Independence and accountability in regulatory governance

As emphasized in the introduction to this volume, the model of the regulatory agency has become the main institutional model in the area of regulatory governance. Like other types of independent agencies, regulatory agencies exercise public authority but are not hierarchically subordinate to directly or indirectly elected politicians (cf. Thatcher and Stone Sweet 2002: p. 2). The delegation of competences to such organizations is believed to have a number of advantages from the perspective of policy efficiency and effectiveness. First, their independence would allow agencies to develop higher levels of specialization and expertise, which would result in policy decisions that are better informed and more evidence-based (cf. Bawn 1995; Vibert 2007). This is particularly important in highly complex and technical policy areas such as regulatory policy. Second, as independent agencies are exempted from electoral pressures, they would be better able to credibly commit themselves to consistent, long-term policies. This is particularly important in policy areas in which electorally attractive short-term options conflict with long-term policy consistency, a feature that characterizes areas such as monetary and regulatory policy (Levy and Spiller 1996; Majone 1996).

The insulation of regulatory agencies comes at a price, though. In particular, it has led observers to raise questions about the democratic legitimacy of the organizations and the decisions they make (see Weir 1995; Skelcher 1998; Flinders and Smith 1999; Maggetti 2010). As Majone sets out, 'democratically accountable principals can transfer policy-making powers to [independent agencies], but they cannot transfer their own legitimacy' (1999: p. 7). In other words, while the political decisions made by, or under the auspices of, democratically elected officials derive their legitimacy from the electoral process, the decision-making process of independent agencies is deliberately insulated from electoral dynamics, and therefore cannot build on the democratic legitimacy associated with elections in representative democracies.

The problem is aggravated by the fact that the electoral insulation and operational independence of the organizations implies not only an exemption from political involvement in the decision-making process, but also an exemption from the accountability mechanisms inherent in the ministerial hierarchy. As a consequence, independent agencies face, ceteris paribus, more opportunities to shirk and misuse or abuse their political power than do units within ministerial departments.

These opportunities are enhanced by the high level of expertise and specialization of the organizations, which reinforces the information asymmetry between agencies and their political principals (Binderkrantz and Christensen 2009). Hence, as Majone puts it, '[h]ow to reconcile independence with accountability is the central problem of such institutions' (1994a: p. 2).

While politicians will not be able to deal with the decrease in democratic legitimacy without overthrowing the independence of agencies, they can introduce alternative accountability mechanisms to reduce the risk of shirking and misuse or abuse of power (cf. Majone 1999; Thatcher 2002). Even though the agencies are not part of the ministerial hierarchy, they may be made subject to alternative provisions for accountability to government and parliament. Furthermore, they can be made subject to provisions for accountability to supervisory bodies and stakeholders in society.

The introduction of alternatives to the accountability mechanism inherent in the ministerial hierarchy is essential from a constitutional point of view. Constitutional (or Madisonian) perspectives emphasize the importance of the protection of citizens from the arbitrary exercise of political power (see Dahl 1956; Sartori 1995). Introduced in Europe during the Enlightenment period, constitutionalism was further developed by the founding fathers and incorporated into the Constitution of the United States of America. Its central principles are limited government, checks and balances, the separation of powers, and judicial review (see, for example, Meny and Surel 2002; Bartolini 2008). From a constitutional point of view, the insulation of agencies is problematic as it implies a weakening of the checks and balances in the political system, which increases the potential for misuse of public funds, for neglecting the rights and freedoms of citizens and for corruption and patronage. As preventing and detecting abuse and misuse of political power are among the aims of accountability arrangements, introducing accountability provisions may lead agencies to refrain from engaging in such undesirable activities.

 
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