Regulation And Rulemaking Essay ⋆ Political Science Essay Examples ⋆ EssayEmpire

Like many other political concepts, regulation is hard to define, not least because it means different things to different people. The term is employed for a myriad of discursive, theoretical, and analytical purposes that cry out for clarifications. It is also a highly contested term. For the far right, regulation is a dirty word representing the heavy hand of authoritarian governments and the creeping body of rules that constrain human or national liberties. For the old left, it is part of the superstructure that serves the interests of the dominant class and frames power relations in seemingly civilized forms. For progressive democrats, it is a public good, a tool to control profit-hungry capitalists and to govern social and ecological risks. For some, regulation is something that is done exclusively by government, a matter of the state and legal enforcement; while for others, regulation is mostly the work of social actors who monitor other actors, including governments. State-centered conceptions of regulation define it with reference to state-made laws, while society-centered analysts and scholars of globalization tend to point to the proliferation of various forms of civil and business-to-business regulation.

Competing Perspectives

For legal scholars, regulation is often a legal instrument, while for sociologists and criminologists it is yet another form of social control. For some it is the amalgamation of all types of laws—primary, secondary, and tertiary legislation—while for others it is confined to secondary legislation. For Chicago school of regulation economists, it is usually a strategic tool used by private and special interests to exploit the majority. Not all economists are alike: for institutional economists, regulation is a constitutive element of the market and is often understood as the mechanism that constitutes property rights or even as a source of competitiveness. The French Regulation school seems to have developed a similar institutional perspective but with a more critical tone and without the functionalist orientation of some Anglo-Saxon economists. While scholars of public administration seem to perceive it with direct and intimate reference to the scope of state authority and formal regulatory organizations, scholars of global governance tend to focus on standards and soft norms. While some seem to think of the rise of regulation as yet another indication of the advance of neoliberalism and the retreat of the welfare state, others tend to see it at as a neomercantilist instrument for market expansion, high modernism, and social engineering. In European parlance, for most of the twentieth century regulation was synonymous with government intervention and, indeed, with all the efforts of the state, by whatever means, to control and guide economy and society. This rather broad meaning of the term seems to have faded, and scholars now make efforts to distinguish rulemaking from other tools of governance, and indeed from other types of policy instrument, such as taxation, subsidies, redistribution, and public ownership.

Regulation not only is a distinct type of policy but also entails identifiable forms and patterns of political conflict that differ from the patterns that are regularly associated with redistribution and distribution. In addition, while other types of policy such as distribution and redistribution are about relatively visible transfers and direct allocation of resources, regulation only indirectly shapes the distribution of costs in society. Government budgets include (relatively) visible and clear estimations of the overall costs of distribution and redistribution but hardly any of the cost of regulation (with the exception of the administrative costs of regulation—costs of fact finding, monitoring, and implementation). The most significant costs of regulation are compliance costs, which are borne not by the government budget but mostly by the regulated parties. The wide distribution of these costs and their embeddedness in the regulatees’ budgets make their impact, effects, and net benefits less visible and therefore less transparent to the attentive public.

For some, regulation is a risky business that is prone to failure, but for others the business of regulation is the business of risk minimization. Some contend that regulation comprises mostly rulemaking while others extend it to include rule monitoring and rule enforcement. For some, regulations are about the rules and functions of the administrative agency after the act of delegation; for others, as already observed, regulation includes every kind of rule, including primary legislation and even social and professional norms. The extensive literature on regulation in the United States and the extensive attention paid to regulation could have resulted in a consensual definition of regulation. Yet this is not the case. The American Administrative Procedure Act defines the term rule but not the term regulation, and what it defines as rule is confined to the scope of the act itself.

Role Of Administrative Agencies

One important aspect of any discussion of the different connotations and character istics of regulation is the intimate relations between regulation and the existence of an administrative agency. Rulemaking and rulemaking agencies are closely connected. An emphasis on the workings, characteristics, failures, and merits of regulation by administrative agencies is prevalent in the literature on regulation. Thus, one of the most widely cited definitions of regulation suggests that regulation is a “sustained and focused control exercised by a public agency over activities that are valued by the community.” Not only does this definition include an explicit reference to public agency, but it also stresses the sustained and focused nature of regulation. Regulation involves a continuous action of monitoring, assessment, and refinement of rules rather than ad hoc operation. Implicit in this definition is also the expectation that ex ante rules will be the dominant form of regulatory control. The definition is less apt in the sense that it fails to recognize that many, perhaps very important, regulations are not exercised by public agencies but by a wide variety of executive organs. It excludes business-to-business regulation as well as civil regulation and unnecessarily limits regulation to those actions that are valued by the community.

The regulatory agency is a nondepartmental organization that is involved mainly with rulemaking but that also may be responsible for fact finding, monitoring, adjudication, and enforcement. It is autonomous in the sense that it can shape its own preferences, and the extent of its autonomy varies with both its administrative capacities and its ability to enforce its rules. The autonomy of the agency is constituted by the act of its establishment as a separate organization and by the allocation of a policy space where the agency is expected to operate in order to meet its functions and responsibilities. Note that rulemaking, fact-findings, monitoring, adjudication, and enforcement capacities are usually the characteristics of regulatory agencies. While regulatory agencies are not new, their growth and proliferation is the outstanding feature of the emergence and consolidation of the regulatory state. Regulatory agencies originated in various boards, ad hoc committees, and other premodern organizational entities that during the twentieth century became the pillars of the modern administrative state. Regulatory agencies became a distinctive feature of the American administrative state in the early twentieth century. What other countries often nationalized, the United States regulated. Indeed, the history of the American administrative state is also the history of the establishment of regulatory agencies. Yet, while the number of regulatory agencies in the United States has not grown since the mid-1970s, such agencies have become popular elsewhere in the world. A recent survey of the establishment of regulatory agencies across sixteen different sectors in sixty-three countries from the 1920s through 2007 reveals that it is possible to find an autonomous regulatory agency in about 73 percent of the possible sector–country units that were surveyed. The number of regulatory agencies rose sharply in the 1990s, partly in connection with privatization policies but also in fields and places where privatization had little effect. The rate of establishment increased dramatically, from fewer than five new autonomous agencies per year from the 1960s to the 1980s, to more than twenty agencies per year from the 1990s to 2002 (rising to almost forty agencies per year between 1994 and 1996).

The expansion in the number of regulatory agencies, and arguably also in the scope of regulation and of the policy capacities of these agencies, has been manifest since the 1990s in the popularity of the notion of the regulatory state. In its most straightforward form, as defined by Christopher Hood and colleagues’ in Regulation inside Government, (1999), the term regulatory state “suggests [that] modern states are placing more emphasis on the use of authority, rules and standard setting, partially displacing an earlier emphasis on public ownership, public subsidies, and directly provided services.” Three elements are especially useful in characterizing the regulatory state. First, bureaucratic functions of regulation are being separated from service delivery. Second, the regulatory functions of government are being separated from policy-making functions and, thus, the regulators are being placed at arm’s length from their political masters. In this way, regulatory agencies became the citadels that fortify the autonomous and influential role of the regulocrats in the policy process. We are witnessing the strengthening of the regulators at the expense of politicians on the one hand and of the managerial elite on the other. Third, and as a result of the first two elements, regulation and rulemaking emerge as a distinct stage in the policy-making process. Accordingly, regulation is emerging as a distinct profession and administrative identity. Professional affiliation to global networks of experts becomes a major source of innovations, world views, accountability, and legitimacy.

From The Regulatory State To Regulatory Capitalism

The focus on the administrative elements in the study of regulation might be less useful for scholars who emphasize the limits of “hard law” and who are aware of the importance of social norms and other forms of “soft law” in the governance of societies and economies. A wider definition of regulation that captures regulation as soft law would suggest that regulation encompasses “all mechanisms of social control” including unintentional and nonstate processes. Indeed, as pointed out by Robert Baldwin and colleagues (1998), it extends “to mechanisms which are not the products of state activity, nor part of any institutional arrangement, such as the development of social norms and the effects of markets in modifying behavior.” Thus, a notion of intentionality about

the development of norms has been dropped from this definition of regulation, and anything producing effects on behavior may be considered regulatory. In addition, a wide range of activities that may involve legal or quasi-legal norms, but without mechanisms for monitoring and enforcement, might also come within the definition. This definition connects widely with the research agenda on governance, the new governance, and the new regulatory state, where elements of steering and plural forms of regulation are emphasized in the effort to capture the plurality of interests and sources of control around issues, problems, and institutions. This rather wide definition of regulation also allows us to decenter regulation from the state and even from well-recognized forms of self-regulation. Decentered approaches to regulation emphasize complexity, fragmentation, interdependencies, and government failures, and suggest the limits of the distinctions between the public and the private and between the global and the national.

Scholars of regulatory systems often point to the growth in the number of civil and business actors that invest in regulation and accordingly also in the growth of civil and business-to-business regulatory institutions and instruments. At the same time there are indications of the transformation of the politics of interest groups and nongovernmental organizations. Civil actors are often associated with advocacy (e.g., lobbying) and service provision (e.g., replacing the state in the provision of welfare), but in our areas of study they also produce, monitor, and enforce regulation. The concept of civil regulation aims to capture this evolving feature of civil politics. The term refers to the institutionalization of voluntary global and national forms of regulation through the creation of private (nonstate) forms of regulation intended to govern markets and firms. Civil regulations attempt to embed international markets and firms in a normative order that prescribes responsible business conduct. It includes old and traditional forms of self-regulation but goes beyond it to include regulatory techniques such as third-party accreditation and certification, gatekeeping strategies, met regulation, enforced self-regulation, self-regulation, and leagues tables. Business-to-business regulation is another form of a nonstate source of regulation. Here the growth of regulation is driven by the ability of some businesses (most often big business) to set standards for other businesses (most often smaller). One relevant example is the ability of big supermarket chains to set standards of food manufacturing, processing, and marketing all over the world.

The narrow definition of regulation and the broader one are coming together in the literature of regulatory capitalism in order to denote a global order that is characterized by the simultaneous growth of plural forms of regulation. It also denotes the growth in scope, importance, and impact of regulation at the national and global levels and the growing investments of political actors in regulation in general and regulatory strategies in particular. It suggests that regulation and rulemaking are the major instruments in the expansion of global governance. The notion of regulatory capitalism takes regulation theory analysis beyond national boundaries (hence, beyond the notion of the regulatory state) and beyond formal state-centered rulemaking (therefore toward civil regulation and decentered analysis of regulatory systems). It also denotes a world where regulation is increasingly a hybrid of different systems of control; étatist regulation coevolves with civil regulation; national regulation expands with international and global regulation; private regulation coevolves and expands with public regulation; voluntary regulations expand with coercive ones; and the market itself is used or mobilized as a regulatory mechanism.

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