The Rise of the Regulatory State in Europe by Giandomenico Majone - Article Example

Introduction The publication of the ‘The rise of the regulatory state in Europe’ by Giandomenico Majone is considered to be a landmark in the history of European politics. As it is with this paper, the European politics students were introduced with a new term of ‘regulatory state’. Two important trends were featured in this paper that has become central thesis for the European politics over the past twelve years. Majone argues that the currently used tools of redistribution and stabilisation gave way to modern means of regulation and legal authority. Another major shift that the paper propagated is the expansionist role of the European Commission (EU), which has exerted its influence to pass various policies in the region and globally. The growing power of EU has been attributed to the absence of any such organisation in the region. With the publication of Majone’s paper, the statement that the world is at present living in a regulatory state era has become common. Some of the features that describe this phenomenon are the concept of making public services privatised, creating regulatory bodies with quasi-autonomous power and developing relations in the framework of policy domain. One of the most important discussions that the paper undertakes is the concept of regulatory state. As per Majone, regulatory states have the power to create rules for the market to follow, which therefore, helps in steering the market dynamics as well through the formation of various regulatory bodies, rules and regulations as well as commissions. Such a state intervenes into the market indirectly through various regulatory offices. This is distinct from the concept of ‘positive states’ wherein the governments intervened openly into the market and the economy and regulated the market through various public enterprises and state-owned industries and projects. The other major point Majone makes in this paper is the rise of EU to a position of prominence world-over. This paper would review Majone’s landmark paper and focus primarily on the two trends propagated by Majone in his ‘The rise of the regulatory state in Europe’. EU as a powerful regulatory authority Majone claims that EU is actually a ‘regulatory state’ and proves it through normative and theoretical manner. As per Majone, regulation takes place to control market failures, and therefore, regulations can defined as policies that produce results which are Pareto-efficient, wherein every one involved in the market are benefited. Therefore, such a situation is not redistributive, wherein the market has both losers and winners. The governments that formulate the EU also have regulated policies that are competent with the regional level but are kept deliberately away from the domestic policies. Some of these regulated policies help in developing a single market for the region, standardising the products, creating safety and health regulations and formulating monetary policies. The EU can be termed as a regulator agency, which works just like any other regulatory agencies in Europe. It can be similar in its operation like that of a telecom agency, bank, court etc. However, due to its regulatory nature, Majone states that EU should not be democratic in its approach to formulate various policies. In case EU decides to create polices using a democratic system or in a ‘majoritarian’ manner, the Pareto-efficient would not be executed properly. This would happen as the majority would try to select an ideal situation which is as per its policies. In doing so, it would overlook the choices and opinions of the minorities. Therefore, Majone believes that this would lead to domination of the EU by the various governments of Europe and the policy-making process would become highly politicised. In case of politicisation of the process, decisions would become redistributive, which would further decrease the central premises of the EU, which is to create social policies and equality in the region. However, such politicisation would in evidently create losers and winners in the market, instead of benefiting everyone involved in the market. Thus, EU would only look after providing support to the losers in the market and would not consider identifying and then rectifying the failures. Thus, Majone believes that the problem faced by the EU is to create a credible reputation for itself rather than following a democratic system of governance. EU should therefore think of creating some changes in its fundamental system rather than re-evaluating its procedures. In order to gain greater credibility, EU should create transparency while taking in decisions, focus on becoming a professional organisation, undertake help from various technical experts, formulate regulations to protect minority rights and interests, allow scrutiny of its policies by outside consultants, media as well as various stakeholders from the EU and parliamentarians from the region. Majone also states that the European Parliament should also have greater power to inspect the expenditure incurred by the EU. Further, the Parliament should also intervene to help in raising the quality of the legislation followed by the EU. However, the interference from the Parliament should be limited and should not focus on changing the EU legislation completely and should take into account the opinions and preferences of various elected governments in the EU. Further, the Parliament should also not influence the Commission to take certain decisions or censure various regulations. On the whole, Majone believes that if EU could build its credibility by following these procedures, it would gain larger public acceptance, which would further help in providing a legitimate place to the Commission. Regulatory state It can be said that Majone’s concept of regulatory state can be drawn from the American idea of social science. Just like the American system, Majone also draws parallel by emphasising on the need to create credibility rather than an action-oriented or strategic system. Thus, the US-based idea of domination of the congress is seen to be implemented across various organisations found in Europe. Thus, Majone’s emphasis on credibility has given added flavour to the debate surrounding the importance of democracy over reputation that has been going on since the 1980s. Majone presents his arguments based on empirical as well as theoretical evidences. Such an analytical system helps in not only facilitating assessments of the idea but also in improvising it further. However, not all the evidences that Majone presents are valid, some of them are in fact questionable. Majone believes that most of the policies created by EU are redistributive in nature. He states that the policies that are Pareto-efficient do not have any redistributive effect and therefore, should not be created along the democratic process or Majoritarian system. Such an assumption can be stated as correct. In case a policy is to be made for everyone, without creating any winners or losers during the process, then creating the policy through the means of parliamentary system or democratic majority would not yield the desired result. Instead, it would only provide a result that the majority is looking for, which would focus on safeguarding the interest of only one party. The voice of the minority would not be heard in such cases and therefore, an unequal policy might be formulated through a democratic system. However, the issue occurs in case of identifying such policies that create Pareto-efficient by providing a single and unique solution to a problem, especially at the empirical level. It cannot be said that the decisions that are redistributive in nature does not take the minorities into consideration. Therefore, there is a fair amount of dichotomy between redistributive and pareto-efficient nature of policies. The central idea of creating a policy is to establish an order that would provide opportunities for everyone and are for the general well-being of the people, most would agree that policies which follow a middle-path between redistributive and pareto-efficient would be the best one to undertake. For instance, in case of judicial decisions, the court rulings only have a few limited correct options, wherein the decisions are largely based on legal terminologies and technical basis of the case. Some such cases where the decision is fairly fixed are property disputes, technical cases, consumer cases, safety standard cases etc. In all such cases, the court decides based on the technical outcomes presented in the court and the facts provided. The issue of minority does not arise in such cases. Therefore, it can be said that one a policy has been formulated the state should not interfere in the law and order system that implements the policy. Competition policies and interest rate policies are two other policies that may require redistributive policies. Although, policies are created to correct the failures in the market, often the policies are required to create an environment of trust in the state. Most economists believe that the banks in a state should have independent powers and not controlled through majoritarian system, such a belief is not uphold universally. Therefore, Majone’s view that the market regulation policies of EU should be Pareto-efficient might not hold true here. This is because of the fact that the present market scenario is quite different from the idealistic environment portrayed by Majone. In the present system, there are still losers and winners in the market. However, Majone states that the policies of EU should be such that it should provide more power to the member states in order to create pareto-efficient policies. Majone provides various reasons for creating EU policies, such as those on food safety, by employing institutions that are non-majoritarian and are independent. However, such an argument is not applicable for policies wherein choices need to be undertaken that have distributive effects. Further, Majone does not provide any reasons for isolating democratic method to formulate a policy. Majone’s arguments also lack insight into the concept of long-term and short-term losers and winners. Majone believes that the Commission and the working groups that constitute the Commission and the agencies would be sufficient enough to protect the rights and interests of the citizens. He places much more trust in the committee members rather than the majority of the members representing the European Parliament, who have in fact elected the President for the Commission. Further, it can not be stated for sure that the policies created by the EU through an undemocratic process would be unbiased and fair in nature. As such institutions have added power, they might misuse their power to overshadow the minorities and their opinions to create policies that are biased towards the powerful members or the winners. Therefore, it can be said that the policies created by EU needs to be pareto-efficient or redistributive in nature. Both have their own positives and negatives and are full of follies. It cannot be said for certain that either of the two are perfect and can be applied to create ideal policies. What is essential therefore is to create a mix of both these system. The EU should also realise that there are still winners and losers in the market and the policies should be created in such a manner that it looks after the interests of both the parties. Therefore, the political members in the Commission should look after creating publicity for the EU agendas and uniting the governments on common policy platforms. The European Parliament meanwhile should occupy the second-rung place and should only come out to contest for issues that may hamper national interest. Conclusion The contribution of Majone is immense in European politics. His ideas and assertions about creating pareto-efficient policies have certain merits as it tries to bridge the gap between the haves and the have-nots. However, on an empricial basis, it might be said that it is difficult to confirm to the idea that pure pareto-efficient policies can be created, as even in organisations such as the EU, certain members would have powerful support that can over-ride minority rights. Reference: Majone, G.D, (1997) "The 1Riѕe of the Regulatoґy Ѕtate in Euґope" fґom Weѕt Euґopean Politicѕ 17 (3) pp.77-101 Read More