Accountability and Consumer Sovereignty

Martin Lodge

Orthodox debates about the supposed accountability deficit of the regulatory state have largely focused on institutional relationships between elected representatives and regulatory bodies (Mulgan 2000). However, what are the implications of changing the focus of analysis from the reporting obligations of regulatory bodies toward provisions advancing consumer choice? This chapter takes such a 'consumer sovereignty' perspective and argues that accountability-related debates need to consider what public services actually seek to achieve rather than regard accountability as an end in itself. Furthermore, it explores the (limited) extent to which European telecommunications and energy regulators have sought to advance consumer sovereignty through a 'web census'.

The traditional interest in accountability has focused on the institutional aspects of the regulatory state - characterized by a shift towards the private provision of public services, contractualized relationships between procurer and provider(s) of services, and oversight by quasiautonomous agencies outside the 'normal' ministerial line hierarchy (also Chapter 1 of this volume). First, the regulatory state has triggered debates about the discretionary decision-making power of 'non- majoritarian' institutions, that is, those bodies that do not have a directly elected mandate. Second, the regulatory state has attracted criticism as its institutions and overall policy settings are said to represent a shift towards an emphasis on efficiency-related administrative values (as opposed to fairness or redundancy-related values). Such a value shift has distinct implications for understandings of democracy, as it represents a change in the understanding of citizenship. Third, and finally, those observers who focus on the 'decentred' nature of the regulatory state by emphasizing the prevalence of non-state actors in transnational and national regulation highlight accountability-related concerns about how hybrid, and sometimes purely private, constructions can be held to account.

Debates surrounding these three concerns about the regulatory state's accountability have offered valuable insights into long-established controversies in political and administrative life. Accountability-related problems appear everywhere: unelected officials abuse their office, politicians 'cheat' by ignoring procedural safeguards that are supposed to protect agency autonomy, resourceful private interests benefit from lucrative arrangements at the expense of the general public, and transnational actors reduce the scope for national (that is, electorally legitimized) priority setting. This has given rise to all sorts of listings of accountabilities (horizontal vs vertical; political, legal, professional and market-type forms of accountabilities; citizen-oriented and other conceptions of accountability; see Bovens 2007; Cuellar 2005; Mulgan 2000; Olsen 2013; Schillemans 2011; Yesilkagit and van Thiel 2011).

Accountability per se is seen as important - the 'more' accountable various actors are in performing their roles, the 'better'. Other accounts suggest that 'more' accountability is a problematic idea when seen from different viewpoints as to which accountability relationships matter most (such as 'professional' and 'political' types). This links to a wider literature that considers the limits and unintended effects of various methods of holding to account and their unintended effects. One example of such an accountability-seeking programmatic idea that is having potentially highly undesirable effects is that involving 'audit': the spread of 'audit' as a programmatic idea and a potentially questionable technology leads, at best, to rituals of verification and (potentially dangerous) placation effects rather than insightful understandings about the running of an organization (Power 1997).

In contrast, the literature in the regulation field has a normative commitment towards 'more' in terms of political accountability - office holders are supposed to be accountable to politicians, who themselves are accountable to the voters. The literature discusses this 'chain of delegation' in the analytical language of principal-agent terminologies - actors are said to 'drift' in self-interested and strategic ways. Such a concentration on political accountability clothed in the language of principals and agents is problematic. Such terminologies misrepresent the fiduciary relationships involved in regulation that are precisely not positioned between a 'principal' and an 'agent' - and where the problem is also about holding 'principals' to account. Furthermore, disputes about the 'more' hide more fundamental disputes about what (regulated) public services are meant to achieve, not about how accountable they are.

So far, so non-accountable. What unites these debates is an interest in exposing actors, to whip them into line and thereby reduce the scope for strategic discretionary behaviour that might fall short of wider expectations. A variety of mechanisms have been explored to consider how accountability can be understood in ever more differentiated ways, whether they be political, legal, professional or horizontal or vertical. Such an understanding of accountability is usually shaped by an interest in the conduct of a governing institution, namely the (usually non- majoritarian) 'agency' conducting regulatory activities. Less interest has been paid to regulated industries themselves.

In contrast to these orthodox debates, this chapter suggests that accountability in regulation should be considered in the light of contrasting perspectives as to what public services should achieve. Accountability is not a value in its own right, but facilitates a particular conception of a public service. Three perspectives on how to conceptualize a public service can be distinguished: 'fiduciary trusteeship', 'citizen empowerment' and 'consumer sovereignty'. The first is the traditional legal-public administration view of formal obligations (and sometimes voluntarily undertaken functions) to report on particular activities, the second is defined by its emphasis on the importance of participation as a transformative process, whereas the third is about maximizing individual choice in the marketplace; services are therefore to be accountable to the customer.

This chapter concentrates on the third perspective, namely consumer sovereignty, by discussing this perspective in the light of utility regulation. After all, if 30 years of liberalization and marketization have had one effect, then it should be in the way in which regulatory regimes have moved towards enabling the consumer to undertake competent choices. Thus, the relationship in some regulated domains can be assumed to have moved towards a consumer sovereignty perspective. This chapter considers to what extent accountability relations reflect this trend. A consumer sovereignty-based perspective has received further attention in the light of the 'discovery' of so-called behavioural ('nudge') approaches, which has drawn regulators into reflecting on the ways in which consumer choice is facilitated or not.

This chapter therefore addresses two related discussions. One is to further develop the consumer sovereignty perspective so as to add to the wider literature on the relationship between accountability and the regulatory state in the context of democracy. The other is to develop indicators to explore the extent to which sectoral regulatory regimes have moved towards a consumer sovereignty-type regime. This chapter therefore also contributes to this volume's discussion of measurement in the study of accountability. It assesses how contemporary (European) regulatory agencies in telecommunications and energy have adopted consumer sovereignty-related mechanisms.

The rest of this chapter first introduces the consumer sovereignty perspective, and contrasts it with more established perspectives on accountability. It then develops indicators that permit an assessment of how a regime scores in terms of consumer sovereignty. Finally, these indicators are used for an explorative comparison of 29 European telecommunications and energy regulators. The chapter concludes by highlighting the limited extent to which consumer sovereignty has taken hold in regulatory regimes and contrasts this limited finding with the wider appeal of so-called behavioural approaches towards regulation (that is, 'nudging') that emphasize similar recipes for improving overall regulatory outcomes for consumers.

 
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