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Competitive Regulation: Stepping Outside the Public/Private Policy Debate

BY DR. JEAN-PAULL GAGNON** | 17.08.2011

The central aim of this work is to try and detail the argument that governmental regulation can move beyond the public versus private policy debate. This argument depends largely on Kant’s and J.S. Mill’s works regarding the harm principle (see Ripstein, 2006; and Mertens, 2007, for further reading). In contemporary political philosophy, we see the focus turning to equality and justice within the framework of international peace and individual sovereignty (see Krasner, 1988; Guardiola-Rivera, 2010; Campbell, 2010; and Smith, 2008 for more). This discourse is central to my argument because I feel the literature supports my point that accountability, transparency and the right to question the public and private spheres wheresoever they may cause harm to be a right for any individual. It might be that, for many, this is simply part of democratic governance (see Hanberger, 2009; Meijer, 2009; Steffek, 2010; Tallberg, Uhlin and Bexell, 2010). This, in cumulative terms, manifests as the right for the pluralities composing citizenries to collectively challenge public and private industries and institutions if their activities cause harm or are suspect. This in turn may lead to the expectation that our representatives or leaders in civil society should champion this democratic right. If we do not have this right, the public and private spheres may operate in the dark: away from accountability, away from transparency, and away from popular knowledge and scrutiny.

cesran_papers_5_A contemporary example could be the recent financial crisis. Since the 1970s and 1980s, we have seen the growth of deregulation or casting away ill-framed and, perhaps in some circumstances, poorly fitting or illogical regulation limiting the dynamic growth of business (see Fenili, 2011; Yang, 2010; and Marshall, 2009, for example). But this of course led to arenas of operation beyond our democratic control and this violated the harm principle. We only need to consider the hundreds of millions of individuals around the world that have suffered great hardships as a result of the deregulation of financial markets (to go into this further the reader may want to consider Mayer, 2010, as hers is a good and robust gateway into this large body of literature). We might also consider the growth of violent crimes in countries with dramatic socio-economic inequality like the USA (this literature too is wide but the reader may wish to consider Loury, 2010; Pettit, 2010; and Stewart, 2011 for a start). This is why I am proposing that we are in need of competitive regulation. This form of regulation is meant to push industries and institutions forward: to detail where these bodies (public or private) can operate freely and what they must not do so as to avoid causing harm socially, politically, economically, ethically and environmentally.

Before we proceed any further however, a first priority is to stipulate exactly how I conceive “competitive regulation.” The term is used in the literature (see, for example, Fitzpatrick and Davison, 1997; Varoudakis and Rossotto, 2004; and Cooke, 1992) to theorize or analyse a specific role for government-derived regulation. The normative argument is that regulation must not oppress the growth of the economy, but must be proactively engaging and promoting as vigorously as possible the chance for the private or public economy to compete with each other. This is often a topic brought about regarding telecommunications or utilities, be they owned privately or publicly. We see in Canada, Australia, and in certain African as well as Asian countries that governmental regulation is needed to break apart monopolies and other such anti-liberal economic practices. But my concept goes further than this. It argues that regulation must take a cosmopolitan methodology in its formation so as to be globally competitive in itself (if we were to compare it with other similar regulations), not just economically, but socially, politically, and environmentally as well.

Beginning in 2007, many U.S. industry associations radically adjusted their national political lobbying strategies to support legislative enactment of social regulatory policy, policy that is primarily designed to address issues related to health, safety, and the environment. The regulations that are derived from such policy are generally limited to a specific issue, but they also have the power to regulate across industry boundaries. The normative justifications for environmental, health, and safety regulation often include the impact of negative externalities generated from a manufacturing process on employees and the natural environment and/or the existence of “information asymmetries” between business and the consumer concerning potentially harmful physical qualities associated with products. (Dudley, 2005: 33)

Taking the argument in this quote into consideration, especially its focus on regulating across boundaries might also have us thinking that business and government might also do well to incorporate boundary crossing elements in politics and economics. For instance, we can reason that accountability, transparency, anti-corruption, and blind accounting should be present in all bodies whether they are public or private (this of course changes if we take into consideration the Ministry of Defence or trade secrets: there are limits to transparency but these still have to be better defined).

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*Published as CESRAN Papers 5.

** Dr. Jean-Paul Gagnon is a social and political theorist with a Ph.D. in political science. He completed his doctorate at the Queensland University of Technology under the aegis of Australia’s prestigious Endeavour Award.

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