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Julia Black Legitimacy and the Competition for Regulatory Share

breaches the Code. However, when a company declines the jurisdiction of the

19

PMCPA or is expelled by the ABPI, the MHRA agrees to take over consideration of

the complaint. Ideally, therefore, the state and the non-state systems interact to

provide a mutually reinforcing regulatory regime.

Examples of mutual enrolment also exist at the EU level. As noted above, the

EU has in effect enrolled the International Accounting Standards Board to formulate

accounting standards for EU member states by requiring those states to comply with

the IASB’s rules. In environmental regulation, the EU encourages firms to adopt a

non-legal standard of environmental management: EMAS (Eco-Management and

Audit Scheme). After a brief period when it differentiated itself from, and competed

with, other standards, EMAS now incorporates the environmental management

formulated by the transnational, non-governmental standard-

standard ISO 14001,

20

setting body, the International Standards Organisation. At the national level, the UK

Environment Agency encourages firms to adopt EMAS through bureaucratic

incentives: firms that comply with EMAS will be regarded as posing lower risks under

the Agency’s risk-based rating framework and thus will receive fewer inspections.

Governmental bodies can also enrol non-state regulators by seeking certification

themselves from non-governmental regulators. The Forestry Commission, as a

manager of woodland and supplier of wood, has sought and gained certification for its

wood products from the Forest Stewardship Council. The Environment Agency is

21

accredited under the ISO 14001 standard for its own internal environmental

management. Governments are assessed by non-governmental actors for

22

compliance with their norms; Transparency International provides a good example. 23

T

HE CHALLENGES OF POLYCENTRICITY

The above examples give only glimpses of the ‘new’ regulatory landscape, but,

hopefully, enough to illustrate the fact that frequently, governmental and non-

governmental regulators interact in the production of a regulatory regime in a myriad

of ways. Decentred or polycentric regulatory regimes pose four central challenges:

functional, systemic, democratic, and normative. These challenges are in part

exogenous; they exist outside the regulatory regime in that they are standards or

criteria of evaluation. But they are also endogenous; they exist within the regulatory

regimes in that the performance of those regimes faces these challenges, albeit in

different measures and in different ways.

Functional challenges revolve around the problem of coordination: networks of

organisations within a regulatory regime may be characterised by complex

As the Code extends beyond the legal requirements, it is possible that a promotion can be in

19

compliance with the law, but not the Code; the aim of the Code, however, is that compliance with the

Code is also compliance with the law.

Commission Regulation (EC) No 196/2006 of 3 February 2006; Environment Agency, Position

20 rd

Statement on Environmental Management Systems, at http://www.environment-

agency.gov.uk/aboutus/512398/289428/656055/?version=1&lang=_e.

Forestry Commission, Certification Standard for the UK Woodland Assurance Scheme (London: 2000).

21 See http://www.environment-agency.gov.uk/commercial/1075004/399393/1072778/.

22 See eg C. Scott, ‘Private Regulation of the Public Sector: A Neglected Facet of Contemporary

23

Governance’ (2002) 29 Journal of Law and Society 56. 7

14/2009

interdependencies and may lack a central locus of authority. There may not be a body

whose role it is to act as the lead interpreter of the regimes’ rules or principles, for

example, or to otherwise steer or coordinate the activities of the multiple participants

in such a way that the regime moves towards the resolution of the problem which it

defines and also by which it is defined. 24

Systemic challenges revolve around issues of fragmentation of social systems. For

25

lawyers, this is particularly the challenge posed to both the identification and identity

of law by the presence of numerous normative orders, an issue debated in

international law in terms of the nature of ‘soft law’ and in legal theory journals in

terms of the challenges of legal pluralism. Which norms are ‘law’ and which are not;

26

what are the implications of fragmentation within law by regulatory norms, of the

fragmentation of law itself into a number of different sub-systems with no legal code

for determining their internal hierarchy, of the porosity of national and transnational

27

legal systems, or indeed of the extensive by-passing of law in many governance

regimes – each of these questions poses a challenge for understanding law and for

28

law’s understanding of itself.

Democratic challenges arise from issues of representation: who should be involved in

the decision making structures of the various components of the network; to whom

should such bodies be accountable and how. 29

Finally, normative challenges stem from normative concerns as to the goals and

operation of the regulatory regime: from competing conceptions of ‘the good’ that

should be pursued. 30

These challenges, especially the latter, are not unique to polycentric regimes, but

are enhanced by them. Of these, it is the functional, democratic, and normative which

are often articulated in terms of the legitimacy and accountability of the regimes as a

whole and of different actors within them. Most of the debates on regulators, both

state and non-state, see the next stage in the debate as being the question of how to

meet these different challenges – in particular, how to enhance the accountability and

For discussion, see eg W.. Kickert, E. Klijn, and J. Koppenjan (eds), Managing Complex Policy Networks

24

(London: Sage, 1997); E. Klijn and J.F.. Koppenjan, ‘Public Management and Policy Networks in the

Public Sector: A Theoretical Study of Management Strategies in Policy Networks’ (1995) 73(3) Public

Administration 437; E. H. Klijn and J. F. M. Koppenjan, ‘Public Management and Policy Networks.

Foundations of a Network Approach to Governance’ (2000) 2(2) Public Management 135; M. Castells, The

Rise of the Network Society: Economy, Society and Culture (Oxford: Blackwell, 2000).

The leading work is N. Luhmann, Social Systems (Stanford: Stanford University Press, 1995).

25 Eg G. Teubner, ‘”Global Bukowina”: Legal Pluralism in World Society’ in G. Teubner, Global Law

26

without a State (Aldershot: Dartmouth, 1997); B. de Sousa Santos, Toward a New Common Sense: Law, Science

and Politics in Paradigmatic Transition (Oxford: Oxford University Press, 1995).

Eg M. Koskienniemi, ‘The Fate of Public International Law: Between Technique and Politics’ (2007)

27

70(1) Modern Law Review 1; N. Krisch, ‘The Pluralism of Global Administrative Law’ (2005) 17 English

Journal of International Law 246.

Eg Cassese, n 11 above.

28 See eg J. Cohen and C. Sabel, ‘Global Democracy’ (2005) 37(4) NYU Journal of International Law and

29

Politics 763; C. Skelcher, ‘Jurisdictional Integrity, Polycentrism and the Design of Democratic

Governance’ (2005) 18(1) Governance 89; K. Dingwerth, ‘The Democratic Legitimacy of Public-Private

Rule Making: What Can We Learn from the World Commission on Dams?’ (2005) 11 Global Governance

65.

See e.g. Krisch, n 28. ‘The re-description of international law in terms of ‘governance’ has also been

30

criticized as disguising or even seeking to neutralize the normative and political dimensions of

international legal regimes’ (Koskienniemi, n 27 above). 8

Julia Black Legitimacy and the Competition for Regulatory Share

legitimacy of these regulatory regimes. This is a significant question, but I want to

suggest here that the questions of legitimacy and accountability that are raised are not

just normative challenges; they are also functional challenges for the regulators

themselves.

POLYCENTRICITY, LEGITIMACY AND REGULATORY

COMPETITION

What is the relevance of these new patterns of governance, and / or our new

understanding of existing patterns of governance, for the debate on legitimacy, and

more particularly for the argument being made here – that organisations compete for

legitimacy?

Central to that argument is a recognition that legitimacy is not, or at least not

necessarily, a question of legal validity. This is not to argue against the positivist

It is simply to say

position that law is accepted as legitimate because it is legally valid.

31

that in identifying the ‘legitimacy’ of governance regimes or organisations within

them, trying to do so by identifying legal validity will often be unproductive. Where

regulatory regimes are largely non-legal and where, as in transnational regimes,

infusing them with law is problematic, using only a legal concept of legitimacy will

lead us to a dead end: such regimes will necessarily lack legitimacy and any potential

for legitimacy in legal terms. They may, however, still be regarded as perfectly

legitimate by others. The Forest Stewardship Council or Responsible Care, for

example, are seen as legitimate by a number of market actors in the forestry and

chemical industries respectively, but they have no legal basis.

In many debates in law and political science, legitimacy is a normative issue:

when should an actor / institution be regarded as legitimate? But in order to

understand the dynamics of legitimacy, and thus in part to understand how regulation

operates in this polycentric context, we have to recognize that legitimacy is as much a

Legitimacy means social credibility and

sociological concept as a normative one.

32

acceptability – ‘a generalized perception or assumption that the actions of an entity are

desirable, proper, or appropriate within some socially constructed system of norms,

values, beliefs, and definitions’. More particularly, in a governance or regulatory

33

context, a statement that a regulator is ‘legitimate’ means, it is suggested, that it is

perceived as having a right to govern both by those it seeks to govern and those on

whose behalf it purports to govern. The right to govern includes the ‘right to govern

34

in the manner in which they are governing’, a point to which we will return below.

Organisations (regulators) may claim legitimacy, and may perform actions and enter

into relationships in order to gain it. But legitimacy is rooted in the acceptance of that

C. Schmitt, Law and Legitimacy, tr. J. Seitzer (Durham: Duke University Press, 2004).

31 W.R. Scott, Institutions and Organisations (Thousand Oaks, California: 2 ed, Sage, 2001). The arguments

32 nd

in this section are developed more fully in Black, * above.

.Scott, n 32 above.

33 See discussions in R. Barker, Political Legitimacy and the State (Oxford: Oxford University Press, 1990)

34

and D. Beetham, The Legitimation of Power (London: Macmillan, 1991). 9

14/2009

organisation by others, and more particularly, in the reasons for that acceptance.

These reasons lie in the congruence of the regime with a person’s beliefs or

expectations.

35

Thus we have to recognize that the question ‘is this regulator legitimate’ is not

just a normative one, but an empirical one as well: ‘when is an organisation regarded

as legitimate’; in other words, when is it regarded as having a right to govern both by

those it seeks to govern and on whose behalf it purports to govern? So when

organisations compete for legitimacy, they are competing for social acceptance that

they have a right to govern.

Why are organisations, including regulators, in practice regarded as legitimate?

That social acceptance comes from the regulator’s different ‘legitimacy communities’

which operate in its environment. Institutionalist theorists identify three sets of

reasons for social acceptance: pragmatic, moral and cognitive. Legitimacy may be

pragmatically based: the person or social group perceives that the organisation will

pursue their interests directly or indirectly. It can be morally based: the person or

social group perceives the goals and / or procedures of the organisation to be morally

appropriate. Finally, legitimacy can be cognitively based: the organisation is accepted

as necessary or inevitable. Therefore, that acceptance may be derived from one or

36

more of three sources: the giver’s own pragmatic self-interest, from their normative

assessment of the organisation against a range of (competing) criteria, or from their

more deep-rooted, cognitive, and unquestioning acceptance of the organisation.

Legitimacy thus lies as much in the values, interests and expectations, and

cognitive frames of those who are perceiving or accepting the regime as it does in the

regime itself. However, different people’s perceptions of whether an organisation is

legitimate are not necessarily based on the same types of evaluations. B may perceive

an organisation or set of institutions (A) to be legitimate because it embodies a

particular religious ideology, or because it is pursuing a goal which B judges to be

normatively good (sustainable development; pro-life; euthanasia; animal rights; free

trade). Alternatively, C may perceive A to be legitimate because it is procedurally fair

in its conduct, or because it is pursuing C’s interests.

Legitimacy is also associated with the roles that are being performed. Role-

37

legitimacy is particularly relevant when considering the role of non-state regulators, as

not all organisations will be perceived as legitimate in performing regulatory roles. An

NGO, for example, may be perceived by some as legitimate in performing a role as a

lobbyist, but not as a regulator; just as an aid organisation may be perceived as

Beetham, n 34 above, 11; M. Weber, ‘Bureaucracy’ in H.H. Gerth and C. Wright Mills (eds), Max

35

Weber, Essays in Sociology (London: Routledge, 1948), 213; J. Habermas, Legitimation Crisis (London: Polity

Press, 1973), though leaving aside for the moment how these values are themselves grounded (eg the

Habermasian position that the validity claim of norms lies in rationally motivated agreement and the

counterfactual supposition that the norms could be ‘discursively redeemed’, ie grounded in the consensus

of participants through argumentation (Habermas ibid 105).

M. Suchman, ‘Managing Legitimacy: Strategic and Institutional Approaches’ (1995) 20(3) Academy of

36

Management Review 571; L. G. Zucker, ‘Institutional Theory of Organizations’ (1987) 13 Annual Review of

Sociology 443. A fourth form of legitimacy, charismatic legitimacy, is also noted by these writers.

Suchman, n 36 above; Zucker, n 36 above.

37 10

Julia Black Legitimacy and the Competition for Regulatory Share

legitimate in providing humanitarian relief for those affected by civil war but not in

lobbying for regime change.

38

Finally, we know from work on compliance that legitimacy is also affected by the

manner in which regulators perform their roles. Work on compliance with state-

based regulators and regulatory norms suggests that the observance by regulators of

principles of ‘fairness’ or ‘due process’ (colloquially defined) affects people’s

assessment of their legitimacy and in turn, those person’s propensity to comply.

39

Assessments of regulators’ ‘legitimacy’ can thus differ significantly across time

Legitimacy claims may

and space, and between actors, systems, and contexts.

40

change, and organisations can lose legitimacy from a particular legitimacy community

as the claims of that community change to require conformance to a different set of

values. But legitimacy can also resilient – legitimacy communities may ‘forgive’

individual transgressions by organisations. Conversely, an organisation may not be

41

regarded as legitimate by other legitimacy communities because it does not conform

to their pragmatic, normative and / or cognitive claims. In other words, the regulator

is not serving their self-interests; and / or does not conform to their normative

criteria; and / or because there exist significant and deep-rooted cognitive barriers to

accepting the regulator as being legitimate. These barriers to legitimacy, particularly

cognitive barriers, it is suggested, are as important in understanding the dynamics of

the contest for legitimacy as the reasons why it may be bestowed.

42

It is worth exploring the nature of the claims that are usually made on regulators

more closely to explain how the differences in legitimacy claims can arise. Take first

cognitive legitimacy. Cognitive legitimacy is based, in the regulatory context, on the

almost unquestioning acceptance of an organisation having a right to govern. NSRs

cannot gain this cognitive legitimacy from their formal legal status, but they may gain

it through the way that they operate. Meyer and Jepperson, for example, argue that

there has developed a particular model of actorhood – of rational, purposive action in

. M. Edwards and D. Hulme (eds), Non-governmental Organisations: Performance and Accountability (London:

38

Earthscan, 1995).

T. Tyler, Why People Obey the Law: Procedural Justice, Legitimacy and Compliance (New Haven: Yale

39

University Press, 1990); T. Tyler, ‘The Psychology of Legitimacy: A Relational Perspective on Voluntary

Deference to Authorities’ (1997) 1 Personality and Social Psychology Review 323-345; V. Braithwaite and M.

Reinhart, ‘Taxation Threat, Motivational Postures and Responsive Regulation’ (2007) 29(1) Law and Policy

137; V. Braithwaite, J. Braithwaite, D. Gibson, and T. Makkai, ‘Regulatory Styles, Motivational Postures

and Nursing Home Compliance’ (1994) 16 Law and Policy 363.

This differs slightly from Beetham, n 34 above, 10, who argues they rest solely on the characteristics of

40

the regime, although he also states that what is significant is the resonance that those characteristics have

for different actors within and outside the regime; however, he is not so concerned with delineating the

differences between legitimacy communities.

Although as Suchman argues, the resilience of legitimacy is linked to its basis: pragmatic legitimacy is

41

less resilient than moral or normative legitimacy, which is in turn less resilient than cognitive legitimacy.

For discussion, see Suchman, n 36 above; Zucker, n 36 above.

For example, different parts of an organisation may simply reject what another tells them, simply

42

because of where it has come from - management, or from compliance, or the union (eg Neil

Gunningham’s LSA paper on management-based regulation in mines in Australia – deep-rooted

antagonism of miners to management and so refusal to adopt any management edicts or systems

irrespective of any functional value they may have). The same can be true for organisations and those

outside them. 11

14/2009

which organisations can exert control over the messy world which surrounds them.

43

Organisations which can present themselves in this image are afforded legitimacy as it

taps into these more deep-rooted notions of what an acceptable regulatory

organisation should look like and should do.

Normative legitimacy, in the regulatory context, is frequently based on one or

more of four main sets of normative claims:

• Democratically-based claims relating to the composition and / or deliberative

procedures of the regulator

• Goals / values-based claims relating to the goals or values that the regulators is

pursuing

• Constitutionalist-based claims relating to the extent to which the regulator

conforms to what may be loosely termed ‘constitutional’ values such as

proportionality, transparency, consistency, or broadly framed ‘rule of law’

values of rules which are open, stable, clear and prospective (even though

their norms may be soft law)

• Functionally-based claims relating to the values such as the effectiveness,

expertise, speed, and efficiency of the regulator.

However, as noted above, the extent to which regulators are perceived as

legitimate is not only based on cognitive and normative assessments, but on pragmatic

assessments. Pragmatic legitimacy is often excluded from legal and political science

accounts of legitimacy (indeed seen as an illegitimate form of legitimacy), but it can be

The dynamics

significant in practice, even though it may be normatively undesirable.

44

of ‘responsible consumerism’, for example, in which consumers make purchasing

decisions not just on the price and quality of goods, but on peripheral attributes such

as the conditions of their production (labour rights, sustainable development) or the

terms of their economic transfer in the supply chain (fair trading), mean that firms

both on the supply and demand side can have a significant pragmatic and economic

self-interest in complying with social and economic norms that bodies such as FSC

generate, as consumers consider these regulators to be legitimate on normative

grounds. The FSC’s legitimacy is thus pragmatically-rooted for some (e.g. suppliers),

45

and normatively-based for others (consumers).

46

J.W. Meyer and R.L. Jepperson, ‘The ‘Actors’ of Modern Society: The Cultural Construction of Social

43

Agency’ (2000) 18(1) Sociological Theory 100.

See also Bernstein and Cashore, n 1 above. On the role of self-interest in the compliance with ISO

44

14001 standards, see M. Potoski and A. Prakash, ‘The Regulation Dilemma: Cooperation and Conflict in

Environmental Governance’ (2004) 64(2) Public Administration Review 152.

Bernstein and Cashore, n 1 above.

45 Of course some consumers may see the FSC as legitimate as it is in their self-interest to do so, and

46

some suppliers may see the FSC as legitimate on normative grounds, for example because they support

the goal of sustainable development. 12

Julia Black Legitimacy and the Competition for Regulatory Share

COMPETING FOR LEGITIMACY

In one sense there is nothing original in pointing out that different groups of people

value different things, though normative assessments of legitimacy made by academic

writers can sometimes overlook this point. But the point being made here about

47

fragmented legitimacy communities is somewhat different. It is that the fragmentation

of legitimacy communities and their competing claims pose a functional challenge for

regulators, particularly non-state regulators, not just a normative one for academics or

policy-makers.

How and why does this functional challenge arise? This question brings to the

fore a key issue which discussions on state-based regulators obscure: an awareness of

why regulators need legitimacy. The answer is that all regulators, including non-state

regulators, need legitimacy because legitimacy is a critical element in motivating

behavioural responses. Regulators require not only that others accept them, but that

48

they change their behaviour because of what of the organisations or standards say.

NSRs have a particular problem, because unlike state-based regulators whose

actions are supported by law, non-state regulators cannot necessarily rely on the

49

authority of law to motivate people to behave, or derive their legitimacy from their

position in a wider legal order and constitutional settlement. They have to create the

motivation for compliance or change in some other way. That can include trying to

50

render themselves legitimate to states in an attempt to attract support, for example by

enacting their norms into law. Non-state regulators may then be linked to state actors

in ways within a regulatory regime which mean that they can ‘borrow’ on the

legitimacy of the state (e.g. state actors could choose to adopt their norms, and indeed

turn them into law, such as the EU’s adoption of IASB standards in accounting).

However, such links may not exist for others, or for the same organisation in a

different legal jurisdiction. Or NSRs will often enrol others to enforce their

standards, expanding the number of organisations participating in the regulatory

51

regime. Such enrolment does not avoid the need for legitimacy, however, but

enhances it and often raises the issue of role legitimacy (is an NGO a legitimate

‘enforcer’ of standards, for example).

Distinguishing state from non-state regulators in this context does not mean that

state-based regulators are always perceived as legitimate, and compliance is necessarily

forthcoming (or indeed that the state is always absent in polycentric regimes).

Research into compliance with state-based regulatory requirements shows that how

people respond to regulatory regimes can depend significantly on their perceptions of

For exception, see eg C. Harlow, ‘Global Administrative Law: The Quest for Principles and Values’

47

(2006) 17 European Journal of International Law 187-214.

Suchman, n 36 above.

48 By which are included legally constituted regulators in the EU.

49 For discussion of cooperative strategies in the transnational context, see A. Chayes and A.H. Chayes,

50

The New Sovereignty: Compliance with International Regulatory Agreements (Cambridge, Mass.: Harvard University

Press, 1995).

J. Black, ‘Mapping the Contours of Contemporary Financial Services Regulation’ (2002) 2 Journal of

51

Corporate Law Studies 253; D. Kerwer, ‘Holding Global Regulators Accountable: the Case of Credit Rating

Agencies’ (2005) 18(3) Governance 453-475; id, ‘Rules that Many Use: Standards and Global Regulation’

(2005) 18(4) Governance 611. 13

14/2009

the legitimacy of those regimes and the particular regulator in question. But although

52

legitimacy is central to motivating behaviour in all regulatory regimes, it is particularly

critical for non-state regulators who do not necessarily have the legitimacy of the state

or supranational or international settlement to fall back on. For them, satisfying

multiple legitimacy communities (or rather a certain set of legitimacy communities) is

particularly necessary if their authority is to be recognized and accepted, and thus for

their continued survival as a regulatory body. State-based regulators can borrow on

the authority of the state or the international legal regime to bolster their legitimacy

claims, but non-state regulators need to build legitimacy from the start.

Legitimacy is therefore essential to the regulator’s ability to function effectively,

in other words to be able to regulate others. But there is an added dimension to the

need for legitimacy. It is that more than one NSR can be trying to regulate others who

are operating in the same regulatory domain. Often, as Meidinger notes, a code

sponsored by a non-governmental organisation is countered by one sponsored by

industry. Thus in forest stewardship, for example, there are two main NSRs – the

But

FSC, the industry-sponsored Program for Endorsement of Forest Certification.

53

the competition may not fall so neatly into industry versus non-industry. In the realm

of fair trade, for example, both the Fair Trade Labelling Organisation and the World

Fair Trade Organisation have sets of standards and certification processes, which

although they serve similar markets and seek to make the same kinds of appeals to

consumers, are based on different approaches to Fair Trade monitoring and

certification. Regulators, particularly NSRs, thus may find they have to compete with

each other for ‘regulatory share’. In this competition, legitimacy can play a key role.

COMPETING FOR REGULATORY SHARE

The idea that non-state regulators have to compete for regulatory share might sound

an odd notion to administrative lawyers, who by their nature focus largely on state

based regulators that form part of the administrative structures of government. These

state regulators may have to ‘compete’ with other regulators in other jurisdictions in

order to attract business, and they may overlap or otherwise have to coordinate with

other regulators in the same jurisdiction, for example the concurrent competition

powers of sectoral regulators and the OFT or overlapping responsibilities for water

quality between the Environment Agency and Ofwat, but they do not have to

compete with each other to try to get firms or others to follow their rules rather than

those of another regulator. They do have to ensure that firms abide by the regulatory

rules and not their own organisational or industry norms, but as organisations, their

regulatory remits are secure, because they are legally defined and sanctioned. Some

See in particular Tyler, n 39 above (1990 and 1997); Braithwaite and M. Reinhart, n 39 above;

52

Braithwaite, Braithwaite, Gibson, and Makkai, n 39 above. See also A. Chayes and D. Shelton,

‘Commentary: MultiLateral Arms Control’ in D. Shelton (ed), Commitment and Compliance: The Role of Non-

Binding Norms in the International Legal System (Oxford: Oxford University Press, 2000).

Meidinger, n 1 above; see also Abbot and Snider, n 1 above.

53 14

Julia Black Legitimacy and the Competition for Regulatory Share

non-state regulators, such as the GMC, are in a similar position in that they have been

granted a legal monopoly to regulate a certain group of people (doctors).

Moving beyond the boundaries of state-based or state-sanctioned regulators,

however, there is a plethora of non-state organisations which attempt to regulate

firms or others in accordance with a set of norms, and which have no state

endorsement or backing at either national or international level. There are multiple

examples at the transnational level, such as the Fair Trade Labelling Organisation, the

Forest Stewardship Council and the Marine Stewardship Council. At the national

level, within the UK there are both industry and non-industry based codes. In the area

of food, for example, there is the Red Tractor logo of the Assured Food Standards

organisation, as well as the non-industry based RSPCA’s ‘Freedom Food’ certification

and labelling scheme. It is open to industry to seek OFT approval of their Codes, but

this does not give them legal force and is in any case voluntary.

The codes and practices of NSRs are usually discussed either as manifestations of

the phenomenon of governance or decentring, or in terms of the challenges of

decentred regulation outlined above: functionally -- how effective are they in changing

industry behaviour; normatively -- do they only further the self-interest of their

member firms or do they seek to pursue a broader social goal; constitutionally -- what

challenges do they pose to constitutional norms such as accountability; or systemically

-- how do their ‘soft’ law norms interact with ‘hard’ law and what does this interaction

and fragmentation mean for our understanding of ‘law’ and law’s understanding of

itself.

What I am suggesting here is that, in addition to those discussions, we see the

regulatory norms themselves as part of a dynamic process by their sponsoring

organisations to expand the regulator’s ‘regulatory reach’. Where the organisation is

the sole body producing norms in a particular domain or sector, then their challenge is

to get industry or other organisations to recognize and comply with those norms.

Where they are not the sole body producing norms which purport to govern a

particular sector or activity (ie food production, animal welfare, accounting norms),

then the NSR may be implicitly or explicitly in competition with other organisations,

which may in turn be either state-based or state-sanctioned regulators or non-state

regulators. In these circumstances, the challenge for the non-state regulators (NSRs) is

not just to gain compliance as such, but to compete against other rival regulators in a

battle for ‘regulatory share’.

54

This idea that non-state regulators compete for regulatory share is unfamiliar to

administrative law discourse (as it is to much regulatory discourse as well), and as such

requires some unpacking. The argument runs like this: I have argued above that

organisations need legitimacy to survive, but that there are multiple legitimacy

communities, each with competing legitimacy claims. NSRs need to gain legitimacy

from those they seek to regulate. Frequently, the charge is that they do so by writing

rules which favour industry. However, non-state regulators, particularly those who are

attempting to regulate the conditions of production (Fair Trade, Rugmark, FSC, etc)

also need to have the support of consumers if the NSR is to be effective in

State-based regulators can also compete for regulatory share by attempting to ‘export’ their regulatory

54

norms; we will return to this issue below. 15

14/2009

stimulating demand-side pressures for compliance. In other words, they need to be

legitimate to consumers, as well. It is therefore not enough for them simply to write

rules that render them legitimate to firms (eg by being in the firms’ self-interests), they

have to make themselves legitimate to a wider range of legitimacy communities, who

may be making competing legitimacy claims. -

L

EGITIMACY AND REGULATORY COMPETITION CREATING AND MANAGING

LEGITIMACY

So how can regulators create and manage their legitimacy? Again the idea that

regulators, both state and non-state, ‘create and manage’ their legitimacy may be a

strange notion to constitutional or administrative lawyers, who are used to thinking in

terms of evaluating the legitimacy of regulators in a context in which the regulator is

implicitly assume to be a passive agent, an ‘object’ which can be evaluated. But

regulators, like states, or indeed any organisation, can play a role in constructing,

55

maintaining and repairing their own legitimacy in three main ways: by conforming,

manipulating, or informing. They can conform to the ‘legitimacy claims’ of

56

legitimacy communities, for example by pandering to their self-interest, or by trying to

conform to normative claims by making themselves more representative, or more

expert, or more transparent, or by aligning themselves with someone who has those

qualities, and so building legitimacy networks.

Many state-based regulatory agencies, for example, have developed systems of

public consultation, decision-making, and reporting which go well beyond those

required by law to enhance their normative legitimacy. Non-state regulators also can

57

seek to manage their legitimacy, both out of self-interest and because they perceive it

to be the ‘right thing to do’ -- in March and Olsen’s terms, out of a logic of

consequences and a logic of appropriateness. The International Accounting

58

Standards Committee has changed its constitutional structures and membership to

enhance its legitimacy. Cashore’s analysis of the FSC’s legitimacy illustrates how the

FSC seeks to manage its pragmatic legitimacy by engaging in ‘brand-destroying’

activities against those who do not conform, thus attempting to make conformance

with its norms be in the self-interest of firms in the supply chain. However,

59

legitimacy-enhancing strategies can be multi-faceted, and Meidinger’s analysis of FSC

emphasises how it seeks to manage its normative legitimacy by enhancing the

democratic nature of its membership and processes.

60

Regulators can also seek to develop moral and cognitive legitimacy through

building ‘legitimacy networks’, in other words linking themselves to other

See e.g. S.M. Lipset, ‘Some Social Requisites of Democracy’ (1958) 53 American Political Science Review 69;

55

R. Merelman, (1966) 60 American Political Science Review 548; Habermas, n 35 above.

See Suchman, n 36 above; P. DiMaggio and W. Powell, ‘Introduction’ in W. Powell and P. DiMaggio

56

(eds), The New Institutionalism in Organisational Analysis (Chicago: University of Chicago Press, 1991).

See M. Thatcher, ‘Regulation after Delegation: Independent Regulatory Agencies in Europe’ (2002)

57

9(6) Journal of European Public Policy 954.

March, J. and Olsen P., ‘The New Institutionalism: Organisational Factors in Political Life’ (1984) 78

58

American Political Science Review 734.

Suchman, n 36 above.

59 Meidinger, n 1 above.

60 16

Julia Black Legitimacy and the Competition for Regulatory Share

organisations which are perceived to be legitimate by those whose legitimacy claims

they want to meet. For example, a number of the social and environmental

accreditation bodies have agreed to ensure that they abide by the Code of Practice

developed by ISEAL (the International Social and Economic Accreditation League)

on the development, publication, and review of standards by member organisations,

largely to enhance their credibility. Modelling can also be adopted as a strategy to

61

enhance legitimacy by an NSR. Froomkin, for example, argues that ICANN has

developed procedures modelled on the Internet Engineering Taskforce, which is

widely accepted as legitimate by the internet community, in an attempt to gain

legitimacy for itself. 62

Alternatively, regulators can adopt less honourable strategies than actually

conforming to normative claims and can attempt to gain legitimacy through

manipulation, pretending to conform to the perceptions of the legitimacy

communities (eg ‘green-washing’). Or they can attempt to change or manipulate the

reasons why legitimacy is being given, such as attempting to refute democratic claims

by appealing to functional claims, in other words by advancing the argument that it is

more important for them to be dominated by experts than it is for them to be

democratic, as enhancing their democratic nature would reduce their effectiveness.

This argument is one which has traditionally been used by technical NSRs, such as the

BCBS or IASB, just as it has been used in the area of scientific risk assessments and

risk management by state-based regulators.

Regulators can also increase their legitimacy by providing information on aspects

of their existing activities which they think will provide a basis for acceptance from

different legitimacy communities. This strategy can clearly be used alone or in

conjunction with the other two. The form that any of the strategies will take vary with

the type of legitimacy that is at issue: pragmatic legitimacy (based on self-interested

claims of legitimacy communities), moral or normative legitimacy (based on

assessments that this is the ‘right thing to do’), or cognitive legitimacy (based on

assumptions that things could not be any other way), and on whether the organisation

is seeking to build, maintain, or repair legitimacy. 63

Regulators can also switch between legitimacy claims in attempts to enhance

their legitimacy within different communities. Wood’s work on the ISO provides a

good illustration. When the ISO started to lose ground in its functionally-based

64

legitimacy claims (ie that it is technical, expert), it switched to an alternative claim, but

one which was more cognitively-rooted: that it was the most appropriate body

because of its long-standing existence and role in a related area.

ISEAL Alliance, Code of Good Practice, at http://www.isealalliance.org/

61

index.cfm?fuseaction=Page.viewPage&pageId=502&parentID=500. See also E. Meidinger, ‘Multi-

Interest Self Governance through Global Product Certification Programs’ (Buffalo Legal Studies

Research Paper 2006-016), at http://ssrn.com/abstract=917956.

A. Froomkin, ‘Habermas@discourse.net: Toward a Critical Theory of Cyberspace’ (2003) 116(3)

62

Harvard Law Review 749, 844-845.

Suchman, n 36 above, 585-601. See Cashore for consideration in the context of the FSC: B. Cashore,

63

‘Legitimacy and the Privatization of Environmental Governance: How Non-State Market Driven

(NSDM) Governance Systems Gain Rule Making Authority’ (2002) 15(4) Governance 503-529.

S.Wood, ‘Will ISO 26000 Corner the Market for International Social Responsibility Standards?’

64

Competition for Transnational Regulatory Authority (paper presented at the SLSA conference, Montreal, May

2008) (copy on file with author). 17


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Materiale didattico per il corso di Theories of Regulation della prof.ssa Laura Ammannati. Trattasi dell'articolo di Julia Black dal titolo "Legitimacy and the Competition for Regulatory Share" all'interno del quale è affrontato l'argomento dell'importanza della legittimazione nell'attività di regolazione del mercato.


DETTAGLI
Corso di laurea: Corso di laurea magistrale in economics and political science
SSD:
Università: Milano - Unimi
A.A.: 2011-2012

I contenuti di questa pagina costituiscono rielaborazioni personali del Publisher Atreyu di informazioni apprese con la frequenza delle lezioni di Theories of Regulation e studio autonomo di eventuali libri di riferimento in preparazione dell'esame finale o della tesi. Non devono intendersi come materiale ufficiale dell'università Milano - Unimi o del prof Ammannati Laura.

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