Environment and Planning C: Politics and Space

In the Federal Republic of Germany a tendency towards centralization can be identified. As it is difficult to decide whether this tendency increases or decreases welfare, a conceptual framework is developed that is based on an extended notion of costs in that it also allows a comparison of political with economic costs in the traditional sense. This approach allows the conceptual determination of an optimal degree of centralization/decentralization that depends on preference costs of citizens on the one hand [for instance, the costs of violated (‘frustrated’) values by a more centralized system] and resource costs (which increase with decentralization) on the other. This analysis also comprises as intermediate steps the derivation of certain principles that are elements of the theory of fiscal federalism.

Almost from the beginning of the Federal Republic of Germany in 1949, a sophisticated horizontal equalization mechanism with strong equalizing effects has existed between its states (Länder). Its historical and social background is shown briefly, and the equalization procedure, which compares the revenue potential of each state with a rough measure of its fiscal need, is described in detail. The far-reaching equalization of state revenues that results is evaluated under distributional objectives and above all on allocative grounds: There are few incentives for states to care for their own tax base, particularly because states have no tax-rate authority which would enable them to vary their revenues from own sources.

Spatial planning at the regional level is a particularly good example of ‘centralization versus decentralization’ in a federal system. In one respect the region is dependent on the central level, as far as its legal bases, organizational forms, and planning tasks are concerned; but the cities and counties should be allowed to specify the functions they perform in their own region. This is the crux of the conflict in finding an effective balance between centralization and decentralization. Solutions to date in the FRG have favored a progressive centralization. Because of the increasing economic and ecological problems with which the regions are faced, this centralist solution is no longer tenable and decentralizing reforms are now required and under discussion. These concern the institutional organization and functions of the regions, a mobilization of the capacities available in the respective regions for solving their problems, plus a gradual shift to new region-specific planning. Thus, changes are occurring in regional planning which pave the way for a more decentralized planning process. However, in spite of the new understanding, even at central level, that the regions are capable of contributing efficient solutions to actual problems, these changes have not yet achieved a breakthrough in planning practice.

In the brief history of West German federalism the field of regional economic policy underwent an important change. In the beginning it had been a state function, but became more and more influenced by the federal government. This development was confirmed by a change of the Basic Law in 1969 when regional economic policy became one of the three ‘joint tasks' (Gemeinschaftsaufgaben). Since then both the federation and the states have been included in the decisionmaking process. Meanwhile several problems of this specific form of federalism have been become evident. The most important items of criticism are a tendency towards centralization and uniformity, an increasing inflexibility in the face of new problems, and an almost inevitable tendency towards expanding the support areas.

The literature on entrepreneurship in the USA suffers from the fact that it has not been comparative. Researchers have generally identified characteristics of entrepreneurs and assumed that these characteristics distinguish them from individuals who are employed by others. In this study the backgrounds and personality traits of entrepreneurs and nonentrepreneurs are compared. It is concluded that the reported differences between entrepreneurs and nonentrepreneurs are overblown—actual differences are minimal.

Poland is undergoing important political changes. The evolution of legal, political, and financial resources of local government since 1950 is discussed in this paper. In the last section are presented the Solidarity programme and governmental response at the historic ‘Round Table’ talks between the ruling Communist Party and the Polish opposition, which opened the way to the opposition's magnificent victory in the parliamentary elections in June 1989. In 1950 a very centralized organization of the state was imposed. But the postwar history shows expansions and limitations of local government power. These shifts and their causation are analyzed. The poor quality of the urban fabric, the need of social support for the ruling party, and important economic tasks of local government call for decentralization. Its implementation requires overcoming the barriers, which result from resistance by political and bureaucratic structures, bad economic situation, and lack of public interest in local democracy. Recently a decentralization policy is being implemented. Many legal openings have been made, but the political organization is still very centralized. It is argued that a deconcentration of tasks and means cannot be effective without changes in political structures. Therefore Solidarity asks for full self-government at the communal level, but the ruling Party has strong reservations against this.

Previous studies of the spatial balance of combined budgets are reviewed. A new variant of the ACIR (Advisory Commission on Intergovernmental Relations) state-level ‘federal expenditure-to-revenue ratio’ is suggested as an indicator of the relationship between the federal government and an individual state. Patterns of change in such ratios are examined for the period 1971–85, focusing on: Trends in spatial disparity, time series models, correlations with state income and unemployment, and changes associated with the ‘new federalism’. The main conclusion is that past notions about incremental or autoregressive behavior within a single spatial system may need to be modified for the post-1981 period.

In public policy analysis the state is often presented as primarily technocratic and virtually separate from society. It freely chooses its own goals, but falls short primarily because of shortcomings in policy planning techniques. This view, however, conflates policy and investment programs, while neglecting state–society relations, multipurpose policies, and the legitimation of spatial policy. State theory must be able to interpret these dimensions of the state and its limited autonomy, as this critique of Lim's theory of state policies suggests.

This paper begins with a selective review of theories relevant to the state–society relationship. The review focuses on the mode by which competing theories are constructed. Three factors which affect theory-building are considered: Assumptions about the intention of the state; the function and capacity of the state; and the forms of alliance, allegiance, and conflict. It is argued that each of these competing theories is valid under specific circumstances and it is suggested that they are not necessarily mutually exclusive but can be complementary at a given point in time. With these reflections on theory and theory-building as background, Klak's comment on an earlier paper is evaluated.