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Why the EU is a polycentric system of governance

Elinor Ostrom provides the ideal framework to understand the European Union. Jan P. Vogler explains why.

When the EU faced massive refugee inflows from Syria in 2015 and 2016, polycentric governance was maintained in the crisis response: On the one hand, individual states managed and coordinated the entry of a large number of refugees. On the other hand, only the combination of these individual efforts with a major agreement between the EU and Turkey ultimately resolved the crisis. Photo: NTB/AFP/Bulent Kilic

The EU is often subject to biting criticism by its opponents: political speechwriter Aram Bakshian contends that the EU has “a single giant bureaucracy and an imposed-from-above social model” and journalist Leo McKinstry suggests that it is “a federalist monster that will not stop until nations are abolished.”

Such negative portrayals of the EU as a highly centralised system of governance that relentlessly imposes its will on participating nations in a top-down fashion are widespread. They likely have amplified Euroscepticism and contributed to Brexit – the most dramatic setback of the European project thus far.

But are these criticisms justified? In a recent book chapter, I argue that they are not.

Instead, using Vincent and Elinor Ostrom’s theory of polycentrism, I suggest that the EU is the opposite of what many of its critics claim. Indeed, it is actually best understood as a “polycentric” system of governance characterised by:

  • a high degree of vertical and horizontal dispersion of decision-making authority
  • an efficient division of governance responsibilities among central, national and local political units
  • the preservation (and sometimes expansion) of substantial influence by regional and local actors

What is polycentric governance?

The theory of polycentrism was originally developed by Nobel Laureate Elinor Ostrom and her husband Vincent to analyse governance in metropolitan areas.

Their central argument was that these conglomerates of towns and cities are best governed in a “polycentric” fashion. By using this term, they referred to an organizational structure with substantial dispersion of political authority and with local governments providing the public goods and services that are most efficiently supplied and managed by them.

In line with this first argument, they suggested that a system that centralises all political power in a single institution would suffer from severe inefficiencies and low levels of responsiveness to citizens.

While units in a polycentric system do profit from working under a centralised set of rules, their interactions are mostly deliberative in style and system-wide governance decisions are mostly not just imposed from above.

Importantly, however, they also acknowledged that certain aspects of governance could and should be organized centrally – if central management represents the most efficient solution. For example, this is the case if centralised provision profits from high economies of scale, if there are cross-unit spillover effects in the underlying phenomena or if standardization significantly improves the functioning of markets.

How we can analyse the EU as a polycentric system of governance

Although the theory of polycentrism was originally developed for the analysis of metropolitan areas, it also is a perfect framework to investigate and understand the institutions and governance of the EU. This is so for several reasons:

First, the three areas in which the EU centralises most decision-making authority are economic exchange, environmental regulation and the agricultural sector.

Given (1) the substantial benefits from both market integration through standardisation and the removal of internal and external trade barriers as well as (2) high levels of cross-border environmental interdependence (which both indicate significant potential spillover effects), organizing these policy dimensions in a more centralised fashion likely represents the most efficient solution.

Second, the EU’s institutional framework is evidently designed in a way that avoids an omnipotent central authority.

EU’s institutional framework is evidently designed in a way that avoids an omnipotent central authority.

It does so through several mechanisms, including by distributing political power horizontally between the Commission, the European Council and the European Parliament and by fully integrating the political “subunits” (nation-states) into central decision-making processes.

Furthermore, the European Council in particular has a deliberative style of governance and it can therefore be seen as a carrier of polycentric principles.

Finally, the theory of polycentric governance places much emphasis on the importance of local governments.

Only if local and regional actors retain substantial authority over public goods and services most efficiently organised at their respective administrative levels, can the EU truly be classified as a polycentric system.

In this area, too, the EU meets the framework’s criteria: Local and regional governments retain substantial authority, often managing all sorts of public goods, from transportation and infrastructure to schooling and policing. They might also be able to expand their administrative capacities through EU funding. Indeed, prominent EU scholars argue that European integration has given local and regional governments more power than they would have in a Europe of nation-states.

Prominent EU scholars argue that European integration has given local and regional governments more power than they would have in a Europe of nation-states.

Will polycentric governance survive crises?

While all of these circumstances clearly show that the EU – in terms of its formal institutional arrangements – can be classified as a polycentric system, a key question remains:

Are polycentric governance processes maintained in system-wide crises?

Often, such crises lead to either full centralisation or systemic breakdown, making them crucial objects of analysis. In my book chapter, I analyse two crises that posed serious threats to the EU, namely (1) the sovereign debt crisis of 2010–12 and (2) the refugee crisis of 2015–16.

The debt crisis started because restrictions on the liquidity of financial markets in the aftermath of the Great Recession (2008–10) casted doubt on the ability of several European governments to refinance their debt. In the EU’s response to this crisis, polycentric governance was maintained:

While central institutions, especially the European Central Bank, played a key role in providing liquidity and stabilizing financial markets, it was only the combination with more decentralised policy initiatives by major subunits of the polycentric system  as well as with deliberations in the European Council that provided comprehensive institutional steps toward a permanent solution.

The two subunits that had the greatest influence on the process were Germany and France, who were also crucial to establishing the financial stabilisation facilities that represented more institutionalized solutions.

In the EU’s response to the 2015–16 refugee crisis, too, there was a complex mixture of initiatives by different actors, including national governments, the European Council and the European Commission. Individual states, both in southern and northern Europe, managed and coordinated the entry and allocation of refugees. Additionally, the Commission created a joint-action plan with Turkey to more comprehensively address repeated refugee waves.

Thus, similar to the sovereign debt crisis, only the combination of decentralised and centralised actions helped deal with the refugee crisis in a broader form, highlighting the system’s persistent polycentric character.

Only the combination of decentralised and centralised actions helped deal with the refugee crisis in a broader form, highlighting the system’s persistent polycentric character.

Why polycentric governance theory is relevant

As the analyses of the EU’s institutional structures and of two major crises show, the EU can be classified and analysed as a polycentric system of governance:

  • It is characterised by significant horizontal and vertical dispersion of political power
  • pools and diffuses decision-making authority over public goods based on the criteria of efficiency and responsiveness
  • leaves substantial power in the hands of local and regional governments

These broader institutional principles were maintained throughout two major crises, highlighting the persistently polycentric character of European governance.

I hope that, in the future, more political economists specialised in the EU will consider applying this theoretical framework. Not only does it have a pertinent dual focus on the EU’s effectiveness of governance and the efficiency of public goods provision, but it is also inherently flexible in terms of accounting for a wide variety of different actors and contexts.

Given this openness and flexibility, a second key strength of polycentric governance theory is its wide applicability to contexts beyond the EU (and metropolitan areas). In this sense, I believe that its application will massively benefit not only scholars of the EU, but also scholars of governance more broadly.

This post is based on Jan P. Vogler’s book chapter, which can be accessed here.



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