The Rise of the British Regulatory State:
Transcending the Privatization Debate
David Levi-Faur
and Sharon Gilad
Senior Research Fellow
Regulatory Institutions Network (RegNet)
Research School of Social Sciences
Australian National University
Canberra ACT 0200 AUSTRALIA
Tel +61 (0)2 6125 5465
Fax +61 (0)2 6125 4933
Home:+61(0)2 6248 5452
DPhil student
Nuffield College and the department of
politics and international relations,
University of Oxford
Tel +44 (0)1856 278561
Home +44 (0)1865 722091
Email: david.levi-faur@anu.edu.au
Email: sharon.gilad@nuf.ox.ac.uk
** A Revised Version will appear in Comparative Politics, October 2004 **
We are happy to acknowledge helpful comments and encouragement from Ian Bartle,
John Braithwaite, Margit Coen, Jan Froestad, Peter Grabosky, Jacint Jordana, Adam
Lefstein, Vibeke Nielsen, Robert (Reuven) Schwartz, Ezra Suleiman, Raanan
Sulitzeanu-Kenan, and the anonymous referees.
David Levi-Faur is a Senior Research Fellow at the RegNet programme of the
Research School of Social Science, Australian National University. He is also Senior
Lecturer at the University of Haifa from which he is currently on leave. He has held
research positions in the University of Oxford and the University of Manchester, and
visiting positions in the London School of Economics, the University of Amsterdam,
the University of Utrecht and the University of California (Berkeley). He published in
leading journals such as the Journal of Public Policy, the Journal of European Public
Policy, Review of International Relations, Review of International Political Economy,
Studies in Comparative International Development, European Journal of Political
Research and Comparative Political Studies. His professional interests include
comparative politics, comparative political economy and comparative public policy.
He currently works on research on the rise of the Regulatory State and Variations in
Regulatory Capitalism. Among his publications is an edited volume (together with
Jacint Jordana): The Politics of Regulation: Regulatory Reforms and Institutions in
the Age of Governance (Edward Elgar, 2004).
Sharon Gilad is a DPhil student at Nuffield College and the Department of Politics
and International Relations, University of Oxford. Her doctoral research inquires into
the role of consumer complaints and complaint handling in the regulation of the UK
retail investment sector. She previously worked as a governmental lawyer in the fields
of taxation and business regulation in Israel.
1
The Rise of the British Regulatory State: Transcending the Privatization Debate
Hood, Christopher, Colin Scott, Oliver James, George Jones and Tony Travers,
Regulation inside Government: Waste-Watchers, Quality Police and SleazeBusters, Oxford, Oxford University Press, 1999.
Power, Michael, The Audit Society: Rituals of Verification, Oxford, Oxford
University Press, 1999.
Moran, Michael, The British Regulatory State: High Modernism and Hyper
Innovation, Oxford, Oxford University Press, 2003.
For almost a century the regulatory state was one of the distinctive features of
‘American exceptionalism’: while other states regulated and while regulations were
always a major tool of the state, it was in the United States that regulation through
‘independent regulatory commissions’ became the most visible and celebrated tool of
governance. What the United States regulated, other countries often nationalized;
where the United States applied legalistic and formal modes of regulations, other
countries relied on persuasion, informal exchange, and consensual policy styles.1 The
regulatory state is no longer exclusively American.2 Major features of the regulatory
state, such as privatization and governance through autonomous regulatory agencies,
are a central feature of reforms in the European Union,3 Latin America,4 and East
Asia.5 At the same time, new techniques and instruments of regulation are being
explored, studied, and implemented in different policy arenas and with regard to
innumerable social and political issues.
While regulation is by no means new, the last two decades have undoubtedly been an
era of institutional regulatory innovations. Since the late 1980s, privatization has been
increasingly accompanied by the establishment of state agencies that exert regulatory
controls over business entities in fields as diverse as telecommunications, electricity,
water, post, media, pharmaceuticals, environment, food safety, occupational safety,
insurance, banking, and securities trading. These new entities, often known as
independent regulatory authorities,6 have been granted some measure of autonomy
2
from direct political control, allegedly in an effort to increase ‘policy credibility’ visà-vis domestic and international capital.7
Although privatization and institutionally autonomous regulatory agencies are the
most visible and celebrated aspects of the regulatory state, our review emphasizes two
further characteristics of the new regulatory state which, together with privatization
and autonomous regulatory agencies, have transformed the way capitalism is
governed: first, the formalization and codification of what was – most probably not
only in Britain – an informal way of applying law in general and regulation in
particular;8 and second, the proliferation of new mechanisms and techniques of
regulation, meta-regulation, and enforced self-regulation.9 These two additional
characteristics make for a broader conception of the regulatory state than is usually
found in the literature. Most important, the emphasis on meta-regulation and enforced
self-regulation suggests the importance of going beyond the notion of ‘regulatory
state’ and introducing the notion of ‘regulatory society’ to explain the overall change
in governance structures.10
This is altogether puzzling since amidst the rise of neo-liberalism, the prominence of
the American deregulation movement, and the teleology of privatization, one might
have expected a retreat of the state and a relaxation of rules and regulation. Yet, as the
books under review demonstrate, liberalization and managerial reforms that were
supposed to ‘hollow out the state’ were intimately coupled with the rise of multilayered regulatory institutions and formalization of codes of behaviour at the
corporate, state, and international levels. In contrast to rational choice explanations of
increased formalization by reference to the interest of privatized sectors in policy
stability, they show that the increase in and formalization of regulation were not
limited to sectors that underwent privatization and managerial reforms. The debate
seems at last to be moving beyond privatization and interest-driven behaviour. Our
aim is to make some sense of these developments and to suggest an interpretive
framework that links the rise of regulation with sociological and cultural changes.
3
The three books reviewed here are empirically focused on Britain. However, given
both the importance of the British case and the theoretical frameworks that the authors
develop, their analysis should be applicable and highly relevant elsewhere. Michael
Moran’s The British Regulatory State emphasizes the destruction of an anachronistic
governance system that was based on trust and tacit agreements between business and
governmental elites and its replacement by a modern system of regulation.
Christopher Hood, Colin Scott, Oliver James, George Jones and Tony Travers’s
Regulation inside Government focuses on the growth of formal regulatory
mechanisms within government. The authors identify several important modes of
control and account for the variance in their spread by introducing the notion of the
‘relational distance’ between regulators and regulatees. Finally, Michael Power’s The
Audit Society focuses on the explosion of auditing and on the ‘auditization’ of British
society. The British—and, Power believes, not only the British—are more concerned
with the monitoring of services than with their actual improvement. Rituals of
regulatory verifications serve as ‘empty assurances’ for a public who fail to trust
professionals’ judgement.
This suggests that behind the proliferation and
formalization of regulation stands a society that prefers formal rules and regulations to
interpersonal trust and individual discretion.
I. Moran and the Rise of the British Regulatory State
For the first two-thirds of the 20th century, Britain, according to Moran, was the most
stable and least innovative country in the capitalist world. Once a byword for
stagnation, since the 1980s Britain has been a pioneer of institutional and policy
change.11 Moran deals with three major questions regarding the transformation of
Britain: Why did this transformation happen? What did it amount to? What were its
consequences? Moran describes four prevalent scholarly images of the regulatory
state: as an ’American State’,12 as a ‘European Madisonian State’,13 as a ‘Smart
State’,14 and as a ‘Risk State’.15 As an alternative, he presents a ‘British’ image of the
regulatory state: a state that is grounded uniquely in British history and culture or in
British ‘exceptionalism’. Moran fuses economic and cultural perspectives in order to
produce a political account of the change. Transformation is said to be driven by the
4
conjunction of the economic crisis in the 1970s, which revealed the long-term decline
of the British economy, and ‘a deep institutional crisis’ of British ‘club government’.16
Moran’s focus is on the institutional crisis of ‘club government’, which therefore gets
special attention here.
Nothing encapsulated club government quite so perfectly, Moran tells us, as the
British system of self-regulation:
Britain is, in Baggott’s words, ‘a haven for self-regulation’. In this haven
self-regulation...has been uniquely informal. Specialized regulators have
been rare; instead, regulation has commonly been done as a kind of byproduct of market activity. …the British have been reluctant to codify rules
in details, and correspondingly reliant on trust and implicit understandings.
Finally, self-regulation in Britain has taken an unusual legal form: private
associations, often entirely unknown to the law, have been central to many of
the most important systems of self-regulation: and the law itself has
historically played no role, or only a residual one, in the life of self-regulatory
systems.17
Club government was expressed by oligarchic, informal, and secretive operations in
the ‘overlapping spheres of self-regulation and the vast, labyrinthine world of quasigovernment’. 18 It is a deliberate anachronism of a pre-democratic order that served to
protect the British elite from democratic pressures. This was made possible by a
combination of the British ideology of self-regulation and the public’s deference to
business and governmental elites. The old ‘Victorian’ regulatory state, which was a
response to industrialization, was intimately embedded in the arrangements of club
government.
Before the industrial revolution, writes Moran, the economy was certainly regulated,
but it is not sensible to speak about a ‘regulatory state’ since bureaucratic institutions
were weak and scattered. The growth of the state and the institutionalization of public
and private regulatory agencies are all products of the industrial revolution and the
Victorian era. Between 1833 and 1850, British politicians created various new
institutions to govern social and economic life, including: ‘the Factory Inspectors; the
Poor Law Commissioners; the Prison Inspectorate; the Railway Board; the Mining
Inspectorate; the Lunacy Commission; the General Board of Health; the Merchant
5
Marine Department; and the Charity Commission’.19 The great Victorian bursts of
regulatory institution-building also encompassed some innovation in the selfregulatory system, such as the creation of modern patterns of self-governing
professionalism and self-government in the critical financial markets.20 Moran calls
these innovations in governance a ‘regulatory state’ because they created (or
reorganized) public institutions as regulatory bodies. At the same time, these
institutions were shaped by particularly cooperative relationships between regulators
and regulatee, and between public and private regulation.21 Moran further implies that
this cooperative character resulted in systematic responsiveness to insiders’ and elite
interests.
As mentioned above, Moran’s focus is on the transformation of that system of
governance. The club system was largely shaped by the principle of self-regulation in
two domains: the professions and the City of London. It was in the professions and in
the City that ‘a dominant British ideology of regulation was hammered out, and was
then diffused throughout much of the twentieth century to other parts of the British
state and economy’.22 The crisis of club government is also a crisis of self-regulation,
and Moran examines, in detail and in a masterly way, changes in the governance of
the City, in the professions (lawyers, accountants, doctors, teachers, higher education)
and even in a leisure sphere such as sport.
As these domains had symbolic
importance, their transformation had important effects: ‘A whole way of thinking
instinctively about regulation, and a whole way of intellectualizing regulatory activity,
was called into question.’23
The transformation of this club government since the 1980s resulted in a system of
governance of ‘increasing institutional formality and hierarchy, where the authority of
public institutions has been reinforced…by substantial fresh investment in
bureaucratic resources to ensure compliance’.24 This new hierarchical system is at the
same time made more transparent and open ‘by the provision of systematic
information accessible both to insiders and outsiders, and by reporting and control
mechanisms that offer the chance of public control’ (albeit a few islands of closed
6
communities immune to external control remain).25
This allows and encourages
higher levels of politicization.
In contrast to images of withdrawal and hollowing-out of the state, with a transfer of
power to international agencies and domestic actors, the change described by Moran is
one of a vigorous regulatory state whose central ambitions have not diminished. On
the contrary, it uses command and control regulation to colonize new areas, develop
new agencies and reform old ones.26 The tools it applies to achieve these ambitions
are entirely congruent with ‘high modernism’: that is, standardization, central control,
and synoptic legibility to the centre.27 Yet, as elaborated later, these innovations and
reforms amount, according to Moran, to an incomplete reconciliation with modern
conditions of globalization.28
II. A Regulatory State within the State: on Waste-Watchers, Quality Policy and
Sleaze-Busters
While the rise of the regulatory state in Britain, as studied by Moran, is something that
happens between state and society, Hood and his colleagues examine it within the
British government. The context of their study is the managerial reforms of the 1980s
and 1990s (the so called New Public Management), which promoted decentralization
and managerial autonomy. The authors study the effects of these reforms on the
modes of control and the relationships between regulators and regulatees within
government. This they do by systematic comparison of changes in the modes of
control over central government, local government, prisons, schools and EU
overseeing of the UK public sector.
What may have been described by others or in the past as ‘administration’ is brought
into the framework of regulatory theory. Just as business firms are exposed to a set of
different regulators – auditors, inspectors, licensing bodies and competition authorities
–– so are public organizations. A collection of waste-watchers, quality police, sleaze-
7
busters, and the like exert their powers on local authorities, schools, health suppliers,
regulatory agencies, prisons, and executive agencies. Some of these overseeing
organizations are common to the public and private sectors, but many are specific to
public bodies in the form of distinctive systems of audit, grievance handling, standard
setting, inspection, and evaluation.
The overall scope and scale of regulation within the British government is perplexing
and it is certainly a growth industry. The British government, they argue, expends
more effort on regulating itself than it does on regulating the much-discussed
privatized utilities They count 135 separate regulators in total, ‘directly employing
around 14,000 staff, and costing £770m to run in 1995 – just over 30p in every £100
the UK government spent…’.29 This is a conservative estimate of change that was
ignored by others. And its impact is even larger if one considers the massive
compliance costs for the regulated agencies. For example, inspection of secondary
schools has been estimated to cost each school around £20,000 in expenses directly
connected to the inspection.30 Moreover, ‘regulators of government for the most part
made no attempt to assess the costs to their clients of complying with their
demands’.31 In an era when governments aspired to be leaner and meaner in the name
of efficiency, regulators within government approximately doubled their budget. From
the 1980s the British government substantially reduced the number of its direct
employees – with more than one civil servant in four disappearing from the payroll
between 1976 and 1996. Yet total staffing in public sector regulatory bodies went
dramatically in the other direction, with an estimated growth of 90% between 1976
and 1995.32 It might well be that this growth reflects their role as an instrument chosen
for making the rest of the public service leaner and meaner. Indeed, if the patterns of
regulatory growth and civil service downsizing had continued at the 1975-1995 rate
indefinitely, the authors estimate that late in this decade the civil service would have
had more than two regulators for every ‘doer’ and over ten regulatory organizations
for every major government department.33
The authors examine the above dynamic against four ideal types of controls: oversight
(command and control techniques), mutuality (informal peer control), competition
8
(use of internal markets, comparative tables, lateral entry, etc.), and contrived
randomness (control through unpredictable processes or pay-offs). They demonstrate
that these ‘ideal’ forms of control are in reality mixed together in several ‘hybrids of
controls’ and suggest that, within government, control shifted from predominant
reliance on informal peer control to reliance on a particular popular hybrid that
combined formal oversight and competition.
Still, the degree of codification and formalization varies across central policy
departments (where control by mutuality is still the main source of control), executive
agencies, and the margins of government (where formalization of rules, group division
between regulators and regulatees, and the use of comparative indicators are more
accentuated). Moreover, while in the vicinity of Whitehall the increase in formal
regulation co-exists with (and compensates for) higher managerial autonomy, at the
margin of the state it is combined with detailed central micro-management of local
service delivery. Hood and his colleagues, following a study by Grabosky and
Braithwaite,34 relate this variance in regulatory modes to different levels of relational
distance, that is, to the scope, frequency, and length of interaction between regulators
and regulatees.35 Higher formality of regulation at the margins of the state is
associated with higher relational distance, that is, the difference in professional and
career backgrounds of regulators and regulatees and infrequent regulator-regulatee
contact.36 The authors’ explanatory framework shifts the discussion from actors’
rationality and interests to the socio-cultural aspects of regulators’ and regulatees’
relationships.
The contribution of the book goes beyond applying socio-cultural lenses to an
examination of the relationship between regulators and regulatees. Its interpretation
and exploration of within-government control in terms of regulation opens a new
agenda for public administration research. In addition, it invites us to broaden our
thinking about regulation beyond the narrow contexts of privatization and
government-business relationships. Last, by showing variance in regulation of
different sectors within the same country (Britain), the book questions the simplistic
9
tendencies to think of regulation in terms of coherent national styles and of overarching and global trends.
III. The Audit Explosion and the Regulatory State
Michael Power’s The Audit Society is an intriguing exploration of the dynamics of
public control over business through one particular instrument of regulation –
auditing. During the late 1980s and early 1990s, he observes, the practice and
terminology of auditing began to be used in Britain with growing frequency and in a
wide variety of contexts. Financial auditing, the traditional regulation of private
companies’ accounting by external financial auditors, came to acquire new forms and
vigour. Among the emerging new forms of auditing were forensic audit, data audit,
intellectual property audit, medical audit, teaching audit, and technology audit.
Auditing won a degree of stability and legitimacy that institutionalized it as a major
tool of governance well beyond the control of business: ’increasing numbers of
individuals and organizations found themselves subject to a new or more intensive
accounting and audit requirement… and a formalized and detailed checking up on
what they do.’37 The augmentation of auditing practices creates the ‘audit society’,
’the extreme case of checking gone wild, of ritualized practices of verification whose
technical efficacy is less significant than their role in the production of organizational
legitimacy…’.38.
Building on his observations about the growing importance of auditing, Power sets
out to explore the following questions: ‘How and why did auditing become so
attractive to so many diverse groups? ... How can auditing be such a robust policy tool
when it often seems to fail so spectacularly? And how do we begin to understand a
society which seems to invest so heavily in such an instrument of regulation?’39 What
drives the ‘audit explosion’? He sees it as the result of the 1980s and 1990s reforms in
governance, which shared the incompatible ideals of small and non-intervening
government on the one hand and accountability and transparency of public services on
the other. Small government entailed limiting state regulation, while the quest for
accountability and transparency required augmentation of control mechanisms. The
result was reliance on a combination of state regulation and various forms of self-
10
regulation and auditing (which came to be understood as the suitable and legitimate
mechanism for ensuring accountability). As the state became increasingly and
explicitly committed to an indirect supervisory role, audit and accounting practices
assumed a decisive function.40 Accordingly, auditing became a necessary mediator
between systems of self-control and state systems of regulation.41 Power argues that
two developments are occurring simultaneously: reallocation of regulatory functions
down to auditors and corporations, and a drift from an inspection to an audit style of
regulation. Inspection focuses on the processes and outcomes of regulatees’ activity,
while audit is limited to assessing the robustness of internal corporate control systems
over these processes and outcomes. As a result, both state regulation and auditing
amount to assurance that corporate control systems adhere to procedural auditing
provisions. The danger, which Power highlights, is that this adherence may imply
nothing about the actual quality of the services thereby provided to the public.
The explosion of auditing is not just a response to the problems of corporate control in
an era of state contraction. Power perceives it as embodying also a cultural trait of a
society that favours technocratic procedures (as a tool of providing assurance) over
individual professional judgement.42
Surveillance via auditing provides false
assurance and comfort, with every regulatory failure resulting in more formalization
and more auditing rather than deep reflection on the sources of failure. All in all,
Power’s account is thought-provoking and, although he provides no systematic
empirical evidence to validate the relationship between change in public attitude and
formalization of audit, this weakness is ameliorated by the book’s theoretical strength.
IV. Whither the British Regulatory State?
All three books concur that British governance system is changing. But what exactly
is changing? And how are these changes reflected in the rise of regulatory
mechanisms? Four characteristics of the change are particularly important. First is a
new division of labour between state and society with regard to the role and functions
of the state and consequently increasing reliance of the state on rule-making rather
11
than spending. Second is a new division of labour inside the executive branch of the
state. This is manifested largely in the increasing delegation of authority to
institutionally autonomous regulatory agencies and to separate ‘next steps’ delivery
agencies. Third is change in the relations between regulators and regulated, expressed
in increasing formalization of rules and codification of responsibilities in both public
and private spheres. Fourth is the proliferation of technologies of regulation, most
notably self-regulation, meta-regulation, and enforced self-regulation.43 We suggest
that these four characteristics capture best the essence of the rise of the British
regulatory state.44
Let us start with the new division between state and society (or between governmental
and non-governmental actors). This is the most obvious and familiar aspect of the
neo-liberal agenda and is closely related to policies of ownership privatization. It
reflects the popular metaphor of a steering (leading, thinking, directing, guiding) role
for the state and a rowing (enterprising, service-provision) role for society and
business.45 Consequently, the regulatory state is characterized by a shift in the mode of
control from taxing and spending to rule-making, with the caveat that this should be
interpreted as a shift in emphasis rather than the relinquishing of taxing and spending
in favour of rule-making.46 Second, the regulatory state represents a new ideal of
division of labour within the state. Policy-making, regulation, and service-delivery
activities that were unified constitutionally under ministerial control are now shared
and divided between different organizations. Delegation of authority to regulators
(inside and outside the state) seems to be one of the manifestations of the change in
governance in general and of the rise of the regulatory state in particular:
‘An
increased willingness to delegate important policy-making powers to technocratic
bodies enjoying considerable political independence’ is a distinctive feature of the
changing nature of policy-making since the 1980s.47 The new agencies seem to be not
only the most visible aspect of the regulatory state but also one of the popular subjects
of research.
Third, changes in relations between regulators and regulatees are manifested in an
increase in the formalization and codification of rules and responsibilities in public
12
and private spheres. Moran and Hood et al. paint a similar picture of British regulation
shifting from informal peer control to predominantly command and control-type
regulation. Power offers a similar narrative of auditing procedures becoming
increasingly formalized, offering less ad hoc discretion to individual auditors in their
relationship with auditees. It is unclear, though, how far this formalization goes
beyond the policy level and what its effects are in practice. Moran generally assumes
that changes at the legal and institutional levels reflect changes in enforcement. Yet it
is plausible that at the implementation level there are, as before, negotiations and
flexible cooperation between regulators and regulatees, in spite of higher rule
formalization. Regulators depend to some degree on regulatees’ information,
knowledge, and personnel, and this dependency invites informal cooperation in the
shadow of formalization. In addition, regulators may be forward- rather than
backward-looking and thus may prefer persuasion to the use of sanctions. Indeed,
even in the context of local government regulation by central government, one of the
most conflictual areas explored by Hood and his colleagues, the authors note a
persistence of cooperative relations. ‘On paper, oversight regimes could seem formal
and cold, but the way they were applied could involve mutually supportive
relationships.’48 Such cooperative relationships are congruent with Grabosky and
Braithwaite’s study of 96 regulatory agencies in Australia.49 They are also compatible
with Blau’s ethnography of a New Deal enforcement agency’s relationship with its
regulated firms, with Selznick’s study of the US TVA’s relationship with its
environment and with the ubiquitous American literature on regulatory capture.50
Hence, this suggests that the formalization of British regulation may be directed
towards the assurance of outsiders – the public – while flexible cooperation between
regulators and regulatees may remain indispensable given their interdependence.
The fourth characteristic of the rise of the regulatory state is the proliferation of
technologies of regulation, self-regulation, meta-regulation, and enforced selfregulation. The effectiveness of regulatory regimes relies on the effectiveness not just
of the inspectors: it relies also on a wider range of actors, who are empowered by new
regulatory mechanisms and technologies largely in the shadow of the state. Some of
13
these mechanisms are captured in the reviewed books, but for others we turn to the
socio-legal literature on regulation.
Three types of non-state mechanisms of regulation may be discussed. The first is
‘gatekeepers’, that is, private parties who are in a position to counter misconduct by
withholding their cooperation from a wrongdoer.51 These private parties can be
employees of the corporations or professional advisers who have the autonomy and
the power to object to rule-breaking. The autonomy of such actors can be strengthened
by legislation that will allow them some leverage to avoid loss of contract or
employment (if they are employees of a corporation that does not act according to the
rules). 52 A second mechanism of improving public control without over-reliance on
state regulators is that of enforced self-regulation.53 Here, public controls are
enhanced by public requirements from corporations and other organizations to act
according to transparent and self-defined rules and standards and to self-monitor the
implementation of these standards.
54
Citizens’ and consumers’ charters and other
codes of best practice are classic examples. Moran’s account of the decline of ‘club
government’ and self-regulation reveals that he similarly distinguishes between forms
of self-regulation. What is declining is voluntary self-regulation, in which the state has
a marginal role. Instead, forms of state-sponsored or enforced self-regulation are being
developed. A third mechanism for public control which is closely related to enforced
self-regulation is meta-regulation, or what Power terms the ‘audit style of regulation’.
Here public control is enhanced by the institutionalization of ‘controls of controls’.
This is the monitoring of the self-monitoring techniques of corporations as to their
employees’ compliance with socially valued standards of behaviour. According to
Bronwen Morgan, the notion of meta-regulation captures a desire or tendency ‘to
think reflexively about regulation, such that rather than regulating social and
individual action directly, the process of regulation itself becomes regulated’.55
The notions of enforced self-regulation and of meta-regulation reflect a growing
recognition in socio-legal literature that systems of law enforcement that are based on
responsive regulation are more effective and socially desired.56 But note Power’s
reservations when he suggests that ‘control of control’ (i.e. ‘audit style of regulation’)
14
may result in regulatory disengagement from outcomes in favour of hollow approval
of system controls.
It should also be noted that systems of internal controls that were always part of the
work of organizations are increasingly coming under public scrutiny, most notably the
scrutiny of the state. While the state has no monopoly over regulatory power, it is still
a major pillar of the new order and in the creation and proliferation of non-state
mechanisms of control.57 From our point of view, therefore, the debate on the decline
of the state seems to miss the important ways that public interest is reasserted in its
shadow. The mechanisms of regulation and compliance that were noted here provide a
multi-layered system of regulatory controls that for better or worse is one of the major
characteristics of the regulatory state.58 While each of these mechanisms may have
numerous flaws, the effectiveness and the performance of regulatory regimes rely on
all of them together. While these various mechanisms of self-regulation are often
discarded as ineffective, we suggest that ‘self-regulation’ is a double-edged sword.
Self-regulation may act as a buffer against public control, but it may also operate as a
tool of public control via internalization of public norms or responsiveness to concrete
public pressures and demands. Accordingly, we should move beyond the dichotomy
of self-regulation and public regulation towards a study of the interaction of various
forms of complementary controls.
V. Why the Regulatory State?
The British regulatory state seems to be characterized by higher investment in
oversight regulation (compounded with performance measurement), enforced selfregulation, formalization (of rules and regulatory institutions), and juridification. Why
did regulation and its formalization generally increase during the 1980s and 1990s?
None of the reviewed books answers this question in full, although each offers some
possible clues.59 One way to explain the change is to argue that central government
politicians and bureaucrats compensated for the risk associated with loss of control
resulting from managerial autonomy granted under managerial reforms, delegation
and privatization, by reasserting control via regulation. Similarly, it is arguable that
15
regulation of liberalized industries increased as a central response to the incentives
created for corporations by heightened competition to cut costs, so potentially
undermining quality. However, these explanations fail to deal with the increase and
formalization of regulation that Hood and his colleagues observed in sectors, such as
education, local government, and non-privatized prisons, where delegation and
managerialism were minimal. In these sectors what they encountered was not a
‘mirror image’ of augmenting regulation compensating for managerial autonomy, but
a pure increase in regulation alongside lower levels of managerial discretion.
Similarly, the audit society as described by Power goes well beyond a response to the
specific demands of new public management reforms.
Another possible answer, to be only tentatively explored here, focuses on sociocultural explanations: the relationship between trust, relational distance and the rise of
regulation. Defining trust is not an easy task and beyond the scope of this paper. 60 In
modern, complex societies, trust and oversight are to some extent exchangeable.61
Where trust is present, oversight regulation is perceived as redundant, and vice versa.
The importance of trust increases, therefore, where discretion and freedom prevail: ’if
other people’s actions were heavily constrained, the role of trust in governing our
decisions would be proportionately smaller, for the more limited people’s freedom,
the more restricted the field of actions in which we are required to guess ex ante the
probability of their performing them…trust becomes salient for our decisions and
actions the larger the feasible set of alternatives open to others.’62
Two hypotheses may be derived from the reviewed books about the relationship
between relational distance, trust and regulation in Britain and elsewhere. First, the
increase in oversight regulation and in enforced self-regulation developed as a
substitute for the erosion of trust between private consumers and service providers
(requiring third-party regulation) or increased relational distance between regulators
and regulatees (resulting in distrust of various forms of self-regulation). Second,
formalization of regulation took place because there was an erosion of trust in the
ability of informal regulatory institutions to provide public assurance. Hence,
16
formalization was a tool for the restoration of public trust in the effectiveness of these
institutions.
Moran relates the increase in regulation and its formality to an objective social change
– the destruction of club government (which he equates with the ‘old boys club’) –
and to a cultural rift in the British public’s subjective deference to the elite. However,
the association between the sociological change and the cultural change is unclear
from his analysis. Hood and his colleagues link variance in regulatory modes and
formalization to different levels of relational distance, associating higher levels of
relational distance with more formalized within-government regulation. What is the
relationship between relational distance and trust? We suggest that the two may be
closely related. Relational distance measures the objective reality of social
relationships rather than a subjective expectation. It is reasonable to expect, as
Gambetta does, that subjective trust is a by-product of objective familiarity (of low
relational distance) and a common value system that allows reliance on compliance
rather than deterrence systems of law enforcement. Hood and his colleagues seem to
assume such a connection when explaining that ’relational distance factors would lead
formality…to be highest at the boundaries of public administration cultures where
trust might be expected to be lowest…’ (our emphasis).63
Regulation inside
Government offers some empirical substantiation for the case that higher relational
distance results in more formalized regulation. We suggest that decline in interpersonal trust may be the mechanism through which higher relational distance
between regulators and regulatees results in formalization. But, as further discussed
below, decline in trust is not just an outcome of greater relational distance; it may also
be its cause. In the executive agencies around Whitehall, it seems plausible to suggest
a causal relationship between increase in relational distance resulting in decline in
trust and increase in regulation. The evidence presented suggests that agencification
and lateral entry to the civil service weakened mutual social norms between regulators
and regulatees and thus led to an increase in relational distance. The explanations that
relate increasing regulation and formalization to loss of control and to a socio-cultural
change seem to work in tandem.
17
But, in the boundaries of the state – such as local government and school regulation –
the state did not lose control, but centralized a control it never possessed. The increase
in relational distance between regulators and regulatees was intentionally constructed
as a tool of centralization. Regulatory bodies were designed so as to base their
recruitment from outside the regulated sector in order to distance them from their
regulatees. This, for instance, was the idea behind Ofsted’s contracted-out school
inspection and the inclusion of lay people in bodies inspecting prisons. In some cases,
the reason for designing a higher relational distance between regulators and regulatees
seems to accord with the second hypothesis above – that is, as means of restoring
public trust in regulatory institutions.64 For instance, ‘a leading inspector of fire
services said lay inspectors had been introduced for “political reasons”: “they had to
appear not subject to service capture”…’ (our emphasis).65 Similarly, Power explains
audit formalization as a means of maintaining public trust in audit as a system of
regulation, in spite of recurrent scandals. Therefore, if this interpretation is correct,
declining (or apparently declining) public trust in institutions resulted in political
construction of higher relational distance between regulators and regulatees, resulting
in adversarial relationships.66
This explains how regulation and audit developed and became formalized over time as
a response to recurrent regulatory failures and adverse public opinion. What is left
unexplained in our formulation is Moran’s observation that the major changes in
regulation occurred after the economic crisis of the 1970s. If this is true, why is it that
scandals and regulatory failures prior to the 1970s resulted in lesser regulatory
reforms? This puzzle, which remains unsolved by the above analysis, takes us to
Power’s audit society.
Power ascribes the audit explosion in the 1980s and 1990s to a change in society’s
risk toleration and the implications of this change for a general inclination to rely on
rule-bound mechanisms of surveillance rather than on individual discretion. His
argument conveys an understanding of change according to which auditing signifies a
distinctive phase in the development of capitalist societies as they grapple with the
production of risks, the erosion of social trust, fiscal crises, and the need for public
18
control.67 Societies that are less tolerant of risk and are unable to assess it or to
construct a rational response seek comfort in the process of auditing, which they find
more trustworthy than business and government. The same may be said of formalized
regulation more generally. Paradoxically, trust withdrawn from some people is placed
in others, or rather in auditing and regulation as technocratic systems of knowledge.
Trust thus lets itself in through the back door. As argued above, this is indeed a
potentially fertile theory that requires systematic empirical analysis.
VI. The Social and Political Pathologies of the Regulatory State
While earlier accounts of the rise of the regulatory state focused on problems of
delegation and the advantages and disadvantages of regulation compared with public
ownership, the books under review extend the criteria for assessment well beyond the
privatization debate. Moran asks to what extent the new regulatory state in Britain is a
manifestation of progress, policy learning, and ‘reconciliation with modernity’. The
British regulatory state is for him a creature of modernity in the sense that ’the state
turned to the reconstruction of institutions and economic practices, with the aim of
raising competitiveness against global competition’.68 The second dimension of this
modernization project is the advance in the destruction of club government and its
substitution by a hierarchical and more transparent apparatus, which is open to the
influence of diverse groups. For instance, in the context of regulation of privatized
industries, Moran claims: ’By any of the standards by which we might expect to judge
economic government in liberal democracy – accountability, transparency, plurality of
representation – [the current regime is] …immensely superior…’.69 As to this second
dimension, it is still an open question whether nationalized industries and other
governance systems from the post-war period were more elite-oriented and closed
than the meritocratic system of the 1980s and the 1990s.
Alongside his optimistic evaluation of the change, Moran claims that the outcomes
resulted also in constant instability. Innovation in the regulatory field is portrayed as
‘hyper-innovation’, a ‘frenetic selection of new institutional modes, and their equally
19
frenetic replacement by alternatives’.70 This might explain why advances in the tools
and theory of governance that should improve the capacity of the state to govern result
too often in scandals and policy catastrophes. Bringing globalization into the picture
(in a rather limited account), he suggests it may frustrate at least some of the
modernization ambitions of the British government. In a global world ’the state
remains a critically important actor, but its importance lies less in traditional
command than in the contingent ability to operate in globally constituted networks’.71
He is therefore doubtful that the state has any longer the capacities – either the policy
competence or the symbolic capital – to effectively realize its ambitions.72
Hood and his colleagues focus on three major problems of the patchy system of
regulation within government. First, they point to the lack of an overall rationale of
regulation inside government. As was elaborated above, the number of regulators and
the costs imposed by regulation inside government are increasing. What these
proliferating regulatory bodies critically lack are common goals and coordination,
each striving for different and often inconsistent aims. The authors found that there is
no single focal point for the 130-plus regulatory organizations, no overall ‘policy
community’ for regulation in government, and no central point in Whitehall capable
of, or responsible for, overseeing, or gauging its size and growth.73 This results in
failure to exchange knowledge and expertise with other agencies, and most probably
in inefficient and costly controls too. Second is the problem of double standards in the
strictness of regulatory controls depending on the relational distance between
regulators and regulatees. Third, Regulation inside Government is highly critical of
the accountability of the ‘regulators of regulators’. ‘[D]o as I say, not as I do’ seems
to be the (double) standard in the work of regulators within the state.74 The problem of
who regulates the regulators thereby arises as a problem of second-order regulation.
Unlike the foregoing discussion, which focused on the regulatory state, Power’s
attention is focused on the ‘regulatory society’ and its pathologies.
Instead of
providing a critique and an arena for reflection, audit produces comfort and
reassurance, and consequently reaffirms the existing order. As a result, not only does
auditing fail to provide substantial corporate accountability, it also overlays public
20
deliberation with obscure professional discourse. The audit society, and by implication
the regulatory society, represents a case of ‘checking gone wild’.75 Checking is useful
and unavoidable, argues Power, but a balance should be sought between surveillance
and trust. From Power’s point of view, the audit society has gone too far in its reliance
on surveillance rather than trust : ‘Could one imagine a society, or even a group of
people, where nothing was trusted and where explicit checking and monitoring were
more or less constant?... Having said this, could one imagine a society without any
checking at all, a society of pure trust where all accounts are taken at face value? This
is equally difficult to conceptualize. Where expectations are disappointed is it not
simply naïve to carry on as before?... What we need to decide as individuals,
organizations, and societies, is how to combine checking and trusting.’76
This malaise goes beyond the economic costs of too much checking and costly
regulation as it presents a form of ‘learned ignorance’. Interestingly, the auditing
explosion is not to be interpreted as evidence of its success as an instrument of public
control. It is simply beyond the technical capacity of the auditing process to provide
what it programmatically promises, argues Power. Certain limits, most obviously the
economic costs of auditing, constrain the auditors’ ability to protect stakeholders from
abuse. Unfortunately, the limits of auditing are hardly transparent to the stakeholders
and the public at large. Power goes on to question the foundations of auditing as a
system of knowledge. He argues that there is no external measure to assess whether an
audit provides a suitable level of assurance other than an opinion based on the internal
logic of audit as a discipline. Audit’s limitations are regularly revealed every few
years following scandals. Yet the responses of auditors and politicians to adverse
public opinion are manifested not only in corrections of actual holes in the system but
also in increasing limitations on the discretion of auditors by means of formalized
procedures. In this way, despite persistent regulatory failures, public trust in audit as a
system of knowledge is preserved and failure is particularized as ‘bad auditing’. This
further consolidates a situation in which state regulators and auditors have become a
chain of hollow approval of lower-level auditors’ opinion that the system is
maintaining adequate levels of system control safeguards, as defined by the
formalized audit procedures:
21
Audit cloaks its fundamental epistemological obscurity in a wide range of
procedures and routines. From time to time audit practitioners have worried
about the erosion of judgment and the imposition of too much structure on
the audit process, but the history of financial auditing and the recent history
of other forms of audit suggests that codification and formalization is
continuing…77
All in all, while all authors seem to see some valuable advances following the changes
in the British governance system, particularly in the way regulatory controls are
exerted, they point to a set of problems or pathologies of the regulatory state. Moran
emphasizes the limits of command and control regulation in the context of
globalization and Europeanization. Hood and his colleagues focus on problems in the
coordination of the system of regulatory control inside government and the prevalence
of double standards depending on the relational distance between regulators and
regulatees. Finally, Power emphasizes the problem of distrust that ‘spreads suspicion’,
resulting in a focus on process instead of substance, and consequently in limitations
on valuable professional discretion.
VII. The Regulatory State beyond Britain: A Challenge for Comparativists
The reviewed books agree in their understanding of the rise of the regulatory state as a
phenomenon that goes beyond privatization, beyond the creation of new state
agencies, and beyond the subsequent increase in the extent of delegation. They also
concur in their insight that regulation is being increasingly codified and formalized,
and that pure forms of control via informal rules are on the retreat. Our discussion
emphasized the interrelated and overlapping regimes: international organizations’
regulation of national governments, inside-government regulation, government
regulation of business, enforced-self regulation and meta-regulation. Regulation is
thereby conceived as a system of public control, which is carried out by private as well
as public actors on the national and international levels. These regulatory arenas are
22
connected through mechanisms of meta-regulation and enforced self-regulation, and
reflect social, economic and political change. Regulation in this wider formulation
may become one of the central objects of inquiry of social science.78
To what extent can these observations about the British regulatory state be
generalized? To what extent can the four characteristics of the regulatory state be
found in other countries? It is clear to us that privatization and regulatory reforms are
general phenomena. There is widespread diffusion of privatization across the world
(with a notable exception of the Arab world).79
Beyond privatization we find sweeping diffusion of autonomous regulatory agencies.
A study of the rise of regulatory institutions in the telecoms and electricity industries
found that by the end of 2002 at least 120 countries had established new regulatory
authorities in the telecoms industry and 70 in electricity. The popularity of these
institutions might be demonstrated more clearly when these numbers are compared
with the relatively scarcity of these institutions up to 1989. By that year only 11
countries had regulatory authorities in telecoms and only five in electricity.80 A
summary picture of data on the diffusion of these institutions across 36 countries and
7 different sectors is presented in the Graph.81 This institutional innovation, which is
so central to the argument about the rise of the regulatory state, seems to be more and
more prevalent. From 28 agencies in 1986 (fewer than one agency per country), by
2002 the number had increased almost sixfold to 164. On average these 36 countries
have 4.5 agencies in the 7 sectors studied.
Yet we know little about the increase in the degree of formalization and about the
proliferation of regulatory technologies. Some country and arena studies suggest that
this is hardly unique to Britain. However, unfortunately neither do we have the
quantitative studies that examine various manifestations of regulatory techniques
beyond one country, sector or arena, nor are we familiar with country studies that are
equivalent in scope and insight to what the three reviewed books say about Britain.82
In other words, the extent to which the British regulatory state is replicated and
diffused elsewhere is still an open question, in respect of at least some of the
23
characteristics that we have mentioned. More country studies on the regulatory state,
preferably of a comparative nature, are needed (although, given our review and given
the increasing venues for contagious diffusion, we would be surprised if Britain is
exceptional). Indeed, it seems to us as suggested by Moran that it is indeed a pioneer
of change, though the extent to which these changes serve the same purpose in other
countries is doubtful.
We make three suggestions for future research on the regulatory state. The first is to
move beyond disciplinary walls. What we know about the various facets of the rise of
regulation is confined by disciplinary boundaries that need to be lowered. We call for
multi-disciplinary approaches to the study of regulation, not because other disciplines
offer better insights about politics but because our understanding of the political
process might improve if we grasp the nature of regulatory change in wider contexts
than usually suggested. Specifically, while many attempts to breach disciplinary walls
have been aimed at the economics of regulation and Law and Economics, we suggest
that the socio-legal literature on regulation offers insights and lessons that are underutilized by political scientists. Second, we also suggest moving beyond the state. This
is not because the state is not an important actor; indeed, we hold that the state is still
an important pillar of the new governance system. Finally, we suggest that exploring
the rise of a regulatory society, alongside a regulatory state, might be useful as a future
research agenda. Rather than studying each on its own, we suggest looking for ways in
which the regulatory society and the regulatory state transform and constitute one
another.
24
200
150
100
50
0
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
No of Regulatory Authorties
Graph1: the Diffusion of "Independent Regulatory Agencies"
(36 coutnries, 7 sectors)
Total number of agencies
peryear
25
Notes
1
For Britain, see, Keith Hawkins, Environment and Enforcement: Regulation and the
Social Definition of Pollution (Oxford, Clarendon Press, 1984); David Vogel,
National Styles of Regulation (Ithaca: Cornell University Press, 1986). For a study
that maps cross-national policy styles, see Frans van Waarden, ‘Persistence of
National Policy Styles: A Study of Their Institutional Foundations’, in:
Unger,
Brigitte and Waarden, Frans van, Eds., Convergence or Diversity? (Aldershot, USA:
Avebury, 1995), pp. 333-372.
2
A study of consumer and environmental regulation in the EU and the US suggests
that American regulation in these spheres is no longer exceptional. It is an interesting
account since the study doesn’t resort to either the ‘catching up’ or the ‘convergence’
arguments. See David Vogel, ‘The Hare and the Tortoise Revisited’, British Journal
of Political Science, 33 (October 2003), 557-580.
3
Giandomenico Majone, ‘The Rise of the Regulatory State in Europe’, West
European Politics 17 (1994), 77-101;. Giandomenico Majone, ‘From the Positive to
the Regulatory State. Causes and Consequences of Changes in the Mode of
Governance’, Journal of Public Policy, 17(2) (1997), 139-167. On the European
continent, most attention to the ‘regulatory state’ in Europe is paid in relation to EUlevel development. Important exceptions are Müller, M. Markus, The New Regulatory
State in Germany (Birmingham: Birmingham University Press, 2002) and some
papers in the special issue of West European Politics, Vol. 25, 1 (2002), edited by
Thatcher and Stone-Sweet.
4
Jacint, Jordana and Levi-Faur, David, ‘The Rise of the Regulatory State in Latin
America’, presented at the American Political Science Association Annual Meeting,
26
(Philadelphia, 28-31 August 2003); Manzetti, Luigi (Ed.), Regulatory Policy in Latin
America: Post-Privatization Realities (Miami: North-South Center Press, 2000).
5
Jayasuriya, Kanishka, ‘Globalization and the Changing Architecture of the State:
The Politics of the Regulatory State and the Politics of Negative Co-ordination’,
Journal of European Public Policy, 8 (1) (2001), 101-123.
6
The term ‘independent regulatory authority’ is problematic as at most these agencies
might be institutionally autonomous but in no way independent (in the sense of
impenetrable). For some initial discussion of the difference between independence and
autonomy, see Nordlinger, Eric, ‘Taking the State Seriously’, in: Weiner, M. &
Huntington, P. S. (Eds.), Understanding Political Development (Little, Brown,
Boston, 1987), 353-390.
7
Giandomenico Majone, ‘The Regulatory State and its Legitimacy Problems’, West
European Politics, 22(1) (1999), 1-24. Giandomenico Majone, Two Logics of
Delegation: Agency and Fiduciary Relations in EU Governance’, European Union
Politics, 2 (1) (2001) 103-122.
8
A similar observation is found in the analysis of diffusion of adversarial legalism:
see Kagan, Robert, and Axelrad Lee, ‘Adversarial Legalism: An International
Perspective’, in: Nivola, Pietro (Ed.), Competitive Disadvantages Social Regulations
and the Global Economy (Washington, Brookings Institution Press, D.C.,1997), pp.
146-202. And, R. Daniel Keleman Rise of Adversarial Legalism in the European
Union: Beyond Policy Learning and Regulatory Competition In: David Levi-Faur and
Vigoda-Gadot Eran (Eds) International Public Policy and Management: Policy
Learning Beyond Regional, Cultural and Political Boundaries, (Marcel Dekker,
Forthcoming October 2004).
9
The notions of meta-regulation and enforced self-regulation are elaborated below.
27
10
Plainly put, states are embedded in societies and therefore we can expect that long-
term changes will be reflected and manifested in both these ‘imaginary’ entities. For
further exploration of this approach, see, Joel Migdal, State in Society: Studying how
States and Societies Transform and Constitute One Another (Cambridge, Cambridge
University Press, 2001).
11
Moran, p. 2. Our reference to the British regulatory state overlooks some of the
implications of the devolution process. This process exposes much of Scotland and
Northern Ireland to particular developments that are overlooked here. See Midwinter,
Arthur, and McGarvey, Neil, ‘In Search of the Regulatory State: Evidence from
Scotland’, Public Administration, 79(4) (2001), pp. 825-849.
12
On the American regulatory state, see Eisner, Marc Allen, Regulatory Politics in
Transition (Baltimore: Johns Hopkins University Press, 2nd ed, 2000).
13
See Majone, The Rise of the Regulatory State in Europe; Majone, The Regulatory
State and its Legitimacy Problems.
14
The reference here applies generally to the ‘Australian School of Regulation’
around RegNet, the Australian National University, and the works of John Braithwaite
and his colleagues. See also Gunningham, Neil, and Peter N. Grabosky, Smart
Regulation: Designing Environmental Policy (Oxford: Clarendon, 1998).
15
Or Risk Society: see Richard V. Ericson & Kevin D. Haggerty, Policing the Risk
Society (University of Toronto Press, 1997).
16
Moran, p. 4.
17
Moran, p. 68.
28
18
Moran, p. 4. The term ‘club government’ is borrowed from David Marquand: ‘The
atmosphere of British government was that of a club, whose members trusted each
other to observe the spirit of the club rules; the notion that the principles underlying
the rules should be clearly defined and publicly proclaimed was profoundly alien.’
David Marquand, The Unprincipled Society: New Demands and Old Politics (London,
Cape, 1988) p. 178. The term echoes the informalities of British governance as
formulated by Heclo H. and Wildavsky A., The Private Government of Public Money
(London, Macmillan, 1974).
19
Moran, p. 41-42
20
Moran, p. 31.
21
Moran, p. 42.
22
Moran, p. 9.
23
Moran, p. 9.
24
Moran, p. 20-22.
25
Moran, p. 7.
26
Moran, p. 20-21.
27
Moran, pp. 6 and 8. Moran bases his case here on James C. Scott, Seeing Like a
State: How Certain Schemes to Improve the Human Condition Have Failed (New
Haven: Yale University Press, 1998).
28
Moran, p. 179.
29
29
Hood et al., p. 23.
30
Hood et al, p. 27.
31
Hood et al, p 27.
32
Hood et al., pp. 29-31.
33
Hood et al, p. 42.
34
Peter Grabosky and John Braithwaite, Of Manners Gentle: Enforcement Strategies
of Australian Business Regulatory Agencies (Melbourne; New York: Oxford
University Press in association with Australian Institute of Criminology, 1986).
35
Donald J. Black, The Behavior of Law (New York: Academic Press, 1976), p. 40.
36
In contrast, research done on Australian regulatory agencies found no correlation
between frequency of interaction and industry background on the one hand and the
level of enforcement (i.e., the use of sanctions vs. softer types of enforcement) on the
other. Grabosky and Braithwaite (1986) found the number and size of firms in the
sector to be the best predictors of enforcement; Peter Grabosky and John Braithwaite,
1986, Of Manners Gentle; Makkai and Braithwaite (1995); Makkai T., and
Braithwaite John. 1995, ‘In and out of the Revolving Door: Making Sense of
Regulatory Capture’. Journal of Public Policy, 1: 61-78.
37
Power, p. 4.
38
Power, p. 14.
30
39
Power, p. xii
40
Power, p. 11
41
Power, p.68.
42
Power, p. 2; p. 3.
43
This fourth feature – the creation of a multi-layered regulatory system of regulation
and self-regulation – rests on Foucault’s notion of governmentality, and socio-legal
studies’ insight of self-regulation as the internalization of external norms. Rose argues
that for Foucault government is ‘all endeavors to shape, guide, direct the conduct of
others…and it also embraces the ways in which one might be urged and educated…to
govern oneself’ (Rose, Nikolas S. Powers of Freedom: Reframing Political Thought
(Cambridge: Cambridge University Press, 1999), p. 3). Consequently, we should be
aware that state regulation is only one element – though critical – in multiple circuits
of power and public controls. These new scholarly insights resulted in a new
interpretation of mechanisms that were always there. Indeed, it was the earlier
simplistic distinction between regulation and self-regulation that impeded our
understanding of self-regulation as a means of social control.
44
Cf. the three characteristics: (partial) shift in ownership to the private sector, the
creation of quasi-independent agencies, and the formalization of relationships within
the policy domain (Loughlin, Martin, and Colin Scott, (1997) ‘The Regulatory State’,
in Patrick Dunleavy, Ian Holliday, Andrew Gamble, and Gillian Peele (eds.),
Developments in British Politics 5. Basingstoke: Macmillan, pp. 205-219). Also the
following characterization: ‘We can now build a picture of the regulatory state: it is
one which attaches relatively more importance to process of regulation than to other
means of policy making. The regulatory state is a rule-making state, with an
attachment to the rule of law and, normally, a predilection for judicial or quasi-judicial
31
solutions’ (McGowan, F. and Wallace, H. ‘Towards a European Regulatory State’,
Journal of European Public Policy, 3, (4) (1996), p. 563).
45
Osborne, David and Gaebler, Ted, Reinventing Government (Reading, Mass.:
Addison-Wesley, 1992).
46
Majone, From the Positive to the Regulatory State, pp. 148-9.
47
G. Majone, ‘Public Policy and Administration: Ideas, Interests and Institutions’, in:
Goodin E. Robert and Klingemann, Hans-Dieter (Eds.), A New Handbook of Political
Science (Oxford, Oxford University Press, 1996), p. 611.
48
Hood et al. 107.
49
Grabosky and Braithwaite, Of Manners Gentle.
50
Philip Selznick, TVA and the Grass Roots; A Study in the Sociology of Formal
Organization (New York,: Harper & Row. 1966); Blau, Peter Michael. 1963. The
dynamics of bureaucracy; a study of interpersonal relations in two Government
agencies. Rev. 2d ed. Chicago: University of Chicago Press.
51
Rainier Kraakman, ‘Gatekeepers: The Anatomy of a Third-Party Enforcement
Strategy’, Journal of Law, Economics and Organization, 2, (1986), 53-104.
52
Peter, Grabosky, ‘The System of Corporate Crime Control’, in: Pontell N. Henry
and Shichor David, Contemporary Issues in Crime and Criminal Justice (Prentice
Hall, Upper Saddle River, New Jersey, 2001), p. 148.
53
Self-regulate, or else..’ seems to be state strategy. See Ayres, Ian, and John
Braithwaite, Responsive Regulation: Transcending the Deregulation Debate (Oxford:
Oxford University Press, 1992, p. 15).
32
54
55
Ayres and Braithwaite, Responsive Regulation, p. 101-132.
Morgan, Bronwen, Social Citizenship in the Shadow of Competition: The
Bureaucratic Politics of Regulatory Justification, Law, justice, and Power.
(Burlington, Vt.: Ashgate Dartmouth, 2003) p. 2; see also, Parker, Christine, The
Open Corporation: Effective Self-Regulation and Democracy (New York: Cambridge
University Press, 2002).
56
Ayres and Braithwaite, Responsive Regulation.
57
For a critical account of this assertion see, Scott, Colin, ‘Regulation in the Age of
Governance: The Rise of the Post-Regulatory State’, in Jordana Jacint and Levi-Faur
David (Eds.), The Politics of Regulation in the Age of Governance, Elgar and the
Centre on Regulation and Competition, University of Manchester.
58
This multi-layered system is not in any form a product of efficient rational design.
Moran argues, ‘the history of the state is marked by anything but the measured
selection of regulatory institutions and instruments. It is marked instead by crisis and
chaos’ (Moran, p. 26).
59
It is noteworthy that Hood et al. explicitly state that their ‘analysis has been more
concerned with how these developments occurred than why they occurred’ (Hood et
al., p. 209), although, in effect, they supply a great deal of explanation.
60
‘The literature offers a confusing potpourri of definitions applied to a host of units
and level of analysis.’ Shapiro, Susan. ‘The Social Control of impersonal Trust’.
American Journal of Sociology 93(3) (1987), 625. On an inter-personal level,
Gambetta (1988), for example, views trust as a subjective expectation that the
likelihood that another agent will perform a particular action that is beneficial (or not
detrimental) to us, and our confidence in her knowledge and expertise to perform such
33
action are high enough for us to consider engaging in some form of cooperation with
her. Diego Gambetta (ed.), Trust: Making and Breaking Cooperative Relations (New
York: B. Blackwell 1988, p. 219). Shapiro, 1987, 634, inquires into ‘impersonal
trust’, which is relevant when direct contact between principal and agent are
unavailable.
61
‘It is mistaken to regard trust as an element in primary group control, since the
hallmarks of the simpler systems of primacy group control are surveillance, the
absence of privacy, and coercion.… Very simply put, where one cannot directly
observe, yet seeks to control, the principal substitutes are collateral security and trust.
The basic contention is that modern societies and their organizations are increasingly
built on complex trust relationships.’ Reiss, Albert, ‘Selecting Strategies of Social
Control over Organizational Life’, in Enforcing Regulation, edited by K. Hawkins and
J. M. Thomas (Boston Hingham, Mass.: Kluwer-Nijhoff, 1984.), p. 33.
62
Gambetta, Trust, p. 219.
63
Hood et al., p. 202.
64
In other cases the reason seems to stem from partisan politics and politicians’
distrust of regulators. This seems be the case of school regulation, where the Thatcher
and Major administrations perceived the professional education establishment as leftleaning. Hood et al., p. 147.
65
66
Hood et al., p. 103.
However, our discussion above regarding change in regulators-regulatees
relationships, explicates that behind what looks as rule-bound adversarial relationship
we may still find interdependent informal cooperation.
67
Power, p. 14.
34
68
Moran, p. 155.
69
Moran, p. 116.
70
Moran, p. 26.
71
Moran, p. 162.
72
Moran, p. 183.
73
Hood et al., p. 33.
74
Hood et al., p. 34.
75
Power, p. 14.
76
‘Power, p. 2.
77
Power, p. 91.
78
Cf. ‘[T]here are few projects more central to the social sciences than the study of
regulation’ (Braithwaite J, and Drahos P. Global Business Regulation. Cambridge:
Cambridge University Press, (2000), p. 10.
79
Meseguer, Covadonga, ‘The Diffusion of Privatisation in Industrial and Latin
American Countries: What Role For Learning?’ Prepared for delivery at the workshop
on the Internationalization of Regulatory Reforms: The Interaction of Policy Learning
and Policy Emulation in Diffusion Processes, Berkeley (April 24-25 2003). Brune,
Nancy and Geoffrey Garrett, ‘The Diffusion of Privatization in the Developing
World’, Prepared for presentation at the Annual Meetings of the American Political
Science Association, Washington (August 30-September 3, 2000).
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Levi-Faur, David, Herding towards a New Convention: On Herds, Shepherds, and
Lost Sheep in the Liberalization of the Telecommunications and Electricity Industries,
Politics Papers Series (Nuffield College, University of Oxford, W6-2002. Another
study of 19 Latin American countries in 12 different sectors found that from a meagre
number of regulatory authorities in 1988 (mostly in the financial sectors), the overall
number of regulatory authorities (with varying degrees of autonomy) had grown to
134 by 2002. In the four years from 1993 to 1996, 60 new authorities were
established. All sectors and countries were affected by the process . Jordana and LeviFaur, The Regulatory State in Latin America.
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The data cover the following sectors: Competition, Financial Services, Telecoms,
Electricity, Environment, Food Safety and Pharmaceutical. The countries are the 19
that were studied by Jordan and Levi-Faur, The Regulatory State in Latin America as
well as 17 European Countries that were studied by Fabrizio Gilardi. See his
outstanding dissertation: Delegation to Independent Regulatory Agencies in Western
Europe, Thesis at the University of Lausanne, 2004. We are grateful for Fabrizio
Gilardi’s data.
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Notable exception is Polit, Christopher et al., Performance or Compliance? -
Performance Audit and Public Management in Five Countries (Oxford, Oxford
University Press, 1999). The study covers France, Finland, The Netherlands, Sweden,
and the UK. For the Audit Society in Australia, see Scott, Colin, ‘Speaking Softly
without Big Sticks: Metaregulation and Public Sector Audit’, Law and Policy 25
(2003), pp. 203-219.
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