Perspectives on accountability in the regulatory state

As noted, traditional debates regarding the regulatory state have focused on a number of key concerns (Graham 1997; Rose-Ackermann 2008; Stone 1995). Among the key concerns are those relating to the power of 'delegated' agents to evade their mandated objectives (Busuioc et al. 2011; Busuioc 2012; Koop 2011; Koop 2014), those focusing on 'dispersion' and resultant interdependent and shared responsibilities (Black 2008; Bovens 1998; Hancher and Moran 1989), and those emphasizing the power of regulated industries in dominating the regulatory process (Dunleavy 1994).

Much of the existing literature on these themes displays an institution-centred perspective on accountability. It suggests that democratic values need to be protected by 'opening up' the decision-making of politically powerful institutions (with relevant implications for democracy and citizenship). In addition, the existing literature often represents a 'trusteeship' perspective that sees governing institutions, especially regulatory agencies, as guardians of the public interest and welfare. Such a perspective might be criticized as being naive (at least by those of a somewhat more self-interest-oriented perspective to regulation), but it is also a perspective that takes the agency as the centre of regulated activities.

A concentration on agencies is helpful for analytical and research purposes. However, such a concentration is problematic for those who argue the case for a 'decentred' or a 'regulatory regime' perspective (Black 2008). It is problematic as obligations to be 'accountable' might be distributed across actors whose responsibilities might overlap- and underlap. Furthermore, a 'governmental' focus is problematic as it cannot deal with the variety of responses that emerge from the traditional battery of questions regarding 'who to whom through what processes, for what and by what standard and with what sanction' (Mashaw 2006).

A somewhat distinct but related concern with accountability relates to the value base of the 'regulatory state'. In particular, the shift from the 'positive state' with its interest in fairness and redistribution, towards a 'regulatory state' with its emphasis on efficiency, has substantial implications in terms of who the 'winners' and 'losers' might be in such a shift of core values (which might reflect a change in median voter, for example) (Majone 1997). For some, therefore, this presumed shift has implications for understandings of citizenship (Bozeman 2002; Haque 2001).

Related to this, the regulatory state also places a growing emphasis (given the non-majoritarian nature of its discretionary decision-making) on output-based legitimacy. Thus, if the 'product' of the regulatory state, namely 'secure' and 'cheap' (or 'efficient') public services, are achieved, one might then argue that the regulatory state is 'legitimate'. This means that accountability of the regulatory state should be studied primarily on the output and not the procedural side. If, however, the regulatory state delivers unintended consequences or its outputs remain unobservable/unaccountable, then it might be seen to be losing legitimacy.

Such an emphasis on 'performance' (and, thus, performance-based standards) flies in the face of the growing emphasis on management- based standards and enforced self-regulatory regimes where the key accountability 'need' relates to the way in which parties conduct their self-regulatory arrangements and how they are being held to account by state and non-state actors. Here accountability takes on a distinct procedural characteristic. The regulatory state therefore cannot be pictured merely as a system where accountability everywhere can be or should be understood in terms of outputs or outcomes. The regulatory state, in contrast, holds to account from a distance, seeking to encourage 'self-control' rather than in-depth information-gathering and revelation.

Considering accountability in regulation in the context of the 'grammar of institutions' (as coined by Mashaw 2006; also Lodge and Stirton 2010) offers a different approach to the traditional focus on institutions and instruments. Such a focus concentrates on the instrumental value that the actual public service seeks to achieve. This chapter's particular interest is in exploring the implications of the consumer sovereignty perspective on accountability. The focus therefore is on accountability as an 'obligation to inform customers so as to allow them to make informed choice decisions'. This contrasts with the more traditional definition of accountability as the 'obligation to explain and justify conduct to some other party', with these parties being defined in terms of governmental actors (Day and Klein 1987: p. 255). This latter definition characterizes a fiduciary trusteeship understanding; accordingly, accountability is important as a representative actor who is supposed to act in the wider interests of those he or she represents takes decisions. The third perspective, the citizen empowerment perspective, would define accountability as the 'obligation to maximize participation in decision-making'.

In the consumer sovereignty perspective, the key interest is in how a regulated service is accountable to a potential user. Whereas the fiduciary trusteeship perspective views the politician or some representative as critical in holding an agency to account, the interest of a consumer sovereignty-informed perspective is in the individual 'users' seeking to understand their rights, choices and obligations. This means it is not really that important to consider how and whether regulators have to appear in front of parliamentary committees or what kind of societal interests are incorporated in the governance of the regulatory agency and/or its decision-making. Similarly, it is only of limited interest how participatory decision-making processes are. What matters from a consumer sovereignty perspective is whether and how users can exercise their choice.

Table 11.1 offers a summary of these three 'grammar of institutions' perspectives on accountability. It highlights the core differences in terms of definitions and analytical focus. None of the perspectives has fundamentally different views about the level of rationality of the individual - however, the bounded rationality of the individual is addressed in very different ways. The three perspectives point to fundamental differences in the way in which institutions are understood (that is, what their value is) and therefore agreement is likely to be limited: the same instrument of making a regulated service accountable might be advocated for completely different reasons. At the same time, Table 11.1 also illustrates that neither consumer sovereignty nor any other perspective should be seen

Table 11.1 Contrasting three perspectives on accountability

Fiduciary

trusteeship

Citizen

empowerment

Consumer

sovereignty

Definition

Obligation to explain and justify conduct to a representative body

Obligation to maximize participation in decision-making

Obligation to

maximize

informed

consumer

choice

Instrumental value of service

Well-informed decisions on behalf of others to facilitate well-being

Realization of citizenship rights

Realization of individual freedom to choose in marketplace

Core

accountability

value

Protection against abuses of discretionary power

Transforming

citizenship

through

participatory

experience

Maximizing role of individual in the marketplace

Understanding of individual

Individual

requires

protection given limited rationality

Individual capable and willing to engage in participatory processes

Individual capable of informed choice if enabled

Side effect/pitfall

'Paternalism' - restriction of choice and expert judgement

Lack of

decision-making capacity, high cost of participation

High

information

costs

overwhelm informed choice

Analytical focus

Focus on formal and voluntary reporting requirements along chain of political hierarchy

Focus on

decision-making

processes

Focus on possibility to perform informed and 'easy' choice

as superior. Rather, they reflect fundamentally different values, thereby limiting the possibility of outright 'shoot-outs' regarding what is 'better' accountability.

Each of these perspectives also comes with its own pitfalls. Whereas fiduciary trusteeship is widely accused of restricting individual input and tending towards paternalism, citizen empowerment is criticized for its hyper-accountability and indecisiveness. Consumer sovereignty's pitfall is the cost of acquiring and acting on information and whether such choices will be 'well informed' rather than being based on sub-optimal hunches and other decision-making biases.

The limits of consumer sovereignty are a matter of debate. As in any doctrinal debate, it might be argued that there are no limits to the way in which particular recipes can be applied to any given activity. Choice in accountability provisions could be explained as a result of the rise and fall of particular societal preferences and the differences in how particular argumentative strategies will be accepted (Hood and Jackson 1991). However, this chapter takes a different position: consumer sovereignty only makes sense under certain conditions. First, it requires a degree of market liberalization and therefore the presence of choice. Second, it assumes that individuals can choose in informed ways (and/or that that the opportunity costs of being informed are not too high, possibly by the presence of so-called plain vanilla products). Accountability regimes could therefore be seen as a response to the 'cost profile' of particular public services: if the information costs for particular goods or products are so high that they prohibit informed choice, a trusteeship regime may appear to be more appropriate. Similarly, where choices have distinct value implications that trigger externalities, then one may wish to emphasize 'citizen empowerment'-related dimensions. Of course, trying to calculate a 'cost profile' will always, at the margin, be about value choices. However, it seems plausible to point to inherent differences in terms of information 'cost profile' occurring to any individual between the licensing of new pharmaceutical products, choices about whether particular technologies should be introduced in the first place, and telecommunications services.

More generally, a consumer sovereignty perspective on accountability should not be confused with a view that consumers should be left to their own devices. Consumer sovereignty contrasts with pure 'market accountability'-type views. Maximizing consumer sovereignty within a regulatory regime requires a number of potentially heavy-handed regulatory interventions. These interventions are largely directed at reducing the transaction costs (or opportunity costs) that occur to (potential) users of services. For example, it is not satisfactory, from a consumer sovereignty perspective, to formally 'open up' markets to competition without creating the conditions that allow for effective choice. Complex tariff structures, incomprehensible contracts, or switching complexity incur high opportunity costs and therefore fly in the face of consumer sovereignty. Similarly, in energy, highly differentiated and incomparable tariffs and low confidence in the conduct of companies undermines consumer sovereignty. Complex and time-consuming provisions for switching bank accounts are similarly choice-inhibiting and violate consumer sovereignty. Thus, the ease and information-richness of choice is an essential complement to mere formal liberalization. This means that regulators may have a role to play in considering consumer affairs, despite their primary 'econocrat' interest in dealing with regulated industries rather than pesky consumers (see Hall et al. 2001). In sum, therefore, consumer sovereignty is about maximizing the role of the consumer in the marketplace. It is therefore far removed from a 'pure' market perspective where such interventions to enable informed consumer choice would be seen as encroaching on the rights of the producer and where, at most, the focus would be on controlling market dominance.

 
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