The trouble with accountability
The focus here is on a specific sector, yet the analysis engages with the broader framework of the book in terms of the concept of regulatory accountability, a definition of it as given by Bovens (2007, see also Bovens et al. 2008) and its extension and fine-tuning by the editors (Jordana et al. this volume). In this literature, accountability is seen in terms of a post hoc obligation to explain and justify decisions taken by regulators. Such obligations may be upwards-facing (to parliaments and/or ministries), horizontal (to peer regulators and other specialist interlocutors; see below) and/or downward-facing (to regulatees and other affected parties). However, this chapter claims that framing the issues in such a way has a political effect that needs to be compensated for: accountability is intrinsically post hoc. Moreover, as the editors explain in their introduction, accountability is closely related to justifications for delegation to technical actors who are fully or largely independent.
For example, as far as upward-facing accountability is concerned, regulators do not normally come to a parliament asking for advice on how to shape the agenda or how to frame rules; they report afterwards. Thus, accountability, delegation and (varying degrees of) regulatory independence are mutually constitutive. Furthermore, when obliged to demonstrate upward-facing accountability, regulators may be more comfortable when dealing with a technical interlocutor, such as officials in a national ministry or in the European Commission, than with 'the perils of parliamentarization' (Majone 2013). Technocratic actors may be most comfortable with horizontal accountability - that is to say, regulatory networking and self-validation negotiated between peers, or at least professionally and occupationally similar groupings, who broadly share a world view and collectively weave a narrative (Froud et al. 2012). Such peers are found in other regulatory agencies and in national, regional and international fora (Picciotto and Haines 1999; Kelly 2014). To put things this way is to lay emphasis on the relative density of interactions between regulators and their immediate peers - those at national level or higher with whom they may communicate on at least a weekly or monthly basis - as distinct from officials in bodies such as the executive or the legislative, with whom relations are no less important but are more informal and infrequent. As Pasquino puts it, the latter, less frequent and more formalized form of contact 'occurs when the various institutions in different ways are in a position to control the activities of another specific institution' (Pasquino 2011: p. 17, cited by this volume's editors in their introductory chapter). The view taken here is that such more formalized forms of contact and accountability may have a closer fit with upward accountability as defined by the editors, being close to (yet of course still distinct from) accountability to elected politicians. We may take in illustration the ways in which regulators, between themselves, refer to parliaments (national and European): when they say 'the parliament', they refer to it generically, meaning parliamentary staff and elected politicians. Similarly, when referring to 'the ministry', ministry staff and ministers are implied. Clearly there is an element of upward accountability here - which may, however, be functionally weak, one of the motifs of this chapter.
By way of distinction, horizontal relations and accountability, with peers, is characteristically both a more familiar matter and, as conceptualized here, a functionally stronger relation. It is helpful to make clear, for present purposes, that there is more closeness and more of an epistemic community (Adler and Haas 1996; the chapter by Isik Ozel in the present volume; and text below) between regulators than between them and those in other public positions. Absent strong political interest and demands from elected politicians or parliamentary staff, upward- facing account-giving has a tendency to take second place to horizontal, internalized, communal self-validation.
So, as can be observed in relation to the important case of financial market regulation in the pre-crisis period, whatever the merits of a theoretical distinction between vertical and horizontal accountabilities, these two can become hard to distinguish in practice from what we could call internal or peer accountability. The internal space referred to is that of the transnational regulatory community. Horizontal/internal accountability becomes formalized, institutionalized and indeed celebrated when the financial market regulators are independent central banks (the 'autonomous technocrats' of the title of this chapter), whose external account-giving is symbolically highly important, compensating for their high degree of de facto autonomy (see Library of the European Parliament 2013). When accountability means giving reasons after the event, and when the discourse is generally defined by the regulator in terms more familiar to it than to elected representatives (or citizens), as may be the case, for example, of the European Central Bank before the EP, then the formality of the accountability arrangement may not quite translate into political (even post hoc) control.
The attempt being made here is threefold: to critique the pre-crisis model of post hoc accountability as a legitimization for delegation of functions to technocratic agencies; relatedly, to give reasons for doubting that technocratic networking of central bankers is an appropriate answer to a crisis that was (and remains) predicated on overconnectedness of markets, exacerbated by global over-convergence of regulation; and to call for re-embeddedness of policymaking within the political realm, as commonly understood. This implies political parties' engagement in agenda-setting and greater parliamentary involvement in rule-making: in short, the subjection of financial market regulation to the rough-and-tumble of democratic politics. In another context, this is referred to as the 'banalization' of financial market regulation (making it politically mainstream; see Dorn 2014a). What is encouraging about the 'post-crisis' space is that there are empirical signs this is taking place; notably in Europe, for example, elected politicians are increasingly involving themselves in the formulation of policies on financial markets (being more 'hands on') and are directly instructing technocratic actors, not just seeking post hoc accounts from them (Parliamentary Commission 2013). This is creating a new atmosphere that is normatively desirable and functionally useful.