The microfoundations of governance: Why psychology rather than economics could be the key to better inter-governmental relations

Microfoundational assumptions about what drives human behaviour can have an influence not only on the construction of social science explanations but also the development of intergovernmental relations. A microfoundational base premised on economistic rationality-in particular a principal-agency framezvork-tends to pervade the construction of intergovernmental relations. A case study of central-local relations in the UK from 1997 to 2005 is used to illustrate the costs involved in constructing intergovernmental relations on that basis. Alternative microfoundational premises-with greater psychological insight-are introduced to offer other ways of constructing the microfoundations of intergovernmental relations. One recognizes actors behave in a boundedly rational manner and another emphasizes the role of intrinsic or moral motivation to human actors. The paper argues that these microfoundational premises can explain why intergovernmental relations can go wrong and how they could be more effectively constructed. Again the study of central-local relations in Blair's first two terms provides an illustration of the argument but in the conclusion the broader implications of microfoundational premises for the construction of intergovernmental relations are explored.