ABSTRACT

This chapter shows that central government has been unaware of, or is uncaring, the level of transaction costs involved in the implementation of a number of its current initiatives. The consequence is the co-existence of several alternative paradigms for system management. The chapter sets out some of the current evidence about the capacity or otherwise of government to address crosscutting issues in a joined-up manner. It argues that effective capacity building for urban governance must seek to remove the inconsistencies inherent in system management, and discusses the level of transaction costs inherent in the system. The chapter points out the importance of defining governance as a 'whole system' and of recognising the several drivers which reinforce or weaken cultures of integrated 'whole-system' working. It concludes with a reminder of the three well-established paradigms of governance — markets, hierarchies and networks — together with discussion of the extent and nature of their common feature transaction costs.