Power transitions and the rise of the regulatory state: Global market governance in flux

This special issue examines the consequences of the ongoing power transition in the world economy for global regulatory regimes, especially the variation in rising powers' transition from rule-takers to rule-makers in global markets. This introductory article presents the analytical framework for better understanding those consequences, the Power Transition Theory of Global Economic Governance (PTT-GEG), which extends the scope of traditional power transition theory to conflict and cooperation in the international political economy and global regulatory governance. PTT-GEG emphasizes variation in the institutional strength of the regulatory state as the key conduit through which the growing market size of the emergent economies gives their governments leverage in global regulatory regimes. Whether or not a particular rising power, for a particular regulatory issue, invests its resources in building a strong regulatory state, however, is a political choice, requiring an analysis of the interplay of domestic and international politics that fuels or inhibits the creation of regulatory capacity and capability. PTT-GEG further emphasizes variation in the extent to which rising powers' substantive, policy-specific preferences diverge from the established powers' preferences as enshrined in the regulatory status quo. Divergence should not be assumed as given. Distinct combinations of these two variables yield, for each regulatory regime, distinct theoretical expectations about how the power transition in the world economy will affect global economic governance, helping us identify the conditions under which rule-takers will become regime-transforming rule-makers, regime-undermining rule-breakers, resentful rule-fakers, or regime-strengthening rule-promoters, as well as the conditions under which they remain weakly regime-supporting rule-takers.     

Going Nordic—Can the Nordic model tackle grand challenges and be a beacon to follow?

Nordic countries are known for having extensive welfare services, a highly compressed wage structure owing to strong social partners, as well as effective regulation and governance in public administration. Various typologies capture aspects of the institutional features of families of nations across various policy areas, showing that there is a specific Nordic variant of political economy. While there is an extensive literature focusing on socio-economic outcomes in the Nordic countries, there is less scholarly focus on the linkages between the regulatory processes, and their policy output, in response to various challenges. This volume examines how exogenous challenges (market liberalization promoted by EU integration and the gig economy, as well as the COVID-19 pandemic) and endogenous challenges in the welfare state (regulation of child-care quality and retirement ages) are tackled in a selection of Nordic countries. After a bibliometric analysis on the state of the literature, features of the Nordic model are presented. Then, the contributions of the articles to the special issue are summarized, after which lessons for other models of political economy are pinpointed. We find that although there is high variation within the Nordics in the studies of the special issue, there is a trend whereby, over time, a broader range of actors involved in the policy and regulatory process. Although not perfect, challenges are solved incrementally and often at an early stage. In other words, the Nordic regulatory model is highly adaptable to different challenges. Thus, the Nordic model does present crucial lessons for other types of political economy.     

Bricks in the wall: the politics of housing in Europe

Abstract

Housing has important economic, political, and social ramifications for Western Europe and beyond. Despite its importance in shaping economic and political outcomes, however, housing remains in the peripheral vision of major comparative political economy debates. This introduction to the special issue accomplishes four objectives. First it demonstrates how housing defies current political economy typologies by failing to conform to their theoretical and empirical predictions. Second it summarises the current state of housing research within political science, which still remains in its infancy. Third it highlights how the contributions in this special issue expand our understanding of how housing causes and is shaped by political and economic outcomes in Europe. Finally, this introduction concludes by outlining how the special issue contributions demonstrate housing’s importance for the welfare state, political preferences and electoral shifts, regulatory and redistributive policies, and financialisation and household indebtedness in Europe.     

The political economy of regulatory change: The case of British merger control

This article aims to explain the broader evolution of British merger control. To this end it outlines a novel critical political economy perspective on regulation and regulatory change which differs from established political economy approaches, such as the regulatory capitalism/state perspectives, in three main ways: it places regulatory ideas at the heart of the analysis, it differentiates between different degrees of regulatory change, and it links regulatory change in delineated issue areas with changing power balances between fractions of capital and labor. The application of this perspective to the analysis of the evolution of British merger control provides some important new insights, most notably that the content, form, and scope of merger control in Britain have been deeply transformed in accordance with neoliberal ideas since the 1980s and that this process, which was part of a broader regulatory and ideational shift, was premised on the ascendancy of transnational capital.     

Caught in quicksand? Compliance and legitimacy challenges in using regulatory sandboxes to manage emerging technologies

Regulatory sandboxes have become the latest development in regulatory reform, starting first in financial regulation and now expanding to other sectors. While sandboxes offer notable potential benefits for managing emerging technologies, achieving desirable policy outcomes with this novel regulatory instrument also comes with technical and political challenges. This article offers a framework to characterize regulatory sandboxes in any sector, involving a blend of (1) approval regulation with broad-based standards, (2) restricted discretion by the regulator for specific norms, (3) process-oriented regulation, (4) an outcomes-orientation, and (5) structured regulator–regulatee information sharing or dialogue. Using this model, the article outlines issues in compliance and legitimacy, including in trust and accountability, responsive enforcement, the politics of participation, and post-sandbox oversight. The article concludes by calling for greater scrutiny when considering implementing a sandbox instrument, with attention to sector-specific concerns, and offering directions for empirical evaluation of regulatory sandboxes.     

Opposing Energy Transitions: Modeling the Contested Nature of Energy Transitions in the Electricity Sector

Energy transitions are fiercely contested. The incumbents of the fossil‐ and nuclear‐based energy systems have much to lose from a transition to a sustainable and decentralized energy system. They therefore employ their material and political resources to reverse, halt, or slow down this transition. They also attempt to stop and reverse the decentralization of energy production. This article provides a framework that can be used to analyze the contestation that surrounds energy transitions. The analytical framework breaks apart the macro paths of energy transitions, and differentiates between three meso‐paths (political, economic‐technological, and legitimation), emphasizes the feedback processes between these paths, and acknowledges the crucial role that actors play in engendering these feedback processes. It uses Germany as a case study to illustrate the analytical model. It also provides hypotheses that will be tested in the subsequent contributions to this special issue.     

Exploring the formal and informal roles of regulatory intermediaries in transnational multistakeholder regulation

Research on regulation and regulatory processes has traditionally focused on two prominent roles: rulemaking and rule‐taking. Recently, the mediating role of third party actors, regulatory intermediaries, has started to be explored – notably in a dedicated special issue of the ANNALS of the American Academy of Political and Social Science. The present special issue extends this line of research by elaborating the distinction between formal and informal modes of regulatory intermediation, in the specific context of transnational multistakeholder regulation. In this introduction, we identify two key dimensions of intermediation (in)formalism: officialization and formalization. This allows us to develop a typology of intermediation in multistakeholder regulatory processes: formal, interpretive, alternative, and emergent. Leveraging examples from the papers in this special issue, we discuss how these four types of intermediation coexist and evolve over time. Finally, we elaborate on the implications of our typology for regulatory processes and outcomes.     

Sanction Power, Jurisdiction, and Economic Policy-making: Explaining Contemporary Telecommunications Policy in Japan

Variation in policy-making is an important analytical issue in public policy analysis, but it has not been extensively discussed in the literature on Japanese politics and political economy. Focusing on the interaction between state and societal actors, this article presents a causal argument to account for variation in Japanese economic policy-making. It is argued that variation in policy-making patterns is determined by the strength of a bureaucracy's sanction power and the exclusivity of its jurisdiction. This argument is elaborated through analysis of four related cases of Ministry of Posts and Telecommunications (MPT) policy-making: the privatization process of Nippon Telegraph and Telephone (NTT), the regulation of telecommunications after NTT privatization, the promotion of advanced telecommunications, and the reorganization of NTT. The causal framework is also applied to contemporary Ministry of International Trade and Industry economic policy-making to highlight the argument's preliminary applicability to Japanese policy-making. This analysis of Japanese policy-making lays a base for further analysis of variation in policy-making in general.     

Institutional Dynamics in Environmental Corporatism: The Impact of Market and Technological Change on the Dutch Polder Model

This article describes how market and technological change can be conceived to affect corporatist politics in the area of waste management. The article adopts a political economy approach to institutional change, and seeks to trace the impact of market and technological change on established political and regulatory institutions. The article demonstrates that the main impact of marketization of waste services and the introduction of ISO 14001 environmental management systems was to expand the range of choices for companies and regulators to engage in regulatory interaction concerning environmental waste management practices. The main purpose of the article is to demonstrate exactly how the emergence of regulatory choices for both companies and regulators is likely to open up new avenues for regulation in the environmental field that, once pursued, systematically reduce incentives for corporate and regulatory actors to engage in associational politics.     

The Limits of Regulation: Indirect Party Access to State Resources in Australia and the United Kingdom

The way in which political parties use state resources indirectly (e.g., parliamentary expenses) receives substantial attention in public debate, particularly when surrounded by perceptions of misuse. However, scholarly studies of resources indirectly available to parties through their functions in the state, how they are used and regulated, are rare. This article presents an analytical framework that identifies and categorizes the range of indirect resources linked to parties' institutional roles. It locates these resources within a four‐fold matrix of regulation, distinguishing regimes that vary in their detail and whether compliance is externally monitored. Undertaking comparative case studies of parliamentary resource use in the United Kingdom and Australia, we argue that the blurring of party‐political and parliamentary roles can impede the effectiveness of regulatory regimes that democracies adopt, regardless of detail and external enforcement. These findings have important implications for regulatory reforms that seek to constrain parties' behavior to depoliticize democratic governance.     

The politics of regulatory enforcement and compliance: Theorizing and operationalizing political influences

There is broad consensus in the literature on regulatory enforcement and compliance that politics matters. However, there is little scholarly convergence on what politics is or rigorous theorization and empirical testing of how politics matters. Many enforcement and compliance studies omit political variables altogether. Among those that address political influences on regulatory outcomes, politics has been defined in myriad ways and, too often, left undefined. Even when political constructs are explicitly operationalized, the mechanisms by which they influence regulatory outcomes are thinly hypothesized or simply ignored. If politics is truly as important to enforcement and compliance outcomes as everyone in the field seems to agree, regulatory scholarship must make a more sustained and systematic effort to understand their relationship, because overlooking this connection risks missing what is actually driving regulatory outcomes. This article examines how the construct of “politics” has been conceptualized in regulatory theory and analyzes how it has been operationalized in empirical studies of regulatory enforcement and compliance outcomes. It brings together scholarship across disciplines that rarely speak but have much to say to one another on this subject in order to constitute a field around the politics of regulation. The goal is to sharpen theoretical and empirical understandings of when and how regulation works by better accounting for the role politics plays in its enforcement.     

The many uses of regulatory impact assessment: A meta‐analysis of EU and UK cases

Research on regulation has crossed paths with the literature on policy instruments, showing that regulatory policy instruments contain cognitive and normative beliefs about policy. Thus, their usage stacks the deck in favor of one type of actor or one type of regulatory solution. In this article, we challenge the assumption that there is a predetermined relationship between ideas, regulatory policy instruments, and outcomes. We argue that different combinations of conditions lead to different outcomes, depending on how actors use the instrument. Empirically, we analyze 31 EU and UK case studies of regulatory impact assessment (RIA) – a regulatory policy instrument that has been pivotal in the so‐called better regulation movement. We distinguish four main usages of RIA, that is, political, instrumental, communicative, and perfunctory. We find that in our sample instrumental usage is not so rare and that the contrast between communicative and political usages is less stark than is commonly thought. In terms of policy recommendations, our analysis suggests that there may be different paths to desirable outcomes. Policymakers should therefore explore different combinations of conditions leading to the usages they deem desirable rather than arguing for a fixed menu of variables.     

Regulation as a political question

There are at least two frameworks within which the debate on proper institutional arrangements for regulation can be carried out. One rests on seeing the various possibilities as instruments and its central concern is with the most efficient means for achieving regulatory objectives. The second framework views regulation as an essentially political act. It focuses on adapting our choice of institutional alternatives to take account of valued features of our existing political world. It also involves an understanding of how our choice of institutional alternatives actively shapes that world and thus helps to form our regime or the way of life to which we aspire. These two frameworks are examined with special attention being given to the political view.     

Understanding varieties of populism in times of crises

Abstract

This introduction presents the conceptual and analytical framework which constitutes the background for the special issue entitled ‘Varieties of Populism in Europe in Times of Crises’. More specifically, this contribution investigates how different populist parties in the European Union have been affected by the recent economic crisis and the more long-lasting political and cultural crises. Analytically, the article disentangles the role of the Great Recession vis-à-vis other factors (such as political and party system factors, but also structural social changes or cultural opportunities) in the growing strength of populist parties in various European countries. It argues that although the economic crisis has without any doubt provided a specific ‘window of opportunity’ for the emergence of new political actors, which have capitalised on citizens’ discontent, long-lasting political factors – such as the increasing distrust toward political institutions and parties – and the more recent cultural crisis connected with migration issues have offered further fertile ground for the consolidation of populist parties in several European countries. Furthermore, as confirmed by the articles presented in the special issue, the various crises have offered differential opportunities for different types of populism – both inclusionary and exclusionary.     

Designing Regulation Across Organizations: Assessing the Functions and Dimensions of Governance

In recent years, regulation scholars and policymakers have increasingly turned their attention to the role of inter-governmental organizational design in effective governance. The existing literature on regulatory design has provided important insights into the advantages and disadvantages of alternative structural options. This article synthesizes and builds on that literature by describing a novel framework for characterizing, analyzing, and structuring authority across public institutions. Drawing on examples from a range of jurisdictions, it highlights the value of this framework in identifying the values tradeoffs that should drive policymakers' decisions to choose among competing structural alternatives. The framework is founded on two important points. First, inter-governmental allocations of authority can be structured along three different dimensions. Failing to appreciate the existence of, and differences among, these dimensions can prompt misassessments of the reasons for existing regulatory failures and selection of structural allocations that do not suit the problems intended to be addressed. Second, allocations of authority can, and in many cases should, vary for disparate governmental functions. Differential functional allocations of authority can minimize obstacles to needed structural reforms and tailor inter-governmental relations in ways that best promote chosen regulatory values, such as efficiency, effectiveness, and accountability, as well as how allocational choices may and perhaps should vary depending on the governmental function being performed. Finally, the article suggests how future regulation and governance scholarship can harness this emerging framework to help build a body of empirical evidence upon which policymakers can draw in future regulatory design endeavors.     

Privatisation and regulation in an Asian transitional economy: the case of Mongolia

Mongolia's transition to a market economy has entailed rapid and extensive privatisation accompanied by, inter alia, stabilisation, liberalisation and de‐regulation. The primary objective of this strategy was to cement the new political and economic order. Little weight was given to the problems created by the privatisation programme and only limited consideration given to questions of regulation in the economic, social and environmental spheres. However, the failure of the economy to translate economic growth into poverty reduction and the acceleration of the privatisation programme, which includes the progressive transfer of land, and proposals to privatise health, educational and cultural assets, have made regulation a more pressing issue. New, powerful social classes and interest groups have emerged, which have contributed to regulatory failure and capture and have undermined public policy. We identify a range of issues relating to privatisation and regulation and discuss the degree to which they are being addressed by the post‐1990 political class. Although there exist a number of regulatory agencies, there is a lack of political commitment, and only piecemeal implementation and enforcement. The scarcity of experienced and technically competent staff capable of establishing and operating effective regulatory agencies and ensuring compliance is also a major problem. Copyright © 2007 John Wiley & Sons, Ltd.     

Grey Power: Towards a Political Economy of Older Voters in the UK

The impact of age on voting behaviour and political outcomes has become an issue of increasing interest, particularly in the UK. Age divides in voter turnout and political preferences have led to claims that age is the ‘new class’. In this article, we contrast existing ‘cultural backlash’ and political economy explanations of the age divide in politics, and challenge the view that older people are predominantly ‘left behind’, culturally or economically. We show that older people have distinct material interests, related to housing wealth and pensions’ income, that are visible in their political preferences. We argue for the development of a new political economy of age.     

Policy making in divided government: A pivotal actors model with party discipline

This article presents a formal model of policy decision-making in an institutional framework of separation of powers in which the main actors are pivotal political parties with voting discipline. The basic model previously developed from pivotal politics theory for the analysis of the United States lawmaking is here modified to account for policy outcomes and institutional performances in other presidential regimes, especially in Latin America. Legislators' party indiscipline at voting and multi-partism appear as favorable conditions to reduce the size of the equilibrium set containing collectively inefficient outcomes, while a two-party system with strong party discipline is most prone to produce ‘gridlock', that is, stability of socially inefficient policies. The article provides a framework for analysis which can induce significant revisions of empirical data, especially regarding the effects of situations of (newly defined) unified and divided government, different decision rules, the number of parties and their discipline. These implications should be testable and may inspire future analytical and empirical work.     

The Politics of Financial Regulatory Reform in Britain and Germany

Over the past decade, Britain and Germany have both made fundamental changes to their financial regulatory regimes with the creation of single powerful regulators. In both cases, this meant either ending or severely limiting the regulatory role of central banks. This article argues that the creation of these new regulatory actors cannot be understood without reference to the preferences of domestic political actors responding to the increased political salience of financial regulation as a policy issue. The result was distinct partisan differences about institutional design and responsibilities with centre-left parties seeking regulatory actors clearly accountable to government and parliament. Such an account of institutional change is in contrast to previous accounts of the evolution of financial regulation that are largely exogenous to domestic politics.