Social Citizenship in the Shadow of Competition

The Bureaucratic Politics of Regulatory Justification

Bronwen Morgan

• Publisher: Routledge
• Year: 2017
• ISBN:
  9781351775809
• Edition: 1
• Topic: Law
• Subtopic: Law Theory & Practice
• Index: Law

Social Citizenship in the Shadow of Competition explores how economic concepts and tools are reshaping regulatory law. Building on studies that link law - both institutionally and discursively - to the legitimation of economic neo-liberalism, the book charts lawmakers' attempts to justify social welfare regulation in the language imposed by economic theory. It presents new qualitative findings from an ambitious regulatory reform programme targeting over 1, 700 pieces of legislation. Bronwen Morgan argues that the interplay between economic discourse and lawmaking does not destroy the possibility of social citizenship; however, the subsequent regulatory conversations frequently silence or weaken the claims of vulnerable groups. Thus, even when vulnerable groups secure instrumental success, economic conceptions of bureaucratic rationality impoverish their capacity to express certain kinds of intangible values and aspirations. To expand or retain social citizenship requires that we learn to conceive of what matters in political economy without relying on the logic of utility or other instrumental rationalities.

1	Economic Adjudication and the Rule of Law

My primary aim in this chapter is to make an argument that certain complexes of non-judicial institutions, procedures and techniques bear important analogies with the role of legal institutions in fostering global capitalism. I want to suggest that these sites of ‘economic adjudication’ are key to the dynamics of contemporary regulatory politics, and in particular to the trajectory of the increasingly fractious tensions between the ‘social’ and ‘economic’ faces of an increasingly interdependent global economy. At the same time, I want to explore these bureaucratic regulatory institutions specifically as incipient modes of legality, so that the exploration is essentially one concerning the role of law in political economy.¹

The chapter has three main parts. In the first, I cast in abstract form the analogies between judicial and non-judicial legality that I wish to develop. Meta-regulation is the primary form of non-judicial legality in which I am interested: that is, institutions and processes that embed regulatory review mechanisms into the everyday routines of governmental policymaking. In the second part, I sketch empirical examples of meta-regulation, focusing on efforts at both national and international levels to systematise the regulation of regulators, and in particular those who produce legislation. I include a brief layout of the nascent regime of economic adjudication in Australia that forms the basis of the empirical research elaborated in future chapters, though Chapter Two will contextualise that in much more depth. In the third part, I develop the analogy between meta-regulation and the rule of law, concluding on a note that emphasises the malleability of both modes of legality. That malleability is critical to the politics of implementation that the bulk of the book explores. But the construction of meta-regulation as a mode of incipient legality is a crucial context for those fluid, fragmented politics, and it shapes my final interpretation in the last chapter of the cultural meaning of those regulatory politics.

Some of the material in this chapter, particularly in the first and third parts, is fairly schematically presented. This is because I hope this chapter will function as a hinge between social theory and interpretive empirical inquiry, always a difficult transition to make. The empirical case studies explored in future chapters will move increasingly further from any monolithic assumptions, highlighting both the conceptual malleability and the political contestability of meta-regulatory politics. Indeed, if the resonance of my analogy between meta-regulation and the rule of law is to be at all persuasive, it should only be expected that this emergent institution is as complex and contradictory as it is capable of reification.

Judicial and Non-judicial Legality in Political Economy

Consider three situations, mundane enough and possibly familiar. Each is in substance about economic exchange. In each, law plays a crucial role.

Situation one: a business woman has multiple contracts with large numbers of individuals living in different parts of one nation, to sell them the same product. Market conditions vary substantially across the country. Nonetheless, should things go awry, she can turn to the judicial system to enforce her contracts in roughly the same way no matter where the breaching party is based. Moreover, a second business woman thinking of setting up business in the same product arena can also rely on uniform and predictable enforcement of the same kind of contract, should she set up business, and can thereby calculate the likelihood of her success or failure.

Situation two: two companies in different states in a federal regime both sell cigarettes. However, one province has banned the sale of cigarettes. The federal constitution provides a guarantee that interstate trade will be free. The company from the banning state can turn to the judicial system and seek a declaration that the provincial law banning cigarettes burdens interstate trade and is therefore invalid.

Situation three: two multinational companies both net tuna. One company sells the tuna to a country that has banned the import of non-dolphin-friendly tuna. The other company lobbies its national government to turn to a panel of the World Trade Organisation to plead their case that the national law ban contravenes the rules of international trade law.

The three situations share some key features. All involve individual businesses seeking to conduct an exchange of goods for economic gain. All three involve a legal (judicial) pronouncement that an identified action is unjustifiable when evaluated in light of previously agreed-upon rules. This is one legal facet of the scenarios. However, it is not the only legal facet. For in the second and third situations, the action requiring justification is itself law – i.e. a legislative act is the target of the judicial assessment. That legislative act is regulation: an effort by the state to address social (smoking) or environmental (dolphin-culling) risk.

I want to argue that while all three situations tell us something remarkably similar about the instrumental role of (judicial) law in political economy, the difference between the first on the one hand, and the second and third on the other, is that the instrumental role of (legislative) law in political economy is equally important. The general notion of the rule of law tends to blur within its broad frame of reference two aspects of ‘law’: law as dispute resolution and law as rulemaking. In the context of the modern regulatory state, a focus on the role of law as rulemaking is by no means new, as the vast literature on independent regulatory agencies and judicial review attests. There is an equally large literature on the politics of regulatory reform, telling stories which blend elements of dispute resolution, rulemaking, political lobbying, value conflicts and the role of expert knowledge. Much of the first literature, however, is judicially focused; and much of the second literature is sector-specific. By contrast, by focusing on meta-regulation, this story is about the dynamics of regulatory reform as a general mechanism of governance, not confined to one-off efforts to reform particular policy sectors, but instantiating generally applicable and continuously applied techniques of regulatory reform. It is also a story about the non-judicial institutionalisation of meta-regulation, a development whereby the values of economic thinking are being systematised and embedded in routines that increasingly subject law itself to the rule-of-economics. Before I give a concrete descriptive account of just what sorts of institutions, routines and procedures are typical of the rule-of-economics, let me say a little more about what kind of perspective I am taking on the concept of law here.

Weber’s vision of law as a crucial means of rationalising social behaviour in ways that facilitate the ends of a capitalist economy provides the background for my categorisation of the three situations outlined above.² The three situations show that law is, from the perspective of political economy, instrumental in facilitating capitalism. The important facet of law’s instrumental role in this context is its capacity to rationalise the uncoordinated behaviour and decisions of unconnected individuals, to render their effects calculable, predictable and systematic. In the first situation, the decisions of judges enforcing the common law norms of contract provide a systematic way of making relatively predictable the outcome of multiple disperse interactions between individuals from a variety of social backgrounds. In the second and third situations, law is still important in this way. Judicial (or quasi-judicial) decisions in both situations (those of a constitutional court and those of an international panel of experts) rationalise social exchange. But in these two latter situations, law – as legislation rather than judicial decisions – is also the target of the rationalising process, as well as its means. That is, ‘law’ is both the means of the rationalising process (via the decisions of constitutional courts or WTO Panels) and the target of its decisions (the offending legislation passed by democratically elected subnational or national governments).

I want to highlight this increasing importance of law as a target of rationalisation. In the first story the decisions of judges (law) rationalise socially mediated exchange between individuals by coding their actions as justified or unjustified according to common law. In the second, the decisions of judges rationalise legally mediated exchange by coding certain provincial legislation (law) as an unjustifiable barrier to free trade. In the third situation, national rather than provincial legislation is coded as an unjustifiable restriction on free trade, and not by judges but by quasi-judicial panels. That is, one way of viewing this kind of supervision of the content of national laws imposed by the WTO at international level is that the laws that helped nation-state capitalism flourish are now hindering global capitalism, and that techniques are emerging which seek to ‘rationalise’ such laws. The ways in which the European Court of Justice manages the internal EU market³ might be seen as a further illustration of the kind of economically instrumental role I am assigning to law.

At this point I am still emphasising the importance of law (legislation) as the target of rationalisation, in contradistinction to the first story where law (judicial decisions) is the tool of rationalisation. In fact, though law (in the form of rules) is being reflexively rationalised in the second and third situations, I constructed those situations to reflect the fact that one means of such ‘reflexive rationalisation’ can be law itself (judicial or quasi-judicial power to decide disputes). At least where there is a context such as a constitutional guarantee, or international agreements to adhere to the certain principles, there is no reason why law (legislation) cannot be rationalised by more law (judicial interpretation). But now I want to stress the significance of non-judicial institutions as a means of rationalising law. This in itself is not new: Weber himself wrote extensively about the role of accounting methods in this respect. But I want, in the contemporary world of regulatory politics we currently inhabit, to focus not on accounting, but on neo-classical economics.

Even in the quasi-judicial institutional context of the WTO itself, economics is clearly a powerful animating conceptual framework for how to envision the role of the panels. Recent writing argues, for instance, that the WTO represents a new “world trade constitution” in which domestic majorities have committed to institutions that restrain the ability of interest groups to obtain protectionist legislation at the public expense.⁴ This characterisation strongly echoes the conceptual framework of public choice analysis of regulation, which draws strongly on neo-classical economics, albeit giving a particular role to political institutions. Such a framework is not typically elaborated by courts, however much it has caught the imagination of at least some sectors of legal academia. Imagine, for example, a Committee of Wise Economists with the power to decide the boundaries of justifiable national regulation. Like a national supreme court deciding on whether commerce between its constituent states is justifiably impeded (or like the European Court of Justice deciding whether Article 95 of the Amsterdam Treaty justifies a Member State departing from an agreed Community standard), a Committee of Wise Economists would be requiring and enforcing a process of rational public justification.

But would the character, standards and outcomes of such a justificatory discourse differ in important ways from the justifications accepted by judges and lawyers? An instrumentalist Weberian vision might suggest that similar ends may well be pursued by both lawyers and economists: the rationalisation of social behaviour in general, and increasingly of legislative activity in particular, so as to facilitate the smooth development of capitalism.⁵ Meta-regulation as an integral aspect of rationalisation is perhaps analogous, in its zeal for the dream of comprehensiveness, clarity and completeness, to codification of the common law in the nineteenth century: a need to impose rational order, this time on positive law. Furthermore, where judicial law may have combined rationalisation and continuing flexibility through the incrementalism of the common law, meta-regulation tries to achieve flexibility by being reflexive – that is, providing a systematic process for constant revision and self-analysis by government of its own means of governance.

Thus the overall trend of legal and (at least neo-classical) economic rationality can be viewed as parallel techniques towards a common end. Rationalisation is not, however, just about enhancing the calculability and predictability of social coordination. It is also about legitimation – providing a relatively coherent justification for the patterns of conduct that result. From this perspective, legal and neo-classical economic rationality draw on rather different logics of justification, though both may be seen as self-referential. But the self-referential nature of legal justification is more oriented to the past and to tradition, drawing on analogical reasoning from precedent even while incorporating the possibility of forward-looking change. Justification in the context of neo-classical economics, on the other hand, is almost wholly forward-looking, seeking always to maximise the overall efficiency, or net social welfare, of particular political choices. The relevance of this difference will be discussed at the end of this chapter.

In the second part of this chapter, I explore three instances where the rationalisation of law through predominantly neo-classical economic lenses is proceeding apace. In all these contexts, we can observe routines, procedures, criteria and institutions evolving which aim to systematically rationalise the production of new and existing legislation in ways that maximise the smooth operation of competitively structured economic exchange.⁶ As I have indicated, I call this general development meta-regulation. Within that broad term, different degrees of meta-regulation can be observed. First and most loosely, nations can implement regulatory management systems, a capacious term for a set of somewhat diffuse routines, procedures and evaluative criteria that might ensure ‘regulatory quality’. Secondly, and more developed, I describe a specific regulatory management system in Australia that arguably approximates the building of institutions of ‘economic adjudication’. Finally, I allude to recent developments that presage an intersection of meta-regulation and the development of international trade rules. This intersection of trade concerns and national-level regulatory reform potentially gives national legislation the presumptive character of “behind-the-border impediments to international trade”, which can be challenged as unjustifiable in a dispute resolution context. It could possibly even lead to the situation where a country would be expected to institutionalise meta-regulation as a condition of membership of international trade regimes. If such directions were to materialise, it would forge practical links between meta-regulation and the rationalising effects of the rule of law, as well as the conceptual analogies that I sketch in the third part of this chapter. But first, to empirical description.

Meta-regulation

OECD Efforts

The OECD, a non-governmental organisation based in Paris, has for almost two decades now given quiet but persistent attention to systematic collection of information about domestic regulatory reform processes. The Public Management section of the OECD publishes a series of country reports which track progress on regulatory reform in a sector-by-sector manner across countries and over time. In the last 5 years or so, the notion that regulatory reform can be analysed as an economy-wide phenomenon has been increasingly emphasised by the OECD.⁷ In 1995, the OECD promulgated a Recommendation it calls an “international quality standard” on the production of government regulation.⁸ Since 1995, it has explicitly developed a range of ‘best practice’ criteria by which it identifies the sorts of institutions and processes that will guarantee a high standard of ‘regulatory quality’ in different countries. In other words, the approach i...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Dedication
• Table of Contents
• Acknowledgements
• Introduction
• 1 Economic Adjudication and the Rule of Law
• 2 Public Law and Political Economy in the Australian Administrative State
• 3 The Contested Terrain of Regulatory Conversation
• 4 Agenda-setting and Bureaucratic Politics
• 5 Implementation in Competition’s Shadow
• 6 Technocratic Citizenship
• Appendices
• Bibliography
• Index