Summary and Keywords
New policy instruments have come onto the policy agenda since the 1970s, but there is a real question as to whether the ideas behind the design of such tools are actually all that “new” when you assess the role of the policy instrument in its particular institutional and policy context. Taking Hood’s 1983 categorization of instruments as tools that manipulate society to achieve public goals via nodality (information), authority, treasure (finance), or organization, we can find instances where innovations in these areas pre-date the 1970s. Nevertheless, the mention of these instruments in international organizations such as the Organization for Economic Cooperation and Development (OECD) and national institutions and debates as the means for both improving governance and protecting economic efficiency have increased in light of a number of interacting trends: the rise of neo-liberal and new management ideologies, the increasing perception of a number of wicked problems (e.g., climate change) and nested, politically sensitive problems (e.g., health and welfare policy), a rethinking of the role of the state, and other reasons. A typology is offered for differentiating changes and innovation in policy instruments. There have been some very notable and complex policy instruments that have reshaped politics and public policy in a particular policy sector: a notable example of this is emissions trading systems, which create market conditions to reduce emissions of climate change gases and other by-products. Information and financial instruments have become more prominent as tools used to achieve policy aims by the state, but equally significant is the fact that, in some cases, it is the societal actors themselves that are organizing and supporting the management of an instrument voluntarily. However, this obscures the fact that a much more significant evolution of policy instruments has come in the area that is associated with traditional governing, namely regulation. The reality of this “command and control” instrument is that many historical situations have witnessed a more flexible relationship between the regulator and the regulated than the term suggests. Nevertheless, many OECD political systems have seen a move towards “smart” or flexible regulation. In promoting this new understanding of regulation, it is increasingly important to see regulation as being supplemented by, supported by, and sometimes reinforcing new policy instruments. It is the integration of these “newer” policy instruments into the regulatory framework that represents perhaps the most significant change. Nevertheless, there is some reason to question the real impact new policy instruments have in terms of effectiveness and democratic legitimacy.
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