A New Approach to More Effective Regulation?

4th Symposium on Regulatory Reform, Institute of International Parliamentary Affairs.

Dr. Bettina Lange, Centre for Socio-Legal Studies, Oxford University

Argument of the Presentation IUnderstanding how society – a ‘social sphere’ –

shapes regulation is key to thinking about innovative and effective approaches to regulating business actors

- civil society actors (NGOs, citizens and economic actors themselves)

- ‘social norms’: normative and cognitive frameworks shaping how regulators and regulated

think and act

Argument of the Presentation IILegal regulation is more likely to be effective if it is

grounded in the values of society, rather than just one segment of it, in particular the rationalities of markets. Citizens as key stakeholders in regulation, can be strategic champions of such values.

- a different methodological perspective: economic sociology

- embedding economic transactions into social relationships as one approach towards regulating them

Structure of the Presentation1. Karl Polanyi’s key economic sociology ideas

2. Contemporary debates about ‘responsive regulation’

3. A case study: European Union regulation of trade in transgenic agricultural products

4. Some critical reflections upon ‘effective’ regulation

1. Karl Polanyi’s economic sociology

The myth of self-regulatory markets and the rise of the ‘market society’

‘Disembedding economic relationships out of social ones’ – ‘The Great Transformation’ (1944)

The ‘primacy of society’ – all economies are embedded in social relationships

1. Karl Polanyi’s economic sociology

The rise of the regulatory counter-movement

Civil society actors are key: ‘regulating through a social sphere’

Polanyi’s wide regulation concept: a) regulation can reign in negative side-effects of

economic activity b) regulation can be constitutive of economic activity c) social norms can regulate economic activity: trust, reputation, d) state regulation, interaction with social norms

1. Karl Polanyi’s contribution to developing ‘regulating through a social sphere’

A different perspective for understanding what drives economic actors:

the significance of values, not just interests

questioning a clear demarcation between economic and social drivers of behaviour

developing social norms within the corporation as a regulatory force: The US Commission Report on the Deepwater Horizon disaster

2. Responsive Regulation DebatesAyres and Braithwaite (1992): ‘Responsive

Regulation:Transcending the De-Regulation Debate’:

Regulators becoming responsive to the attitudes and behaviours of regulated businesses

harnessing the self-regulatory capacity of economic actors in the shadow of formal state law and in the shadow of community expectations

2. Responsive Regulation Debates

2. Responsive Regulation Debatesthe option of ‘the big stick’ of serious

sanctions enables the regulator in a majority of cases to carry out its work by ‘speaking softly’ - efficient use of resources by the regulator

‘regulating through a social sphere’: at what level in the enforcement pyramid a regulator will locate its enforcement approach will be up to negotiation by a tripartite regulatory community

2. ‘Really Responsive’ Regulation regulators becoming responsive to the operating

and cognitive frameworks of the regulated firm.

taking into account ‘the institutional environment of both regulated and regulators’

Regulators taking into account the ‘different logics of regulatory tools and strategies’

Applying this across 5 steps of an enforcement process

3. EU Regulation of Trade in Transgenic Agricultural Products

Developing the idea of ‘regulating through a social sphere’

communication between participants in regulatory regimes key to ‘regulating through a social sphere’

- the limited role of public participation in European Union (EU) authorisations for transgenic agricultural

products - the role of emotions in this regulatory regime

3. EU Regulation of Trade in Transgenic Agricultural Products

Key elements of the regulatory regime:Directive 2001/18/EC and Regulation 1829/2003/EC

Requirement for prior administrative authorisation for transgenic agricultural products: risk assessment

Key actors: Directorate General Health and Consumer Affairs, EU committees: representatives of Member States, the European Food Safety Authority

3. EU Regulation of Transgenic Agricultural Products

Limited public participation: - narrow legal provisions: preamble 46 Directive 2001/18/EC Art. 7 of Regulation 1829/2003/EC limited scope of national public participation provisions

- limited communication in practice: stock responses

3. EU Regulation of transgenic agricultural products

The invocation and management of emotion discourses: trust in regulatory science, procedures and ‘experts’

institutionalizing consumer distrust in order to build trust into regulatory actors in food regulation regime

rational distrust as a key element of political accountability in a participatory democracy

4. Some queries about ‘effective’ regulation

What is the benchmark?Effective in terms of achieving the objectives of legal

regulation, as spelt out in statutes and interpreted through cases? - but limits of clarity and determinacy of legal rulesWhat should be the benchmark?- responsive regulation is often associated with ‘going

beyond compliance’ or ‘moving towards compliance’The limits of steering regulatory effects: un-intended side effects, paradoxical effects of regulation

Conclusion I ‘Regulating through a social sphere’ not a new

approach – grounded in classical economic sociology – but developed in contemporary, cutting edge debates about ‘responsive’ regulation.

Civil society (citizens and economic actors) actors key to legal regulation – attitudes and behaviours of the regulated matter, tripartite approach: enforcement pyramids

Increasing significance , also in light of the declining role of the nation state in regulating transnational risks

Conclusion IICommunication is key in responsive

regulation approaches

Invocation and management of emotion discourses as a key challenge for ‘regulating through a social sphere’:balancing trust and distrust