered economists of high standing themselves. Nevertheless, the latter in my view give rise to a common misunderstanding in that they allege imperialism being the application of economic
analysis to phenomena „... outside the field of economics“ The gist of the argument is rather that economics
is being utilized for the analysis of real life phenomena outside the economy in the common sense of industrial relations, business, and commerce etc. That this appears to be the more adequate interpretation is underlined by the fact that most of the more recent Nobel prize awards have been granted to representatives of
–3–
Instead of moving in that direction, by introducing and utilizing new biological metaphors
such as the „Views and Comments on Symbiotic Arrangements. Hybrid Forms of Industrial
Organization“4, published in its December 1993 issue, renowned economic journals such as
JITE attempt to proceed in the opposite direction. As so often in the history of economic
thought, economics, considering itself a „hard-core“ social science, has once again borrowed
its new propositions from the natural sciences – this time, however, not as before from
physics, particularly mechanics with its notion of (comparative-)static equilibrium models.
Rather, the hopes for a paradigmatic change, by which the rigid frontier of „normal science“5
is to be surpassed, „... bringing life back into economics“6, are now directed toward (socio-)
biology and its evolutionary version in particular7. Doubtless, the metaphor of „symbiotic
arrangements“ has, not the least by its prominent location in JITE, already stirred a great deal
of inner- and interdisciplinary discussion on the prospective merits and shortcomings of
transferring analytical concepts, useful in one discipline and theoretical context, to others. By
doing so, it may even have helped JITE in regaining lost ground in (re-)establishing its once
undisputed reputation for being a publishing organ, as Zeitschrift für die gesamte Staatswissenschaft, for all disciplines concerned with analyzing state and public affairs in general.
The discussion having all but gained sufficient momentum, not to speak of having reached
consensus on any of the issues surrounding the multi- and interdisciplinary analysis of core
issues in „governing the commons“8 of our „post-capitalist or -industrial“, „information and
knowledge societies“9 these days, the present paper cannot but offer a small additional step
in that direction. It takes the broadly shared assumption for granted, according to which our
modern welfare societies in North America and Europe are heading toward a severe crisis not
only with respect to financing, but also to legitimizing and administering the traditional range
and scope of their public tasks, particularly with respect to their public responsibilities toward an ever growing reserve army of longterm unemployed and welfare recipients.
Our key proposition in this context is the following: New ideas and organizational devices
for coping with those issues, to be observed on a broad basis and particularly in metropolitan
regions with decaying economic, social, and ecological structures and environments, may and
perhaps ought to be analyzed by utilizing said concept of symbiotic arrangements between
4
5
6
7
8
9
NIE for their pioneering analyses in fields like artificial intelligence (H. A. Simon), constitutional democracy
(J. M. Buchanan), family life (G.S. Becker), or bargaining over legal property rights (R.H. Coase) as well
as by the recent renaming of one of Germany’s oldest and most renowned economics and social science
journals „Zeitschrift für die gesamte Staatswissenschaft“ into „Journal of Institutional and Theoretical Economics (JITE)“, covering a broad range of topics outside the economy proper, yet analyzing them in terms
and with the tools of modern microeconomics. To my own understanding such analytical approaches still do
not justify the reproach of economic imperialism, unless they claim to replace rather than complement other
social and/or legal science approaches. In practice, quite the contrary can be observed: With growing concern
of open-minded institutional economists for the past evolution and recent development trends, including the
value basis, norms, and conventions as social institutions in their own right and standing, interdisciplinary
communication and cross fertilization among the disciplines on social phenomena appear to be increasing
rather than decreasing; under such settings, imperialistic strategies tend to have a difficult stand. For more
detailed arguments in that direction cf. Engelhardt (1989).
This is the overall title of JITE, vol. 149, no. 4, 1993, as introduced and edited by Schanze (1993).
Kuhn (1970).
As is the subtitle of a recent book by Cambridge (UK) social economist Hodgson (1993), founder and general secretary of a new and rather active „European Association for Evolutionary Political Economy
(EAEPE)“.
Apart from Hodgson (1994), in the German-speaking world such approaches, including their historical evolution and potentialities as creativity strategies in economic theory construction, have been discussed, above
all, by Witt (1987). For summarizing overviews, including skeptical positions toward socio-biology and its
mutual cross fertilization of and by economics cf. among others Ruse (1979) and Tietzel (1983).
Ostrom (1990).
Masuda (1981), Leontieff/Duchin (1986), Drucker (1993, 1994), Rifkin (1995).
–4–
different public and private organizations and citizen initiatives. For it looks as if our routine
problem-solving devices, following the conventional wisdom and traditional lines of fragmented and departmentalized policy analysis, design, and implementation are suffering from
increasing drawbacks in grasping, not to mention coping with, the problems they once set out
to solve. As a consequence, they increasingly loose public support also and above all by
those they intend to help. Instead, new and unorthodox ways and concepts, cutting across the
border lines between established public and private departments and organizations, joining
forces in public-private partnerships, evolve, hoping to mutually benefit from cooperation
and thus even out one another’s respective strengths and weaknesses.
The NIE concept of symbiotic arrangements between different public, private, and ThirdSector organizations and their respective activities will, in its present state of theoretical scrutiny and empirical validation, surely not yet provide satisfactory answers to the host of questions arising with those new approaches and concepts for providing public goods and services
in a joint venture among different partners, retaining their organizational independence, yet
cooperating in long-term coalitions of public goods and services production and/or provision10. But it may help raise the right questions, formulate propositions as to relevant prerequisites and predicaments for long-term and sustainable coalition formation and cooperation. In
particular, by raising those questions in the abstract and seemingly detached terms of NIE, it
may contribute not only to academic theory-building in that field, but also to developing criteria for comparative cross-sectional and regional, if not international policy analysis.
1.2 Outline of the Paper
In pleading the case to be pursued in this paper, the following line of argumentation appears
plausible: First, a brief general discussion of the concept of symbiotic arrangements (2.) both
in its initial context of a biological metaphor and its transformation into an institutional economic setting is in order. This is to clarify the basic philosophical function of metaphors as
creative strategies for theory-building (2.1) as well as the concepts and criteria for identifying
and evaluating the costs and benefits of cooperation in economic terms (2.2).
Second, the specific problems and specifications of transferring the concept of symbiotic
arrangements from the private and basically profit-oriented sector of industrial organization
to the public and nonprofit sector in general, of local labor market, employment, and welfare
policy-making in particular, have to be dealt with (3.). This will be done by, first, dwelling on
some methodological and conceptual efficiency and application aspects of and to private versus public sector activities (3.1) and, second, by applying them on selected policy schemes in
the overlap between local employment and welfare policies in Germany; in this context, two
major examples, namely job mediation services on the one hand, employment initiatives and
associations, on the other, will serve as cases in point (3.2).
Third and last, a summarizing and tentative evaluation of the preceding discussion will be
presented. Its emphasis will be on deriving issues for future research and comparative policy
analysis rather than on speculating as to what the analysis might imply with respect to the
comparative merits and shortcomings of the specific institutional arrangements mentioned in
10
For an earlier NIE approach to the analysis of local public economies, differentiating between production,
provision, and governance aspects to be taken care of by different institutional arrangements and in their
combination also different organizational settings for cooperation between various public and private organizations cf. ACIR (1987). Whereas this report does not seem to have had an important impact on the relevant public discussions, new approaches such as undertaken by Osborne/ Gaebler (1993), heading into similar directions of even „Reinventing Government“ have been labeled as „...the blueprint“ for future public
administration by the acting US president.
–5–
the paper itself (4.). If anything is to be derived from the initial résumé in the concluding section of the paper (4.1) it is this: All social science , and in that respect „economics is social
science“11, that is to claim general applicability for self-regulating systems has to be „reflexive“12, i.e. self-applicable. In that sense, the concept of symbiotic arrangements between different independent agents of the public, private and third sectors appears to be a fascinating
field of policy analysis, formation, implementation, and evaluation, the deeper the crisis of
traditional policy approaches tends to get (4.2.). To study and govern it in symbiotic arrangements of long-term cooperation between scholars and practitioners of various disciplines, policy fields, and nations should be of mutual and cost-exceeding benefit to all partners involved.
2. SYMBIOTIC ARRANGEMENTS IN A NIE PERSPECTIVE
2.1
Symbiotic Arrangements as Institutional and Organizational Devices
to Provide for Interpersonal Cooperation
„Jeder Vergleich hinkt (literally translated: Any comparison „limps“, i.e. is deficient)“ is a
common idiomatic expression in German. Metaphors as rhetorical devices to connect seemingly unrelated phenomena from completely different realms of life13 deliberately turn this
into a strategy of creativity and discovery of new propositions. Its expected effects rest upon
the shock the inventor of such strategy hopes to infer on his addressee, who is thus to be
abduced from his familiar field or way of thinking into strange territory. The term abduction is
deliberately chosen here, because for C.S. Peirce14, the well known English representative of
the pragmatist school of the philosophy of science, uses it as a label for a third cognitive principle besides induction and deduction. The limping thus refers to the inference of metaphors
as replacing theory-testing and falsification. The creative shock, on the other hand, is directed
to the acts of inventing and discovering promising new propositions, i.e. to the generic phases
of theory-building, so to speak.
Indeed: How often do we stumble over and then tend to get mad at the unsophisticated
transfer of seemingly well established knowledge from on field of research to another. If such
activities serve but as a camouflage for lacking research efforts and analytical scrutiny in that
respective field, they are but annoying. To the extent that unreflected policy conclusions or
even recommendations are being derived from them, they may even become dangerous15. On
the other hand, who in the context of looking for new ideas and research agenda would not try
and utilize all kinds of aids offered to him by his experience from familiar fields of action and
deliberation. Metaphors provide cases in point for such endeavor, as long as they are taken as
instruments for developing new propositions and testing devices by way of analogy, rather
11
12
13
14
15
Frey (1989).
Luhmann (1987), pp. 610 ff.
For a definition of the term metaphor along such lines cf. Bertelsmann (1985), vol.10, p. 68.
Peirce (1934), p. 113; in his own writing he says: „The abductive suggestion comes to us like a flash. It is
an act of insight, although of extremely fallible insight. It is true that the different elements of the hypothesis were in our minds before; but it is the idea of putting together what we had never before dreamed of putting together which flashes the new suggestion before our contemplation.“; source and quotation abduced
from Hodgson (1994), p. 17; in all of his chapter 2 Hodgson extensively dwells on problems of mechanistic
versus biological metaphors as economic strategies of discovery.
Prototypical for such endeavors the late Konrad Lorenz (particularly 1973) and some of his disciples (e.g.
Eibl-Eibesfeld (1975), Wickler (1971)), deriving conclusions for human aggression from their ethological
studies of animal behavior. The opposite approach as pursued, e.g., by Tullock (1994) appears far less objectionable in that his abduction of microeconomics into sociobiology is more directed toward the discovery
of new propositions for animal behavior than trying to take that behavior for granted on the basis of untested
economic allegations anyway.
–6–
than as good excuses for not undergoing painstaking testing procedures.
Understood in that sense, symbiotic arrangements as provided by nature and scrutinized
by (socio-)biology for plausible explanations and viable developmental patterns and predictions offer interesting propositions, prospective concepts and schemes of analysis, to be
differentiated and applied in NIE research agenda. Such agenda would by analogy ask in which
circumstances and under what conditions will individual agents and/or representatives of collectives in a human society look for long-term coalition-building and cooperation? Departing
from the initial definition of symbiosis in biological terms, such questions would be directed at
–
the organizational pattern of the specific coalition; this implies the analysis of the rules of
the game as institutions and the group of partners forming the coalition as the organization16, operating under those unanimously decided upon rules;
–
the specific partners as agents forming and cooperating within such a coalition, be they
individual members or themselves functionaries of other sub-collectives represented in the
coalition at hand;
–
the net coalition gains, i.e. excess benefits over costs, the partners expect from their longterm cooperation.
Particularly with respect to the latter aspect considerable problems of abducing the concept of symbiosis from (socio-)biology to the social sciences are to be expected. As already
the Latin name of the anemone – calliactis parasitica – in our initial example indicates, even in
ecological evolution, where selection and environmental fit rather than voluntary decisions of
individual agents determine the sustainability of symbiotic arrangements, the division line
between mutually beneficial and parasitic relations between the partners involved is all but
clear cut. In this example it all depends on the evaluation of the reciprocal costs and benefits
hermit crab and sea anemone bestow on each other, whether their mutual partnership is to be
considered a symmetric quid pro quo or rather a parasitic relationship. In biology, where the
human researchers rather than the partners themselves would be the evaluators, the definition
of symbiosis does not differentiate between those two kinds of relationships and includes
either.
Economics, in evaluating market relationships, usually presupposes voluntary exchange
relations between the market partners involved and considers them advantageous for all of
them as long as they persist; apart from that: „De gustibus non est disputandum“ 17. Such an
implicit evaluation of mutual advantageousness, plausible as it may appear in spot market
activities, appears highly problematic, if long-term (lifelong) symbiotic arrangements are at
16
17
In this differentiation between institutions as sets of rules and organizations as coalitions of people cooperating under those rules we here and subsequently follow North (1990). It implies that cooperation may be
negotiated and result in explicit, if normally relational, contracts. Instead, it can also take place under implicit or quasi-contracts: Its emergence, evolution, and persistence may in this case have come about and be
governed by convention, i. e. a codex of behavioral rules the partners have become accustomed to and under
norms they have internalized to an extent that they are no longer aware of them. Admitting this under transaction cost considerations poses no problem in principle to an institutional economic analysis; it may do
so for empirical testing because of post hoc ergo propter hoc reasoning implicitly possible under such
reasoning.
This title of the famous article by Stigler/Becker (1977) is meant to indicate the orthodox economists’ position of the values and preferences of the economic agents under consideration to be considered exogenous,
i.e. not to be taken as arguments for a change in their behavior within the analytical context under investigation. Thus all evaluation activities can and should be implicitly measured by adjustments to relative changes
in prices and incomes. The consequence of this research strategy, meant to exclude the convenient alibi explanation of any change of behavior by scarcely to be (dis-)proved changes in the value system or preference
orderings, is of course: As long as barter takes place, the exchanged goods and services and/or their monetary equivalents must be considered to provide net benefits to all agents; otherwise they would have withdrawn from the barter.
–7–
stake, particularly if the transaction costs of establishing, joining, and leaving coalitions are included into the respective cost-benefit calculus of the partners involved. In that case, any
ongoing partnership might easily be misused for an ex post rationalization of its mutual advantageousness. For obviously then, the hardships (transaction costs) of changing the status quo
would appear worse than the sufferings from its perseverance; Dr. Pangloss’s18 conservative
credo would become the blue-print for rational non-action: Any endurable state of the world
would in that case be the best of all worlds; otherwise it would have been changed.
Even though mutual adjustments in long-term human partnerships are not to be denied and
may to some extent even exhibit tendencies toward Panglossian conservatism, their potential
for developing asymmetric cost-benefit distributions is obvious. In that case they turn into
parasitic relations in that one or several partners are being exploited by others and be it only
in their subjective perception. To the extent that this cannot be remedied by re-negotiation
and/or the partners feeling that way cannot leave the coalition except under excessive exit
(including sunk) costs, the internal relations within the prevailing coalition are becoming increasingly „precarious“19.
Taken together, the previous remarks caution us not to drive the analogy between symbiosis in socio-biological or ecological environments and human societies too far. Probably for
that very reason the JITE issue on symbiotic arrangements in industrial organization employs
several synonyms for that term, such as „dynamic networks“20, „strategic alliances“ 21, or –
with specific reference to the possibilities of parasitic exploitation – „hybrids“22. A closer
look at the various contributions reveals, however, that they all draw on various, if different,
parallels to the concept of symbiosis, but then carry on to reflect on the similarities, but also
divergences of that concept for animal and human life. The common core of their considerations lies in the insight that human coalitions, and even lifelong personal partnerships at that,
are substantially different from their socio-biological counterparts in that they essentially
draw on deliberate and voluntary agreements.
True, in many cases the partners of a long-term coalition are not completely free in negotiating the rules of their intended cooperation games. To some extent, they are „path dependent“23 on their own previous history, on that of related partnerships or in general on the conventions and norms society at large has established and agreed upon for them. Within that
framework, however, the institutional arrangements for long-term coalitions can be negotiated
voluntarily among independent and rational economic agents. In addition, they can continuously be altered and adjusted to changing circumstances for purposes of fostering mutual cooperative benefits as well as of safeguarding against illegitimate transactions and, particularly
18
19
20
21
22
23
For counter strategies against Dr. Pangloss, who as conservative adversary of Voltaire’s Candide was skeptical about the latter’s notion of societal reform, cf. among others Culyer (1982) and again Hodgson (1994),
esp. pp. 197 - 213. The general gist of such strategies is to interpret the status quo not as an equilibrium
but as a momentary state of an ever changing world, the direction it is going to take depending on political
decision processes governed by opposing coalitions of change and persistence agents. The up to now unresolved question under such indeterminate dis-equilibrium settings is, of course, how to define effectiveness
and efficiency criteria for the evaluation of alternative societal states. We shall have to return to that issue in
section 3.1. of this paper.
Bonus (1995); the term is to indicate the possibility of involuntary transactions within such coalitions that
nevertheless persist. They do, because the partners being or feeling exploited have neither sufficient power
for enforcing a re-negotiation of the rules of the coalition game nor rational exit options.
Buxbaum (1993).
Schmidt/Fellermann (1993).
Hutter/Teubner (1993).
For the concept of „path dependency“ cf. North (1992), particularly in the context of the Panglossian allegations, mentioned before, also Hodgson (1994), pp. 203 ff.
–8–
vis à vis the relatively weaker partners, opportunistic exploitation24.
If anything, the outcome of a basically voluntaristic process of consensus-building among
such agents, based on their essentially self-interested cost-benefit calculus for longterm cooperation, can be considered as human society’s counterpart to socio-biological symbiosis,
evolving by and large deterministically by accidental mutation and selective fit to changing
living conditions by the species of an ecological system. What remains to be asked before
turning to selected examples of public-private, and particularly public-third-sector, partnerships is then: What are the basic concepts of long-term human cooperation and what the criteria by which to judge their comparative (dis-)advantages in a NIE perspective?
2.2. NIE Concepts and Criteria for Analyzing Cooperative Behavior
NIE like neo-classical microeconomics, its orthodox basis and predecessor, continues to follow the principal axiom of analytical philosophy known as „methodological individualism“ 25.
In doing so, however, rather than taking it as the nomological basis for explaining and predicting real behavior, NIE uses this axiom only as a „heuristic principle“26: Much like building
a shelter against bad weather, designing institutional arrangements for long-term cooperation
presupposes some idea on what „weather“ – real life behavior of prospective coalition partners – is to be expected. In order to fulfill its protective mission, not the average weather –
behavior – but the worst case prediction is needed as the positive theory foundation for the
(socio-)technological tasks of building shelters – against nasty weather as against opportunistic exploitation of the weaker by the stronger of altogether selfish partners in economic cooperation27. Methodological individualism in combination with the so-called REMM28 propositions serves exactly that purpose:
Firstly, it has the analytical function to reduce even the most complex collective interaction
contexts to the level of strategic actions and reactions of individual actors; for it is never the
collective as such that (re-)acts, but always individual agents as its members, representatives,
or also as outsiders affected by such (re-)actions. In such contexts it is surely not to be overlooked that all three categories of agents will to a considerable extent and possibly different
degrees be restricted in their own behavior by their position within or vis à vis said collective.
And clearly, it is not only to be conceded, but rather taken as a core issue that all relevant
actions may in their effects transgress the influence sphere of the agents that have taken them.
This is in essence what turns these actions into transactions, their outcome into external effects, which according to their respective evaluation by those affected will be considered legitimate or illegitimate29; institutional arrangements in this perspective primarily serve as le24
25
26
27
28
29
For Bonus (1987) the protection against illegitimate transactions and opportunistic exploitation in case of
asymmetric dependencies is the core objective of institutional arrangements governing economic behavior.
In the Anglo-Saxon NIE literature the term was _ to my knowledge _ first and explicitly introduced in the
seminal contribution to constitutional economics byBuchanan/Tullock (1971), p.VI.
Lenk (1977).
Cf. for that argument in a much more elaborate justification for such „reasons of rules“ than is possible here:
Brennan/Buchanan (1985), passim, esp. p. 59.
REMM is the acronym for NIE’s second axiomatic proposition with respect to the individual economic
agents behaving as resourceful, evaluating maximizing men (and women, of course). It replaces the far more
rigid homo oeconomicus assumption of orthodox microeconomics in that it allows for limited information
and thus only relative rationality (Simon (1959)) in economic behavior. Maximizing under limited information (or even only subjective perception) and relative rationality assumptions comes close to or even overlaps with propositions of satisficing behavior under cognitive dissonance in social science and psychology.
Interdisciplinary communication between the behavioral sciences has thus been and will continue to be facilitated by such propositions, even though they only claim heuristic, rather than positive explanatory power.
For an elaborate discussion of the terms and analytical problems connected with them cf. again Bonus
(1987).
–9–
gitimizers and (dis-)incentive devices for (il-)legitimate transactions.
This is where, secondly, REMM enter the analytical stage. For the perception and evaluation of such (il-)legitimate transactions is in NIE terms once again the job of individual agents
and be it again in their various roles, functions, and degrees of affectedness in and by existing
collectives of a society. True, mainstream NIE protagonists, in analogy to their „relative“,
homo oeconomicus in orthodox microeconomics, still tend to interpret REMM as predominantly self-interested individuals, not so much materially oriented or outright malicious
as socially detached and indifferent to the well-being of others. But as a growing body of literature on (reciprocal) altruism and grants economics30 indicates, this is not the one and only
possible stand on that issue. At any rate, the necessary activities of perceiving and evaluating
the effects of alternative collective decision constellations, the tasks of analyzing their emergence, development, prospective outcomes, and of designing adequate institutional arrangements for their socio-technological governance, are unanimously treated as those of individual
agents (once again in their respective positions and functions), and performed on the basis of
a (relatively) rational evaluation under cost-benefit maximizing assumptions.
These activities and tasks become particularly intricate, if – thirdly – transactions are no
longer uni- or bilateral, but turn into joint and non-separable as well as multilateral interactions. Additional difficulties arise, if joint activities for intentionally beneficial outcomes for
all partners involved have to be institutionally safeguarded against detrimental situations in
future cooperation, the specific circumstances and agenda of which are still unknown or at
least uncertain at the time of initiating and negotiating prospective partnership relations. Particularly difficult in the sense of incorporating high potentials for „precariousness“ in future
relations are ex ante – i.e. pre-contractual – relations with individually asymmetric information on prospective ex post situations or circumstances that affect the later partners in different ways. In that case of moral hazard of some partners differential sunk cost and lock-in
effects arise and have to be coped with, against which the partner most affected neither had
the opportunity to take precautionary measures or at least „insure“ himself against by negotiating adequate relational compensations a priori; nor can he hope to ex post renegotiate the
original terms of cooperation in order to avoid future losses without devaluating and thus
turning into sunk costs part of his initial coalition specific investments and/or without being
deprived of his quasi-rent he had expected to achieve by his ongoing partnership relations.
Taken together, the previous arguments support the following proposition: Symbiotic arrangements as hybrid forms of contractual relations between hierarchical decree and spot
market exchange intend to optimize the prospective net benefits of both cooperation between
and independence of all partners involved. The prospective partners try to utilize the comparative advantages and avoid the comparative weaknesses of either set of institutional arrangements for hierarchical and market interaction. The trade-off calculus by (relatively) rational economic agents with respect to the dangers of irreparable dependencies and exploitation by too rigid hierarchical commitments on the one hand, prospective cooperation gains
through stable partnership instead of elusive spot market relations on the other tends to produce some or all of the following „contingencies for the emergence of efficient symbiotic arrangements“31; they can be structured along the well known NIE criteria (1) specificity, (2)
(information and communication) technology, (3) uncertainty, (4) entry barriers, and (5) resource interdependence (synergy).
30
31
Once again, such eminent economic and social scientists as Boulding (1973) belong to the pioneers of an
emerging grants economics. Rippe (1981) is one of the German standard publications in that field.
Picot (1993); for the subsequent arguments cf. ibid.
– 10 –
(1) Specificity
Specificity versus plasticity of resource inputs for different purposes is the core criterion in
classical transaction cost economics32 for locating the extremes on a continuum of efficient
contractual relations between spot market and hierarchical transactions. The former would
have comparative advantages over the latter in case of highly standardized, i.e. unspecific,
resource inputs. In case of highly specific, or even idiosyncratic and thus non-standardized
resource inputs it would be the other way round. Hybrid relations might under such specificity/plasticity aspects qualify as superior in efficiency under the following circumstances:
– With increasing degrees of resource specificity transaction costs (of finding suitable partners, contract initiation, coordination of resource input, and monitoring of input and output processes) tend to rise;
– with increasing integration of transaction-specific resource inputs into the ongoing (input)
coordination and (output) production process specificity of resource inputs can be controlled at decreasing transaction costs;
– with increasing resource competition (and high prices/wages – e.g. for highly qualified and
thus specific labor) sectors of high transaction specificity and thus also great transaction
cost intensity can only survive within an enterprise if they prove of central and not just
peripheric relevance for the organizational unit under scrutiny and its contribution to the
overall success (market survival) of the enterprise. Sectors including their transaction specific resource inputs not qualifying in this respect tend to get contracted out.
Taken together, the arguments outlined before support the proposition that in the long run
only those highly specific or idiosyncratic sectors and clusters of resource inputs will survive
within an (industrial) organization and its hierarchical command structures that are strategically vital for the survival in increasingly competitive (global) markets. All non-specific or
peripheric sectors will be shut down, their respective outputs, if still needed and used as inputs for the organization’s own production, will be contracted out or bought on the respective markets. What remains is an ill defined semi-specific area of internal goods and services
production as resource inputs which – because of their closeness and permanent need for coordination with the enterprise’s strategic core sector – cannot (yet) be substituted by outsourcing activities. They thus become the preliminary and all but stable domain of symbiotic
arrangements in the form of non-anonymous relational cooperation contracts between even
competing firms, usually with explicitly negotiated options for the sudden death of those
contracts in case of actions considered illegitimate by a partner, or other unanticipated but
major detrimental consequences for the ongoing cooperation. That way a relative safeguard
against lock-in effects and opportunistic exploitation is ex ante incorporated in the relational
partnership contract; idiosyncratic partnership relations, on the other hand, permit a minimum degree of confidentiality and trust-building within the cooperation overlap and possibly
also beyond.
(2) (Information and Communication) Technology
To the extent that transaction costs can in the broadest sense be understood as costs of information producing, gathering, and processing plus costs of creating, implementing, and monitoring the respective communication structures for doing those jobs, such costs can essentially be lowered with improving information and communication technologies. If this does
32
For a brief, if enlightening and thought-provoking discussion of problems connected with those terms in –
specifically – O.E. Williamson’s transaction cost economics cf. Alchian/Woodward (1988).
– 11 –
not hold for the absolute cost aggregate, it is certainly true with respect to per unit costs of
the goods and services produced and provided by an organization. As this seems to be the
case in many technological respects where economies of scale and scope can duly be expected,
the information and communication services are put in brackets in the subtitle and serve only
as a case in point here.
The effect of such technologies rests upon the firm management’s capability of shifting the
break-even point of specificity, beyond which management strategies by internal hierarchies,
more expensive yet better suited to exert coordination and monitoring functions, can be substituted by market services that are less costly but also less suited for those functions in favor
of the latter. Once again, precaution must be taken to prevent external consulting services
from getting and exploiting strategically sensitive data and information on the firm’s vital
strategies for competitiveness and survival. Thus again, there is a realm of semi-specific know
how and management skills, utilizing the economies of scale and scope of those new information and communication technologies by means of relational contracting between several partners on the basis of mutual confidentiality and trust.
(3) Uncertainty
Increasing uncertainties on future developments, be they stochastically indeterminate and thus
uninsurable or based on calculable and insurable risk-taking that surpasses the financial capacity of a single firm, also favor symbiotic arrangements for limited cooperation between
otherwise independent (?) organizations.
The question mark in this context refers to possible doubts as to what remaining
„otherwise independent“ might imply. For uncertainties that could endanger the capability of
survival – to an extent that cooperation with others is sought – surely cannot be considered
peripheral any more; for it is to secure the central goal of any market-oriented organization,
namely its core competitiveness and survival in a hostile environment.
The question mark also indicates the rationale for asking what in such a context could possibly constitute peripheral sectors, i.e. parts of a cooperating firm that could be abolished in
case of events where mutual trust and insurance contracts between thus cooperating organizations would have to take effect for rescuing said firm. Would this firm after such a rescue operation really retain its independence, and would the partnership preserve its status quo ante
characteristics?
If such doubts arise in the relatively clear context of uncertain yet still more or less routine
business operations in the traditional market spheres of the partners cooperating, they are
bound to aggravate in completely new activity fields, say research in new production technologies and/or product innovation. If symbiotic arrangements for cooperation extend into
those areas, and this appears to increasingly becoming common practice, the borderline between strategic alliances of independent firms and amorphous conglomerates of mutually dependent member organizations under all but clear cut corporate governance hierarchies gets
blurred.
This is also true for any clear-cut identification of beneficial versus parasitic interrelations
between the partners involved; the goods and services exchanged more or less take on the
character of „trust goods“, which at best in life long personal relationships get close to becoming „experience goods“33.
33
For relevant quality aspects of goods that are less a matter of objective standards but encompass a variety of
consumer activities such as search, experience, or even trust, thus turning the respective goods into „search
...“, „experience ...“ or „trust goods“ cf. in NIE terms Darby/Karni (1973). For the vital importance of trust
as an also economically valuable resource and goods quality, particularly if such goods consist of rendering
– 12 –
Beyond such questions and doubts, for which at the present stage of NIE theorizing specific propositions are still lacking, Picot’s argument prevails:
Symbiotic arrangements will ensure property rights autonomy of each party by dividing the overall entrepreneurial task and by dealing with the numerous partners thereby diversifying the risk.
Increasing environmental uncertainty with the implication of shortened product life cycles is a typical characteristic of the economic situation in many industries during the recent past. This is a result of
intensified global competition and of the augmentation and diffusion of knowledge. Therefore it is not
surprising that symbiotic arrangements such as strategic alliances, joint ventures, long term cooperation
in special fields, can be found more often than before. Of course, availability of transaction cost reducing technologies supports the use of these organizational options.34
(4) Entry barriers
In times of accelerated technological change and shortened product innovation cycles another
core dilemma threatens an organization’s survival and calls for efficient management strategies
at that. It is closely related to or may be considered as an implication of O. E. Williamson’s
notion of „grand transformation“35: On the one hand, the organization’s continuous struggle
for competitiveness and survival in a dynamically changing environment calls for highly specific human capital resources in the form of idiosyncratic knowledge and management skills
with respect to the firm’s strategic fields of activity. On the other hand, precisely this specificity of resource inputs is subject to increasingly fast devaluation unless continuously adjusted to environmental changes not only in the respective field of specialization, but also on
the overall level of technological change and socio-economic development in general.
What is needed therefore is a permanent learning by doing interchange between basic strategy design and its adaptation to the specific requirements in the firm’s field of specialization,
their mutual interrelations continuously having to be adjusted to sudden and often unpredictable change. The need for a specific and in itself highly flexible mix between the plastic human
capital resources of generalists and the idiosyncratic complements to them provided by specialists is again what fosters the emergence and viability of symbiotic arrangements 36. For the
necessary communication and learning by doing processes that alone can bring about the
amalgamation of the various information demands and management skills cannot start from
zero base. They have to be carefully initiated, starting off from a relatively advanced level and
high degree of differentiation in the organization’s past activities, achievements, and relations.
This constitutes considerable barriers to entry for newcomers, unless they can be recruited on
the grounds of already existing high general expert knowledge and an advanced state of experience in other fields of application, now to be „abduced“ and quasi-experimentally tested out
in new contexts.
Once again symbiotic arrangements in the form of non-anonymous relational cooperation
contracts between independent organizations might be considered as effective strategies for
inducing organizational learning and advanced management training on the job to create that
mix of plastic and idiosyncratic human capital resources deemed necessary as an incrementally developing innovative resource pool, common to all partners involved. Such a pool
34
35
36
services in uncertainty situations, cf. Gambetta (1988).
Picot (1993), p. 735.
Williamson (1985), pp. 61 - 63. The term describes the phenomenon that ex ante plastic resources increasingly gain in specificity in the course of ongoing relational contract implementation. Within such relations
they thereby become more and more effective (responsive to the demands exerted on them) and can also be
utilized efficiently (with decreasing transaction costs). At the same time, however, they loose plasticity with
regard to their external marketability and thus become increasingly dependent on the persistence of their inner-organizational usefulness and continuity in contractual relations.
Jensen/Meckling (1992) consider this argument as a main reason for the burgeoning of special franchising
arrangements in highly innovative and rapidly changing market sectors.
– 13 –
might be redundant for the prevailing tasks of everyday routine. But in its immediate availability it may well turn tout to be vital for the implementation of organizational survival
strategies in the case of sudden, fundamental and yet unpredictable change. For once it occurs,
there is no time left for learning, particularly not for outsiders.
(5) Resource Interdependence (Synergy)
In the preceding subsections, various arguments for the emergence of, and possibly also efficiency gain by, symbiotic arrangements have been discussed more or less without interconnection, even though most of them have to do with specificity aspects of resource input in
interactive production and/or provision processes of goods and services. Hence, the idea is
close to include possible resource interdependencies either as a resultant or as an additional
reason for symbiotic regimes, facilitating such joint production and provision activities. This
appears to be the gist of Picot’s summarizing statement in that context:
Specificity, technology, uncertainty, and entry barriers seem to form the determinants for the emergence
of symbiotic arrangements in industrial organization. However, this intermediate result does not answer
the question as to what concrete organizational form of symbiotic arrangements should be chosen. ... An
analysis of the prevailing resource interdependence between the parties involved can help to guide the design of hybrid forms of organization.37
He then carries on to argue that viability and sustainability of such hybridization require
that from the point of view of at least one of the partners involved his resource input yield
higher net returns than would have been the case without its dedication to the specific joint
venture; otherwise there would be no point for him to join in. According to that argument, the
differential or quasi-rents of cooperative versus solitary resource input, no matter if separable
or not, reflect in their aggregate the existence of resource interdependence. Interestingly, in the
subsequent discussion of three sub-cases, namely dependency, potency, and plasticity38, the
notion of separability prevails. This is probably the case, because predominantly profitoriented and competitive industrial relations – as the sole object of analysis in Picot’s paper –
favor separability for the sake of facilitating the least complicated termination of a cooperation contract.
Additional prospects of symbiotic regimes, possibly of paramount interest with respect to
public-private (nonprofit) partnerships, occur, if non-separable or synergetic 39 resource interdependence is taken into account as well. What appears both particularly problematic and
fascinating in this context is the whole array of questions as to what really constitutes the
object of synergy, what makes up for prospective effectiveness and efficiency gains, and
what has to be traded in for them in organizational terms – (still asymmetrical?) loss of independence of the partners involved, substitution of hierarchical by project management concepts with what consequences for effective monitoring and evaluation demands40 etc.; equally
37
38
39
40
Picot (1993), p. 736.
Ibid., p.136 f., where he writes: „Dependency of resources is given, if this resource yields higher results in
combination with a resource of another firm as compared to a separated use (e.g. knowledge unfolded in a
team compared to isolated use of knowledge). A resource can be called possessing potency if other resources
depend on this resource, but not vice versa (e.g. the continuation of a business may depend on the prolongation of a bank credit). If a resource is dependent but not potent, then there exists a one sided dependence.“
The third case of plasticity is identical with the already mentioned variability of the resource input at hand,
as discussed by Alchian/Woodward (a.o. 1988), without the author specifying, however, what constitutes
the interdependence aspect in this case.
For an encompassing introduction and elaboration of the concept cf. Haken (1983).
For a more detailed discussion of possible implications for the monitoring and evaluation practices of public
accounting offices cf. Engelhardt/Hegmann (1993) and Frey/Serna (1993), both papers, together with several
others on such particularly sensitive public monitoring tasks as in science and research or broadcasting, in:
Engelhardt/Schulze/Thieme (1993).
– 14 –
exciting are questions such as: To what extent can synergies be said to foster innovativeness
in task performance, concentrating on new kinds of goods and services and/or their qualities
respectively; to what extent do they stimulate or even presuppose the generation of new
combinations and/or qualities of – plastic versus specific – (human capital) resource inputs
etc.?
Some such questions will be touched upon in our subsequent discussion of selected examples of symbiotic arrangements in the overlap of local employment and welfare policies. Before that, some general remarks on the transferability of such concepts – given their explicit
efficiency bias in (private and profit-oriented) industrial organization analysis – to the public
realm of (local) government and nonprofit activities have to be made.
3. SYMBIOTIC ARRANGEMENTS IN THE OVERLAP OF LOCAL LABOR MARKET,
EMPLOYMENT, AND WELFARE P OLICIES
3.1. Problems of Applicability in the Public Sector
(1) Efficiency and Public Task Performance
Fascinating as the abduction of concepts like symbiosis and symbiotic arrangements from
(socio-)biology and industrial organization to (local) public economies might appear, some
general conceptual pitfalls should be borne in mind and some precautionary measures against
them be taken. This is highly recommendable, even though, as we should remember, the abduction of that metaphor is only to serve us in its function to generate some possibly interesting new propositions for the further research process, not to replace their elaboration and
testing in that process, however.
The main reason for such warnings lies in the problems of unreflectedly transferring effectiveness and efficiency concepts from private (industrial) to public (local) economies and
possibly also trying to operationalize and empirically measure them by the same standards in
either sector. To avoid misunderstandings right from the outset: This is not to imply that
public economies should not strive for utmost effectiveness (optimal adaptation to demands)
and efficiency (cost minimization); for resources here are as scarce as anywhere. But it is to
draw our attention to the specific conceptual and measuring problems that arise here in more
intricate ways than in industrial organization – and maybe even than in comparison to
(private) industrial and (socio-)biological relations altogether. Being unable to dwell on those
effectiveness and efficiency issues for their own sake in this paper, the following hints must
suffice here:
Though far from overemphasizing any existing analogy between competition, selection,
environmental fit, and survival of the fittest41 between ecological systems and competitive
market structures in private industry, one common feature appears to be a considerable external pressure with respect to economizing resource input by lowering transaction costs of any
kind. Explicitly or implicitly the success of the respective efforts can immediately be measured in some kind of objective standards such as reproduction rates, excess revenue over cost,
etc. For reasons not to be discussed here, this appears to be connected with shorter stimulusresponse chains, leading to much more direct feed-backs in form of immediate punishments
and rewards as indicators for (dis-)functional behavior than in the typically collective deci41
The still prevailing popularity of such steadfast analogies both among economists and biologists cannot be
elaborated here but only – if symbolically – hinted at by referring to the titles of so eminent publications as
Darwin (1859), or Dawkins (1976); for a critical appraisal of Spencer’s renowned „Survival of the Fittest“
proposition cf. Hodgson (1993), pp. 93 - 96.
– 15 –
sion-making arena of public economies.
For one, in public economic settings the direct do ut des relationship between consumers
and suppliers of goods and services is by and large replaced by collective decisions on demand
and supply. The former is – if at all – but loosely connected with immediate consumer wants
and price-bidding; the latter, though the input goods may be produced by private enterprises,
is usually provided by politico-administrative interaction between political bodies and bureaucratic organizations that, as a rule, cannot go broke.
Second, public goods and services are usually financed out of general budgets, funded in
toto by public revenue sources such as fees, taxes, and or credits. By that very feature and a
number of additional reasons, the conventional regime of supplying those goods and services,
offered gratuitously to and consumed jointly by a collective of beneficiaries, and financed by
an anonymous collective of public revenue providers, exerts no incentive whatsoever to
economize on their production and provision costs. To make things worse, it makes it close
to impossible to reach a common understanding, not to mention consensus, on the output
quantities and qualities of the specific goods and services to be provided. With respect to the
latter, an additional problem arises: More often than not, the public good proper is not the
output of a producer or provider itself, but rather that output in combination with a host of
(re-) actions of economic agents in the context of its production, provision, and consumption.
What in public discussions usually qualifies as output is thus at best an intermediate public
good, which in itself serves as an input for the final public good as the resultant or – in political science terms – outcome of all those activities42.
Third, the before-mentioned intricacies of the effectiveness/efficiency syndrome in public
sector economies get still more complicated by the fact that information on those outcomedetermining (re-)actions – and thus on the relevant public goods qualities – are lacking altogether, or – maybe even worse – tend to be asymmetrically distributed among producers,
providers, and consumers of said goods. These groups of involved, concerned, and affected
agents and citizens usually interact in a host of highly diverse agency relations43. In the lack of
objective information, diverse allegations of fact, statements of goals, and wishful thinking on
the part of success-prone politicians, representatives of bureaucratic organizations (including
public and private enterprises as producers of intermediate goods) and citizen initiatives are
inextricably intertwined, rendering the business of ascertaining the effectiveness and efficiency
of public goods provision a hopelessly political, and – by any objective standards – almost
futile business.
In the light of the before-mentioned problems it does not appear all too promising to try
42
43
In discussing problems of „instrumentalizing“ public enterprises for economic policy goals, I tried to illustrate this by the example of a public transportation enterprise: Assume for instance, transportation tariffs
being subsidized and/or frequent train or bus connections maintained, in order to integrate distant parts with
the center of a region. The final public good, envisaged by those measures, can only be considered as successfully provided, if a sufficient number of private households and enterprises can thus be or have been encouraged to choose their domicile or location in those distant areas. Even then it remains to be disputed,
which statistical data, e.g. absolute number versus regional share of households and enterprises, regional per
capita GNP or other economic data, should serve as an adequate outcome measure. The output, in this case
the (negative) tariff and revenue differentials, due to those measures, could at best be taken as an indicator
for the intermediate public good. It would be utterly misleading, if not unfair, to measure the performance of
the public transportation enterprise by private performance indicators such as revenue-cost ratios, not to mention reproach it of its lacking efficiency by referring to its poor profitability. For a more detailed discussion
of this example as of the efficiency issue in public sector economies in general cf. Engelhardt (1990), esp.
pp. 37 ff.
For a representative summary of the concept and relevant issues, concerning agency problems in private
business cf. Pratt/Zeckhauser (1985), one of the first and still rather few applications to public sector organizations is provided by Streitferdt/Kruse (1988).
– 16 –
and utilize the concept of symbiotic arrangements for public sector applications under an
outright efficiency perspective, even though such considerations play an increasingly important role in public debates on that sector as well. Also, a host of new hybrid organizations can
be observed mushrooming over various policy fields, particularly in the overlap of local labor
market, employment, and welfare programs these days. As we shall see, in many of the institutional regimes in practice there the abstract NIE concepts and criteria can easily be recognized. If we therefore turn to that field of application now, it is but for an attempt to illustrate just this. Hopefully, it will contribute to specifying some of the issues at stake and thus
stimulate future research. By no means do we intend to raise any – presently at best superficial – hopes that this might immediately help improve the effectiveness/ efficiency of the
symbiotic arrangements that were the object of our discussion.
(2) Overlapping Fields of Local Labor Market, Employment,
and Welfare Policies in Germany
In a conference paper like this, it is, of course, neither possible nor intended to give anything
close to a representative overview of the intricacies of the German labor market, including the
precarious problems of persistent, if not rising, mass and long-term unemployment, particularly in metropolitan regions with decaying industrial and social structures. For our purposes,
the general statement must suffice that the stubborn disequilibria to be observed on the local
labor markets of these regions produce a host of negative internal as well as external effects
that do not only affect the immediately concerned jobless employees, but also the regional
markets and their enterprises and, in their immediate consequence of slackening (tax) revenue
and exploding (welfare) expenditure developments, also the local public economies. By that
very fact, fighting mass and long-term unemployment in Germany as in other industrial states
has not only become a – mixed private and – public good par excellence, but also one of
paramount importance with respect to its funding as well as with supply organizations, prototypical for employing symbiotic arrangements and thus ideal for studying hybridization
phenomena.
Interestingly, the array of organizational devices as a mixture of institutional arrangements
and cooperating public and private (for-profit and nonprofit) partners ranges from mere information and consulting agencies, specializing in job mediation on the local labor markets, to
(local) government agencies, handling welfare programs with no direct labor market and employment implications. In between there is a continuum of different mixta composita with
respect to their official goal statement, task performance, and organizational setting. Once
again it would be fascinating – and surely is of paramount interest for comparative policy
studies in the future – to include all that variety into a NIE analysis along the lines described
before. For the time being, only a tentative sketch around the two extreme poles on the organizational continuum can be presented here; according to our preceding comments on symbiosis and symbiotic arrangements in general, the core characteristics and criteria, such as the
organizational design, the partners involved, and the expected benefits on the one hand, resource specificity, (information and communication) technology, uncertainty, entry barriers,
and resource interdependence (synergy) on the other, will guide the following discussion.
Looking for the extremes on said continuum, job mediation services can be taken as one of
them. For they come closest to handling the problems of unemployment as imperfections on
the labor market, due to information deficits and/or asymmetries on the side of prospective
employees and/or employers. Organizational devices, trying to set up „second (or third?)
labor markets“ for long-term unemployed and welfare recipients, as usually initiated and
– 17 –
„run“ by local welfare agencies to ease the pressures on their budgets, might be considered as
the other extreme. For the notion of labor „markets“, prevailing in such initiatives is usually
and at best a euphemism, at worst an alibi formula, hiding the obvious intention to shift the
welfare burden from one’s own to somebody else’s budget. Preventing social segregation and
alienation by offering „meaningful“ quasi-employment for long-term welfare recipients may in
these cases still be recognized as serious issues, the amalgamation with anything close to the
„first“ or real labor market nevertheless remaining fictitious.
3.2. Selected Examples
(1)
Job Mediation
Job mediation in Germany emerged from private self-search and mutual help initiatives and
developed via union and employers’ association services, and local public agencies to a state
monopoly in form of a federal para-government organization (PGO)44, called Bundesanstalt
für Arbeit. That organization is administered by a central self-governing assembly of union as
well as employers’ association and federal government representatives as the political decision-making body for current affairs – the business of legislation being, of course, taken care
of by Bundestag and Bundesrat, the two chambers of the German federal parliament – and an
executive board at Nuremberg.
Its daily operations were until recently, when private job mediators were (re-)admitted, exclusively run by the local Arbeitsämter as de-concentrated branch offices of the Nuremberg
agency in almost all (larger) communities. Their information, consulting, and job mediation
services are rendered gratuitously by the same staff that also runs the public unemployment
insurance, covering all workers and employees below certain wage levels as obligatory members. The joint services (of job mediation and unemployment compensation) are funded by
the unemployment insurance premiums calculated proportionately on the wage basis and
evenly shared between employers and employees.
Without being able to trace the emergence and evolution of job mediation regimes back to
change versus persistence agents’ strategies, trying improve their bargaining positions in
looking for and negotiating optimal labor contracts45, the mélange of private and public goods
components in search and mediation strategies for labor contracts, responsible for the recent
development of symbiotic arrangements in that policy field, can be summarized thus:
Individual employers’ and employees’ efforts lack sufficient, or are even subject to an
asymmetric distribution of, information and bargaining potential. The unions’ collective mediating services to their membership, complementing the search efforts by individual workers
and employers, were meant to compensate said asymmetries and thus establish safeguards
against the employers’ opportunistic exploitation practices, particularly vis à vis least qualified and thus unspecific labor supply. At the same time, such collective efforts have always
had the side effect of serving as weapons in the unions’ fight for higher wages by „artificially“
shortening or channeling labor supply.
44
45
For an overview of such para-government organizations (PGOs) in a Western European context cf.
Hood/Schuppert (1988); for specific analyses, partly in NIE terms, of the German PGOs, called
„intermediäre Finanzgewalten“ or „Parafiski“ (intermediary or para-fiscal authorities) over here cf. Smekal
(1981), Tiepelmann/van der Beek (1992).
This would in fact be the approach taken by NIE analysts, trying to discover patterns of institutional change
in the course of socio-economic history. For pioneering studies in that direction, intermittently awarded
with the Nobel prize in economics, cf. North (esp.1990), who tried to analyze the emerging institutions of
capitalism that way; a first attempt to utilize North’s economics of institutional change for the emergence
and development path toward the typically German PGO of job mediation cf. Rosenfeld (1994).
– 18 –
The consequential counter strategies by the employers’ associations, i.e. setting up and
maintaining job mediation services of their own, made the larger cities and communities undertake increasingly intensive attempts of persuading both parties to give up their respective
partial efforts and join forces within locally organized public job mediating services.
In NIE terms these efforts can be interpreted as the local governments’ internalization
strategies vis à vis the obviously negative externalities of an emerging bilateral monopoly by
the increasingly powerful unions and employers’ associations on the labor market, the disequilibria of which increasingly endangering the socio-economic and, in final analysis, also the
political stability, first within the large industrial centers, but eventually also of the young
German Reich in general.
In such a view, the primary and at first regionally concentrated negative externalities, taken
care of by said local government initiatives, may be considered as having grown into dimensions that necessitated nation-wide action. That action was taken by the Bismarck administration partly by way of legal repression of the socialist labor movement (Sozialistengesetze), but partly and more and more dominantly also by institutionalizing a mandatory
social insurance system (Sozialgesetzgebung). That system soon included the above-mentioned unemployment insurance/compensation scheme.
The rationale for jointly organizing unemployment insurance and job mediation administrations in one central PGO, granted a public demand and supply monopoly for job mediating services with respect to relatively unspecific labor46, but with locally de-concentrated47
branch offices can therefore be summarized thus: It is predominantly set up to internalize all
the before-mentioned negative externalities, caused by lacking or asymmetrically distributed
information on the local demand and supply for relatively unspecific labor, with the agents of
the organized employment system and under public monitoring.
The major intention is to thereby protect relatively weaker (usually unqualified labor under
existential supply pressure) against stronger market partners (large industrial employers, including profit-oriented professional broker organizations) from opportunistic exploitation.
The organizational regime of integrating de-concentrated branch offices into the functional
(task-specific) federation of a PGO, simultaneously providing unemployment insurance and
job mediation services, might then be interpreted as intending to serve a triple purpose of
transaction cost economizing; i.e. in particular of lowering
– coordination costs as compared to providing such services within a division of a highly
fragmented and bureaucratic multi-purpose government department;
– information and communication costs by utilizing economies of scale (and scope) by aggregating, amalgamating, and exchanging information on local labor demand and supply conditions to and with a general monitoring and advisory system concerning the national labor
market, thus helping design effective employment policies, which in turn promise positive
feed-backs for local consulting and mediating services;
– provision, compliance, and monitoring costs by taking advantage of economies of scope
and synergy, made possible to the extent that information exchange and communication
46
47
It should explicitly be mentioned that this monopoly has never been rigorously enforced. It precluded neither individual job search and supply activities by single employees and employers nor job hunting by professional consulting firms for highly qualified (i.e. specific to the extent of idiosyncratic) labor, factually
constraining the public monopoly for job mediation on relatively unspecific and more or less standardizable
labor qualities.
In German public administration rhetoric it is customary to distinguish de-concentration from decentralization proper, the former term denominating only administrative, the latter administrative plus political decentralization.
– 19 –
taking place on account of administering unemployment insurance and compensation issues can be activated for the business of job consulting and mediating.
Why then, it is to be asked in view of that rationale for past practices, has the public monopoly of job mediation been abolished after almost 70 years of undisputed existence? Why
was it complemented, if not replaced, by partial re-privatization through admitting private
and even for-profit organizations of professional consulting and job mediation?
Public debate over the merits and shortcomings of the traditional PGO scheme for job mediation in Germany and the introduction of competitive elements by allowing and encouraging
private suppliers of such services to enter the system only began in the early nineties48. The
main criticism raised was the inflexibility and over-bureaucratization of current practices in
that field. Such practices had come to be regarded as increasingly dysfunctional, particularly
in view of the fact that unqualified labor in Germany had almost exclusively become a domain
of foreign – euphemistically so-called guest – workers, their mediation not so much regarded
as a job for German Arbeitsämter. Semi-qualified or specific labor, increasingly demanded, but
scarce in supply was allegedly not sufficiently been taken care of by their routine mediation.
The reasoning for such tendencies appeared plausible, the reasons for that being quite obvious: For the Bundesanstalt für Arbeit, i.e. the PGO as the top level federal agency in Nuremberg, successful job mediation in combination with administering the unemployment insurance/compensation scheme promised the best of all worlds: If so far unemployed people
could be brought back into active employment, this was immediately mirrored in decreasing
outlays for unemployment compensation.
For the Arbeitsämter, as local, but not self-employed branch offices being no real partners
in a symbiotic arrangement of the type discussed earlier, a typical prisoners’ dilemma situation arose: If they put extraordinary effort into local job mediation and were successful at
that, the benefits accrued to the combined system of care for the unemployed (insurance and
mediation) as a whole. The costs of such efforts, however, had to be borne exclusively by the
local offices in terms of less qualified and/or intensive input for the insurance/compensation
branch, since either service category had to be provided by one and the same staff.
It was therefore no wonder then that under such circumstances and incentive structures the
insurance branch tended to get the better over mediation services – with the effect that specific efforts with respect to the latter deteriorated, and more and more local employers ceased
to report their job openings to the local Arbeitsämter altogether.
The supplementary opening toward, and encouragement of, private employment brokers is
hoped to overcome or at least abate that dilemma situation. Being themselves private forprofit professionals, the commercial job brokers can claim to have, or more easily gain, better
working relations with private industry, business, and commerce than the public administrations of the Arbeitsämter. Besides, they have an immediate interest in, in fact are exposed to
considerable pressure for, successful job mediation as an essential source of income generation
for themselves.
Last but not least, the prospects for complementary, rather than outright competitive,
working relations and thus in the long-run for symbiotic arrangements between public and
private job mediations services are not too bad either: The public partners, in that their main
responsibility remains with the insurance business, will keep concentrating their respective
consulting and mediating efforts on the relatively least qualified unemployed as suppliers of
unspecific labor, with whom they have to deal as insurance „customers“, anyway. In addi48
For a general summary discussion cf. Soltwedel (1990) and Egle/Zahn (1992); for the view of the employers’ associations cf. Klös (1990); the unions’ position is represented by Deeke (1992).
– 20 –
tion, they reap information and communication gains with the employers’ side by cooperating
with their private consulting and mediating partners, with whom they can trade the prospect
of shared access to the already existing overall information and communication system on the
labor market at large.
Thus as it looks, new and dynamic networking relations between public and private partners in job mediation may develop and prove advantageous for either side. Such relations also
seem to qualify for some if not all of the criteria, discussed for symbiotic arrangements: The
extremes of totally unqualified (unspecific) jobs, if mediated at all, staying with the public
Arbeitsämter, the highly qualified (idiosyncratic) job demands and openings as before being
left to private initiatives – either to individual search activities or to job-hunting by and for
professionals – the terrain for semi-specific labor mediation may become the domain for cooperation: Information and communication technologies, commonly used, save costs and provide benefits for either side; uncertainties can better be coped with jointly, and entry barriers,
being waived for private professional brokers, may utilize their superior general consulting
and mediating skills for designing better strategies for equalizing semi-specific labor demand
and supply.
Interestingly, synergy in the proper sense of combining inseparable resource inputs of either partnership side also seems to begin looming on the horizon of future job consulting,
mediating and provision. To give but one example from my own home town: A short while
ago a Hamburg newspaper titled one of its articles „Eine Chance für Langzeitarbeitslose ...(A
Chance for Long-term Unemployed ...)“49. It contained a report on the foundation of Start in
Hamburg, a time-sharing and employment broker firm in public private partnership, initiated
as its Dutch twin organization by private business consultants, cooperating with – among
others – the chambers of handicraft, small business and commerce, the City of Hamburg’s
Behörde für Arbeit Gesundheit und Soziales – BAGS (Department of Labor, Health, and Welfare), the Federal Association of Labor Unions, the City State of Hamburg’s Employers’ Association, some church welfare services and, of course, Hamburg’s Arbeitsämter. Start’s primary objective is to consult, mediate and provide long-term unemployed with time sharing
and/or preliminary employment contracts to start with. To the extent that both contract partners gain interest in continuing their mutual relationship, subsequent long-term contracts may
follow. Simultaneously all kinds of (re-)education and training on the job measures are envisaged, likewise experimented with, and practiced during the preliminary contract period.
Obviously then, examples like Start and strategies developed in their context show that
shifts from the extreme pole of mere job mediation on our continuum toward more encompassing strategies of an evolving local employment and welfare policy mix, developed in public-private partnerships are taking place and seem to be gaining momentum these days. As is
to be shown next, similar shifts can be observed to take off from the opposite extreme of said
continuum, supporting once again our proposition with regard to an increasing relevance of
symbiotic arrangements for shaping our post-industrial welfare societies.
(2) „Employment plus ...“ Associations and Related Initiatives
The opposite extreme, as we recall, was considered to be shaped by local social policies, not
directly involved in handling labor market and employment problems, their respective budget
shares, however, being more and more absorbed by welfare payments to rapidly increasing
numbers of long-term unemployed. Local governments, particularly their finance and welfare
49
H.A.(1995 a).
– 21 –
divisions, in decaying industrial regions with obsolete industries and a high share of long-term
unemployed in their populace can thus be identified as the major change agents with respect
to linking welfare and employment policy-making50. The reasons for that, as far as they lie in
the institutional regime of the German welfare system, can be summarized as follows:
According to the German federal Sozialgesetzgebung (social or welfare legislation) those,
who for personal reasons can neither make their own living nor rely on any other sources of
support – be it on the basis of personal or family wealth, current support in money or kind
by relatives, friends or private charities – are entitled to receive subsistence for their daily
living, to be paid by the Sozialämter (welfare departments) of the larger communities and
counties. Following two constitutional building blocks of the Grundgesetz (Basic Law),
namely the Subsidiaritätsprinzip (principle of subsidiarity) and Einheitlichkeit der Lebensverhältnisse (principle of unitary living conditions), the responsibility of the local level as the
lowest possible government unit – in case public rather than private welfare having to step in
– was combined with federal legislation, stating said responsibility on uniform grounds in
order to avoid regional disparities in its implementation.
As long as entitlements, based on individual insufficiencies, were confined to relatively
small minorities, that combination of legal regulations was considered as a legitimate principle
of liberal democracy and widely accepted as such. This changed dramatically, however, with
structural and technological problems arising within the German economy, aggravated but by
no means exclusively caused by the reunification, leading to massive and since about the midseventies stubbornly high, if not increasing long-term unemployment. For the Arbeislosenunterstützung, the compensation scheme as provided by the unemployment insurance,
soon reached and surpassed its financial capacity; Arbeitslosenhilfe, the intermittent transfers
paid out of the budget of the federal Arbeits- und Sozialministerium (Department of Labor
and Social Affairs) could provide but temporary relief.
To make things worse, legislative action, taken by the federal parliament, changed the rules
of the game in either system, essentially abbreviating the period of time for which entitlements for unemployment compensation and transfers were granted. The effect of those measures was an unprecedented additional strain on the local social budgets. For long-term unemployment immediately became the most important single reason for exploding welfare payments, originally designed as subsidies for individual mischief.
Doubtless, the stupendous fiscal crisis the budgets of the communities, particularly those
of the large cities in decaying socio-economic regions, have been facing for almost a decade
now has to be and is being blamed to a large extent on the development, as outlined before51.
The criticism raised by a growing number of high-ranking experts and politicians, culminated
in bitter statements such as that of the Lord Mayor of Cologne, president of the Deutsche
Städtetag (German Urban Association) at its 1995 Annual Meeting in Magdeburg. In his welcoming address he complained of an increasing „... communalization of long-term unemploy50
51
This is is also mirrored in a burgeoning literature on joint local labor market, employment, and welfare
policy-making, including practical handbooks for local government officials, providing information and
trying to help them design their own idiosyncratic strategies. The following examples, if not localized elsewhere and then quoted otherwise, draw on the following contributions, their NIE interpretation being our
own: Brülle/Schleimer (1993); Jaedicke/Wegener/ Wollmann (1993), Stauder (1993), Freidinger (1993 a and
b), Pawlik/Seeger (1993) and Müller (1993), all containing vast additional literature and materials and all
published in the „Handbuch der kommunalen Arbeitsmarktpolitik“ by Freidinger/Schulze-Böing (1993).
That this crisis, beyond all its German idiosyncracy, is not exclusively home-made, but has an international
dimension, facing most big cities in the world with the necessity of simultaneously having to cope with
problems of „Fiscal Austerity and Urban Innovation (FAUI)“ is documented and addressed by an international research and consulting network under that heading. For two recent and representative publications cf.
Mouritzen (1992), Clark (1994).
– 22 –
ment“ with strong tendencies of the federal and state legislations toward „... misusing the local
welfare budgets as federal reserve funds“52. Similarly dramatic statements and urgent appeals,
titled „Save our Cities now!“53, were published by the mayors of the seven largest German
cities. And the annual reports of the Deutsche Städtetag for fiscal ‘94 and ‘95, in their titles
hardly less outspoken54, presented a statistically well underpinned financial status, demonstrating the urban crisis so convincingly that even R. Herzog, as the Republic’s president not
to be suspected of being a partisan spokesman of and for the cities, in his speech before the
Magdeburg congress warned against „... undermining the communities’ privilege of selfadministration“55; as the principles of subsidiarity and equal living conditions this privilege is
granted to the communities by [article 28 (2) of] the German federal constitution.
Given this state of affairs, it appears all too plausible that astute local politicians and administrators have been looking for effective strategies to ease the pressure on their welfare budgets
ever since. As a matter of fact, the first generation of „employment plus ...“ associations and
related initiatives – the plus indicating that providing employment in all those efforts has only
been one aspect among others, possibly even only a means for other objectives – can almost
exclusively be considered as a reaction to the before-mentioned measures of shifting the financial burdens of structural long-term unemployment from the PGO and federal to the local
budgets. The counter strategy of the communities consisted of initializing and organizing
short-term employment opportunities for welfare recipients, in order to shift their fiscal burden from the welfare budget to employment payrolls. Even if that turned out more expensive
in the short run, even the lowest wage rates being higher than welfare payments, in intermediate calculation the community treasurer could expect a „net gain“. For after paying those
wages for up to one year, and „firing“ the welfare recipient, camouflaged as an employee,
afterwards, the latter was then an unemployed person, receiving his or her respective Arbeitslosengeld (compensation) out of the unemployment insurance for the subsequent year, Arbeitslosenhilfe (unemployment transfer) from the federal budget for another, before his or her
welfare payment might again turn up in the budget of a community, possibly not even the
same as the original one ...
Such strategies and counter-strategies, elsewhere denounced as „Externalisierungskarussell
(externalization roundabout)“ 56 sound and to some extent surely were cynical, because they
were attempts to remedy one’s own problems at the expense of others, who as welfare recipients even had to invest in and gamble on their often futile hopes of finding new and possibly permanent employment. Not only for that reason, but also because it was in the communities own self-interest to strive for more sustainable strategies for solving their welfare
budget problems, a second generation of such „employment plus ...“ associations and related
initiatives came into being.
If for the first generation the term „symbiotic“ was all but a blasphemous and once again
cynical indication of the true intentions, such a characterization is all the more in order for the
second generation. For here indeed the insight prevailed that only truly intended and actively
engaged joint ventures between a great variety of public and private partners would help in
the long run. All those partners would have to be and by and large were devoted to create new
employment opportunities together with and for the sake of developing new concepts of and
strategies for technological innovation, regional and community development and of simulta52
53
54
55
56
Literal quotation according to H.A. (1995 b), translation by me; G.E.
Kronawitter (1994).
Cf. Karrenberg/Münstermann (1994, 1995)
H.A. (1995 b).
Engelhardt (1987), pp. 187 ff., and Engelhardt/Seifert (1988), pp. 210 f.
– 23 –
neously creating the specific labor force motivated and skilled to take over the jobs created in
that process.57
For that very reason most of these efforts led to specific organizations that carried their additional socio-economic objective, such as employment and „...structural ..., „...regional ...“
and/or „... community development“, „... professional requalification“ or others in their official name58. And it should also be obvious that most of those second generation joint ventures
evolved in the context of transformation policies in the so-called neuen Bundesländern (new
states, i.e. the former German Democratic Republic). For in their territories completely new
economic (infra-)structures had to be built, before new jobs could be created; only then new
strategies for fighting unemployment would possibly be effective. Fascinating as it would be
to try and systematize or even discuss the whole array of such symbiotic regimes along the
criteria suggested earlier, this has to be reserved for future studies. For room here only permits some hints in that direction, hoping that they might stimulate some such and even more
encompassing and comparative studies.
Initiating transformation and restructuring policies in a former socialist, if highly developed, economy certainly does not mean one has to start from the very scratch; at least this
appears to be true for an existing and – in general, if not specific terms – even highly qualified
and motivated labor force. Also, such policies cannot do without gaining and processing information on the intended structural and regional development concepts, existing in the minds
of relevant policy makers, public administrators, and prospective business leaders that might
want and need be encouraged to invest in those regions. Last but not least it can hardly be
denied that all decisions at hand have to be taken under extreme uncertainty conditions. Taken
together, the tremendous tasks to be performed under such conditions almost cry for symbiotic arrangements in the process both of their conceptualization and realization:
All relevant information on transaction specific investment conditions exist and are available
but „on the spot“; those who have them, however, lack general management know how and
skills; the amalgamation of either is an aspect of semi-specificity as one of the
(effectiveness/efficiency?) criteria for long-term relational cooperation.
The before-mentioned peculiar policy-mix is not only utterly uncertain as to its outcome
and thus also with respect to the survival of the private partners risking at least part of of
their venture capital for investments in those regions; the success of those investments more
often than not will also decide on many a political and administrative career within the newly
emerging nomenclatura of a public policy-making elite in those regions. Joint risk-bearing and
risk-sharing may become a prospective safeguard against prevailing uncertainties and thus a
strong stimulus for organizing activities in symbiotic regimes. To the extent that risk-bearing
and risk-sharing consortia develop on the basis of slowly growing mutual trust, it is almost
self-evident that under such conditions entry barriers to newcomers tend to be difficult to
overcome.
The aspect of synergy, potentially prevalent also in all other variants of symbiotic arrangements, discussed so far, become of particular relevance in the context of what we chose
to call a „third generation“ of „employment plus ...“ associations and related initiatives.
57
58
For detailed summaries of second and also some first generation employment organizations, though, of
course, not labeled that way cf. Müller (1992 and 1993).
In the typical shorthand denomination of German public administration rhetoric they even came to be labeled as ABS-Gesellschaften, i.e. „Gesellschaften zur Arbeitsbeschaffung, Beschäftigungsförderung und Strukturentwicklung (societies for the provision and enhancement of employment and structural development)“.
For detailed descriptions cf. Freidinger/Schulze-Böing (1993); also Knuth (1992, 1993, and 1994), Wagner
(1994).
– 24 –
Whereas the „second generation“ type of activities tend to constitute the clearest and most
decisive steps away from the original polar position in the direction of real and long-term employment initiatives on the first labor market, the „third generation“ appears to remain close
to or even step backwards toward its polar origin, i.e. taking care of people, persistently and
perennially unqualified for „market-oriented“ labor contracts right from the outset. As it
looks and has initially been argued with reference to a growing number of eminent authors59,
however, this may well turn out to become the dominant alternative in our future postindustrial information and knowledge societies, after all.
The gist of the argument is that future production and provision of most of the conventional goods and services we consume in our daily living can be and are increasingly performed
without human labor. Society, if such trends prevail, will be split into two extremely diverse
groups of people: those with high standards of specific knowledge and skills, necessary for
handling the complex information and communication technology for producing and providing
our conventional GNP. If property rights with regard to disposing of said GNP keep being
assigned and distributed along the traditional and exclusive lines of market income acquisition,
fewer and fewer people will get all, the masses nothing. Growing masses of people with no
such capabilities and thus without the respective property rights or claims on the GNP produced constitute the other group.
It is self-understood that sustainable human relations can no longer be built on such assumptions and propositions without substantially adjusting the basic societal allocation and
(re-)distribution mechanisms. If technological progress and its prediction proceed along the
lines indicated before, human beings and their value for society can no longer be determined
and evaluated along the traditional lines, i.e. exclusively on account of their contributions to
the production and provision of conventional GNP items. Accordingly, property rights or
entitlements with respect to being allowed to dispose of income and wealth shares have to be
redefined.
„Employment plus ...“ concepts of a third and all future generations will have to take account of all that. And it looks, as if synergy in the sense of inseparable human interactions
will become ever more important in that context: Such inseparable and socially integrated interactions among human beings, no matter whether they partially contribute or not to anything we value highly and thus are ready to „pay for“, thus creating „income“ on the account
of the originators of values and now recipients of reciprocal counter values, will increasingly
determine, whether mankind will be able to develop new capacities for peacefully living together. Given the tremendous potential of destructive power human intelligence has been able
to invent, accumulate, and preserve this may well decide on its secular survival.
The gist of the preceding quasi-philosophic deliberations appears to be that rather than allocation devices so dominant in the past, distributive patterns will become decisive for our
future. Symbiotic arrangements, stimulating and enacting synergetic cooperation in the process of which people will be able to generate non-market-incomes by being paid functional
transfer payments for meaningful societal activities, irrespective of their marketability, may
thus develop into normal strategies for human relational contracting or rather interacting. As
in our initial example of symbiosis between the hermit crab and the sea anemone society will
periodically have to redefine what constitutes mutually beneficial versus parasitic transactions.
59
cf. footnote 9 and the references listed there.
– 25 –
4. SYMBIOTIC ARRANGEMENTS: SUMMARY AND OUTLOOK
4.1. „Metaphors“ as Analytical Concepts: Summarizing Remarks
on Symbiotic Arrangements
With those thoughts in the back of our minds, we have already taken a decisive step toward
returning to our point of departure. True: Metaphors as abductions of analytical concepts
from a traditional field of thought and application to new and as of yet undiscovered or at
least unreflected grounds of human behavior should not be over-interpreted. Nevertheless,
they can provide valuable insights as creativity strategies for the formulation of new propositions for progressing on those new grounds.
The concept of symbiotic arrangements, abduced from (socio-)biology, though far from
being capable of explaining, predicting, or shaping human cooperative behavior, provided
some possibly useful clues as to the prospective relevance of resource specificity,
(information and communication) technology, uncertainty, barriers to entry, and synergy as
criteria for structuring our understanding of mutual beneficiality and thus sustainability in
organizational cooperation. Interestingly, this understanding was fostered by studying the
highly competitive realm of industrial relations.
It should therefore be of particular interest and has been our main concern to see, if such an
approach can meaningfully be utilized also for analyzing the emergence and development of
joint ventures in public goods settings. For in practice increasing efforts toward cooperation
between different administrative departments, but also between those and private partners
can be observed. For that matter, the present paper formulated some preliminary ideas in that
direction by discussing prospective analogies between symbiotic arrangements in industrial
relations and public goods and service provision. As cases in point examples from the overlapping fields of local labor market, employment, and welfare policy-making were drawn on.
In our view, further research in those fields and along the lines of our NIE analysis appears
promising, although the effectiveness/efficiency syndrome, prevalent in the study of industrial organization, is to be regarded with skepticism and utilized with utter precaution.
4.2. Symbiotic Arrangements in a „Reflexive“ Perspective: Outlook
on Prospective Research, Teaching, and Consulting Networks
for Providing Public Goods and Services
The prospects of our post-industrial societies turning into information and knowledge societies, referred to earlier in this paper60, despite all their gloomy outlook provide fascinating
perspectives, regarding the future role of symbiotic arrangements for scholarly research and
teaching, combined with practical policy analysis and advice in theory-practice cooperation.
For if it is true that in times of utter uncertainty about the future development of our
„Spaceship Earth“ (Boulding) and the human species in it, common search efforts for reliable
human relations and trust-building measures will become predominant, it may well be that
science and research will be assigned a key role for those common strivings.
Not that scholars are in any way better equipped than ordinary men and women to produce ready solutions for the key issues of mankind. But among the various subsystems our
post-industrial and knowledge societies have developed and differentiated into, the „Republic
of Science“ (Polanyi) is the only one that organizationally is granted the leeway and leisure to
professionally reflect on the conditio humana. This establishes far-reaching societal responsibilities and includes profound opportunities to encompass reflections regarding the principle
60
Cf. again footnote 9, p. 5 above.
– 26 –
of reflexivity within self-regulating social systems in the sense of N. Luhmann 61 into their
intellectual and increasingly also social activities. For in that context and to our understanding
scholars have no particular competencies nor responsibilities for substantive solutions; they
surely do with respect to shaping the organizational and procedural arrangements and to organizing, guiding, and mediating the societal communication processes, within which such
reflections might take off and gain momentum.
Once again in reflexive consideration, symbiotic arrangements in the sense of synergetic interaction between the various societal groups, including those that no longer receive property
rights and income entitlements along the conventional rules of a capitalist market economy,
appear to be in urgent and progressively rising demand. Scholars in that context can live up to
their societal privilege of leisurely reflecting and to their responsibility for nonpartisan social
interaction by establishing and running dynamic information and communication networks for
long-term cooperation between representatives of different scholarly disciplines, but also
between them and responsible agents of the existing societal subsystems, jointly working on
strategies for our common future existence and survival.
Such links might become the nucleus and catalyst for strategic alliances of lifelong learning
and flexible adjustment to environmental changes on a global scale. The metaphor of symbiotic
arrangements might in that context prove as a viable concept for reflexive action and active
engagement of scholars, political and administrative agents, and engaged citizens.
To a considerable extent such engagements could and possibly should concentrate on the
overlapping policy fields of analyzing and designing second or third labor markets in the sense
discussed before; resulting devices for long-term cooperation in joint ventures and public private partnerships for (re-)distributive and welfare policymaking could thus be made the object
of common scrutiny and possibly also of practical implementation by way of iterative learning by doing practices.
Hardly any future economist, lawyer, social scientist, or policy analyst will in his or her
later professional career escape the real life problems in those overlapping policy fields. Rigorous methodological training and disciplinary education in the early stages of his or her
studies notwithstanding, it would be extremely useful to get confronted with those problems
in interdisciplinary and theory-practice oriented communication networks as early as in the
more advanced stages of academic studies. It is even imaginable that as topics for masters’
theses and/or doctoral dissertations case studies of such problems be conducted, to be discussed in interdisciplinary and mixed groups of prospective scholars, practitioners, and concerned or even involved citizens themselves.
To the extent that similar or complementary research designs are being utilized in such case
studies, their results could be made accessible for international electronic communication and/
or become the topic for cross regional or even internationally comparative policy workshops
and conferences. For that matter, such studies, the research teams conducting them, and the
people, seemingly only the objects of scrutiny, would become members of interactive groups,
in themselves functioning as subjects and objects alike in developing strategies for jointly
dealing with the problems of sustainability and survival of our post-industrial societies.
Once again, the questions raised in connection with our initial metaphor comes up: Who in
such evolving symbiotic relations is going to function as hermit crab, who as sea anemone;
what constitutes and differentiates beneficial from parasitic interaction, once the narrow and
short run notion of immediate do ut des and quid pro quo interrelations of pure market
economies has become obsolete?
61
Luhmann (1977), pp. 610 ff.
– 27 –
ANNEX
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– 31 –
2. ABSTRACT
„Symbiotic Arrangements“ in Metropolitan Government Third-Sector Interaction
Gunther H. Engelhardt*
„Symbiotic Arrangements“ is an abduction from the biological term symbiosis, denominating longterm („life-long“) cooperation between (groups of) individuals of different species for their mutual
benefit. According to the pragmatist philosopher of science C. S. Peirce, „abduction“, in addition
to „induction“ and „reduction“, is a third major cognitive principle. It appears to be relevant above
all in the creative context of developing new paradigms, rather than perpetuating and refining
traditional propositions in the context of „normal science“ (T. S. Kuhn).
Whereas symbiotic arrangements in ecological systems evolve and stabilize by means of natural selection, in socio-economic life they have to prove advantageous in the light of a long-term
cost-benefit calculus by the prospective partners of a (production, consumption, and/or distribution) coalition on the basis of (more or less) voluntary interaction. Nevertheless the metaphor of
symbiosis is nowadays broadly utilized in the new institutional and industrial economics. For
„symbiotic arrangements“, also termed „strategic alliances“ or „dynamic networks“, even between
for-profit enterprises, otherwise remaining independent, are becoming more and more prevalent in
a variety of „hybrid organizations“ and on a world-wide scale.
In industrial economics the core criteria, by which the relative superiority or comparative advantages in effectiveness and efficiency of symbiotic as opposed to (spot) market and hierarchical
relations appear most evident, are considered to be (1) asset specificity, (2) information and
communication technology, (3) uncertainty, (4) barriers to entry, and (5) synergy (i.e.: resource,
viz.: production, consumption, and/or distribution interdependencies).
Due to indeterminate quality standards and ubiquitous agency relations in collective choice
settings, the criteria for effective and efficient public goods provision are far from well defined.
Nevertheless it looks and is exemplified in this paper, as if „symbiotic arrangements“ in providing
public, particularly metropolitan, goods and services are becoming more and more prevalent
these days. They do so, above all, in policy areas that are most heavily affected by fiscal austerity
strategies, i.e. freiwillige Selbstverwaltungsaufgaben (tasks of voluntary self-government) in the
official German local public administration terminology. And they prevail in regions that are most
severely affected by long-term unemployment, due to structural deficiencies and obsolete industries, in Germany particularly in the former German Democratic Republic.
The present paper, notwithstanding the undetermined effectiveness and efficiency issues in
providing (metropolitan) public goods and services, therefore undertakes to utilize the principle of
„abduction“ on two levels, namely by transferring the metaphor of symbiosis from ecological to
economic life and analysis, respectively, and by „kidnapping“ it from the private (industrial) to the
public realm of socio-economic reality and scrutiny. Though far from providing well established
empirical evidence, a number of propositions and preliminary observations, utilizing the abovementioned institutional economic criteria, are discussed, concerning various fields and aspects of
public-private sector interaction with respect job mediation, in Germany until recently a public monopoly of a PGO, called Bundesanstalt für Arbeit (Federal Agency of Labor and Employment),
and various institutional arrangements of so-called „employment plus“ associations. These semiprivate and public organizations strive for synergy by developing and amalgamating joint programs in the overlap of local (metropolitan) employment, welfare, and cultural policies.
The intention, to repeat the argument, of our analytical effort here is not to prove the relative
superiority of one versus other organizational devices in the policy fields at stake. Our aim is
rather to thereby initiate networking activities for comparative policy analysis between scholars
and practitioners of different academic disciplines, policy fields, and cultural backgrounds, thus
helping to understand and cope with the problems of socio-economic systems transition and
transformation that may well prove critical for the viability of democratic governance in our (post)
industrial welfare and increasingly multicultural metropolitan societies.
*
Abstract of a paper presented at the 2 nd World Conference of the International Society for Third-Sector
Research in Mexico City, July 18 – 21, 1996. Gunther H. Engelhardt is professor of public economics
and director of the Institute of Public Finance, University of Hamburg, Germany.
– 32 –
3. DISKUSSIONSSCHRIFTEN AUS DEM INSTITUT FÜR F INANZWISSENSCHAFT
DER UNIVERSITÄT HAMBURG
Nr.
1/1976
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2/1976
Nr.
3/1976
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4/1976
5/1977
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6/1978
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7/1978
8/1978
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9/1979
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10/1979
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11/1980
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12/1983
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13/1984
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14/1984
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15/1984
Nr.
16/1984
Gunther H. Engelhardt: Wissenschaftliche Beratung der Wirtschafts-und
Finanzpolitik in politökonomischer Perspektive. Ein Forschungskonzept
Cay Folkers: Zur optimalen Bestimmung staatlicher Eventual-budgets
mit Hilfe der linearen Programmierung
Volkmar G. von Obstfelder: Werden heute Reformen unterlassen, so
verursachen wir morgen höhere Ausgaben. Aspekte einer modernen
Finanzpolitik, in der gesellschaftliche Entwicklungen berücksichtigt
werden
Hans G. Nutzinger: Self-Management in the Public Sector
Gunther H. Engelhardt: Zur logischen Struktur von Bewertungssystemen für den öffentlichen Dienst
Peter Busse: Grundkonzeption der Wohngeldförderung und Vorschläge
zur Reform
Dieter Schütt: Bemerkungen zu einigen Modellen zyklischen Wachstums
Dieter Gnahs und Rainer Janneck: Das Problem des illegalen Steuerwiderstandes. Ein Versuch der Integration verschiedenener Erklärungsansätze
Uwe Sander: Variation der steuerlichen Abschreibungsmöglichkeiten
gemäß § 26 StWG als Instrument der Stabilitätspolitik
Martin Rosenfeld: Funktionale Verwaltungsreformen und das Popitzsche
„Gesetz von der Anziehungskraft des übergeordneten Etats“ – Ein
Forschungsdesign
Gunther H. Engelhardt: The Imperfect Political Competition in a
Representative Democracy and the Supply of Public Goods
Birger Priddat: Das Verhältnis von Ökonomie und Natur. Eine erste
Skizze zu einem unbekannteren Aspekt der Theoriegeschichte
Gunther H. Engelhardt: Zum Problem der Politikentflechtung und
Aufgabendezentralisierung in der Freien und Hansestadt Hamburg: Das
Beispiel der Bebauungsplanung
Frank Nullmeier, Birger Priddat, Martin Rosenfeld, Eyüp Saltik und
Volker Schulz: Zur Geschichte des Instituts für Finanzwissenschaft und
der finanzwissenschaftlichen Forschung und Lehre an der Universität
Hamburg
Werner Stark: Die protestantische Ethik und der Verfall des Kapitalismus
Birger Priddat: Ist das „laisser faire“-Prinzip ein Prinzip des NichtHandelns? Über einen chinesischen Einfluß in Quenays „Despotisme de
la Chine“ auf das physiokratische Denken
– 33 –
Nr.
17/1984
Nr.
18/1984
Nr.
19/1984
Nr.
20/1985
Nr.
21/1985
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22/1985
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23/1986
24/1987
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25/1987
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26/1987
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27/1988
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28/1988
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29/1988
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30/1989
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31/1989
32/1990
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33/1990
Gunther H. Engelhardt: Approaches to Fiscal Decentralization in a
Metropolis: Recent Discussions on District Reform in the City State of
Hamburg
Gunther H. Engelhardt, Frank Nullmeier, Birger Priddat, Martin
Rosenfeld und Eberhard K. Seifert: Öffentliche Finanzen im „Post
Welfare State (PWS)“, Beitrag zur Konferenz des European Centre for
Work and Society: „The Future of the Welfare State“ vom 19. 21.12.1984 in Maastricht/NL
Martin Rosenfeld: Shifts of Expenditures between Counties and Local
Units in Lower Saxony as a Result of Recent „Functional Reforms“– A
New Approach to Operationalize, Measure, and Explain Fiscal (De-)
Centralization
Gunther H. Engelhardt und Mitarbeiter: Bürgerpräferenzen und
Konsolidierungspolitik – Anregungen und Materialien für eine finanzwissenschaftliche Projektstudieneinheit
Gunther H. Engelhardt: Programmbudgetierung und Budgetkonsolidierung
Birger Priddat und Martin Rosenfeld: Die Hamburger Finanzwissenschaft in den Jahren 1933 -1945
Gunther H. Engelhardt: Bezirksreform in Hamburg?
Gunther H. Engelhardt: Finanzwissenschaftliche Ansätze zur Analyse
und Steuerung interorganisatorischer Beziehungen in der Verwaltung
Gunther H. Engelhardt: Ansätze zur Integration verwaltungs- und
finanzwissenschaftlicher Forschung und Lehre im Institut für Finanzwissenschaft
Jörn Brossmann: Der Wasserpfennig – Finanzwissenschaftliche Überlegungen zu einem neuen umweltpolitischen Konzept
Peter Bartsch und Henning Probst: Zur Berücksichtigung von Bedarfselementen im Länderfinanzausgleich – Ein Beitrag zur Überwindung der
Stadtstaatenproblematik
Gunther H. Engelhardt und Eberhard K. Seifert: Das gesellschaftlich
Notwendige finanzierbar machen
Martin Rosenfeld: Hat die Dezentralisierung öffentlicher Aufgabenerfüllung eine Chance? – Ein Versuch der Integration und Erweiterung
vorliegender Hypothesen zum „Popitzschen Gesetz“ am Beispiel der
Entwicklung in der Bundesrepublik Deutschland
Gunther H. Engelhardt: The Economics of Public Goods: Basic Concepts and Institutional Perspectives for Comparative Systems Analyses
Gunther H. Engelhardt: Imperialismus der Ökonomie?
Martin Rosenfeld: Zur finanzwissenschaftlichen Analyse der Entwicklung öffentlicher Aufgaben-Strukturen – Bericht über ein Forschungsprojekt
Georg Tolkemitt: Einige makroökonomische Konsequenzen der
Konsumbesteuerung
– 34 –
Nr.
34/1990
Nr.
35/1990
Nr.
36/1992
Nr.
37/1995/96
Peter Bartsch und Georg Tolkemitt: A neo-classical growth model with
government activity – Some simple analytics
Gunther H. Engelhardt: Die Instrumentalthese in der wirtschafts-wissenschaftlichen Diskussion – Ansätze einer institutionenökonomischen Reinterpretation
Gunther H. Engelhardt: Kommunale Finanzpolitik im Zeichen der
Wiedervereinigung
Gunther H. Engelhardt: „Symbiotische Arrangements“ und die Versorgungsorganisation öffentlicher Aufgabenerfüllung – Anmerkungen zur
Institutionenökonomik einer biologischen Metapher mit einigen Anwendungsbeispielen aus dem Überschneidungsfeld kommunaler Arbeitsmarkt- und Sozialpolitik (deutsche Fassung 1995); „Symbiotic Arrangements“ in Metropolitan – Third-Sector Interaction (English Version 1996)
– 35 –