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Accountability in the Regulatory State

Abstract and Keywords

Accountability in regulation will never reach a state of ‘perfection’ and stability, but will remain, given competing values and shifting priorities, in a state of continued tension and fluidity. In other words, debates require transparency regarding the very different ideas concerning the appropriate means and ends of accountability. This article develops this argument in three steps. First, it considers the background to contemporary debates surrounding accountability, pointing to traditional concerns as well as to a change in context captured by discussions about ‘polycentric’ or ‘decentred’ regulation. Second, this article points to key components of any regulatory regime over which demands of accountability are commonly asserted, and to four ways of considering institutional design and accountability. Third, and finally, this article suggests that debates on whether the rise of the regulatory state has led to a decline or rise of accountability and transparency are misplaced.

Keywords: accountability, regulation, perfection, stability, regulatory regime

15.1 Introduction

Over the last quarter of a century and more, claims about the essential desirability of accountability—the obligation to explain and justify conduct to some other party (see Day and Klein, 1987: 255)—and the particular forms it ought to take have been at the forefront of debates in public law and political science, and in the social sciences more generally. Thus for Tony Prosser the task of the ‘critical’ public lawyer is to:

…flesh out the concepts of participation and accountability and evaluate existing institutions against them, whilst at the same time attempting to establish the conditions for their realisation.

(Prosser, 1982: 13)

Bruce Stone, a political scientist, raises ‘questions how different accountability systems are chosen and combined to maximise accountability without impairing the effectiveness of different sorts of administrative work’ (Stone, 1995: 523). (p. 350) Meanwhile, an accountant, Michael Power (1997) puts forward the view that the United Kingdom has become a society fixated with the rituals of account‐giving, arguing that the practice of auditing is unlikely to live up to expectations of accountability, especially when extended beyond its origins in the field of financial accounting.

In the era of privatisation, such concerns were quickly carried over into the privatised utilities, and into the regulatory arrangements put in place for their oversight and supervision, with some diagnosing a ‘crisis’ of regulatory accountability (Graham, 1997; also Prosser, 1997). But the developments of the last quarter of a century present more than an additional venue for the rehearsing of well‐worn debates among lawyers, political scientists, and others. Two characteristics of the regulatory state in particular give rise to concerns that go beyond the age‐old problem of holding public authorities to account:

  1. (i) The importance placed on insulating regulatory decision‐making from ‘improper’ political and industry influence.

  2. (ii) The essential plurality of regulation, with the variety of its forms and venues, and the actors which shape regulatory decisions and are affected by them.

Each of these characteristics challenges conventional assumptions and doctrines of administrative accountability. In place of concerns about how to make administrators responsive to political demands comes a more nuanced concern about the complex trade‐offs between ensuring the fidelity of regulators' decisions to the roles entrusted to them by politicians and the public, ensuring that regulators have appropriate powers and adequate discretion to carry out their mandate effectively, as well as the credibility to retain the confidence of regulatees, users, and others affected by their decisions (see Horn, 1995 for one interpretation of this trade‐off). Moreover, the plurality of regulation, emphasised by advocates of a ‘decentred’ or ‘polycentric’ perspective on regulation (Black, 2001; 2008), naturally leads to a much‐expanded set of answers to who, to whom, and for what, questions about the accountability of regulators and regulatory regimes.

While debates about the accountability and especially those relating to the two features of the regulatory state outlined above are amenable to analysis, they are ultimately contestable ‘trans‐scientific’ issues which go to the root of how as a society we apportion responsibility (and blame). Rather than advancing any particular view regarding how regulators should be held accountable, we suggest that debates require greater awareness of the various components of regulatory regimes and the existence of a diverse, but nevertheless finite set of instruments that are inherent in any institutional design. Accountability in regulation will never reach a state of ‘perfection’ and stability, but will remain, given competing values and shifting priorities, in a state of continued tension and fluidity. In other words, debates require transparency regarding the very different ideas concerning the appropriate means and ends of accountability. (p. 351)

The chapter develops this argument in three steps. First, it considers the background to contemporary debates surrounding accountability, pointing to traditional concerns as well as to a change in context captured by discussions about ‘polycentric’ or ‘decentred’ regulation. Second, this chapter points to key components of any regulatory regime over which demands of accountability are commonly asserted, and to four ways of considering institutional design and accountability. It highlights the importance of looking at the compatibility of different logics of accountability. Third, and finally, this chapter suggests that debates on whether the rise of the regulatory state has led to a decline or rise of accountability and transparency are misplaced. Rather we should be interested in looking more closely at the continuous ‘remixing’ of various accountability tools and thereby enhance clarity as to what is supposed to be held accountable and how often suppressed assumptions shape argumentation regarding accountability and transparency. For the world of practice, this means that we should be interested in the quality rather than the mere existence of formal accountability mechanisms and to identify their prerequisites and limitations.

15.2 Accountability in the Regulatory State: The Old and the New

Any attempt to find the ‘core’ or the ‘essence’ of accountability is likely to be plagued by the plurality of interests and ideas that surround this concept. Standard dictionary definitions suggest that ‘accountable’ is linked to ‘(1) responsible; required to account for one's conduct. (2) explicable, understandable.’ Indeed, the history of accountability as part of government is linked to the word's French origins as ‘aconter’, the official registration and accounting of property. In that sense, tax registers, financial disclosure requirements, and other similarly standardised monitoring devices are the instruments of accountability, traditionally understood. In modern parlance, accountability more commonly signifies the obligation of officials to account for their behaviour, rather than the duty of private parties having to account to public authority (see Bovens, 2007).

Contemporary debates are further complicated by the addition of ‘transparency’ into many of those discussions traditionally reserved to the idea of ‘accountability’. According to dictionaries, ‘transparent’ is defined as ‘(1) allowing light to pass through so that bodies can be distinctly seen. (2a) easily seen through; (2b) easily discerned; evident; obvious. (3) easily understood; frank; open.’ Originating in the Latin ‘transparere’ (‘to shine through’), the idea is encapsulated in Bentham's famous canon that ‘the closer we are watched, the better we behave’. In (p. 352) contemporary parlance, accountability is often associated more with the ‘reporting’ duties, whereas ‘transparency’ offers ‘visibility’, such as the publication of all procurement contracts on the Internet and such like. However, what unites both of these terms is a concern with the use of discretionary (private and public) authority—and therefore we use them interchangeably.

15.2.1 Traditional concerns

The concern with the discretionary powers of regulatory (and usually non‐majoritarian) institutions has been a long‐standing one, with important antecedents in the contending views of Mill and Bentham on whether responsibility for public services should be vested in committees or in ‘single‐seated functionaries’ (see Schaffer, 1973). Classic debates have been heavily dominated by the US experience, and the early British and European literature is influenced by North American concerns (for example, Baldwin and McCrudden, 1987). This has been the case even (as in Hancher and Moran, 1989) where the intention was to draw contrasts as much as similarities.

A central preoccupation within the literature on the US‐regulatory state since the late 19th century has been the delegation of legislative and executive power, and the mechanisms for the control of the discretionary power arising from such grants of authority. This literature emphasises elections, hierarchical reporting, and the impersonal application of rules, with the development of a substantial literature on the formal ways through which administrative bodies account for themselves. Devices for achieving regulatory accountability included reporting duties, oversight by the legislature and the use of rewards and punishments to ensure responsiveness to political demands. The modern literature on the effects of structures and processes on the political control of administrative agencies (McCubbins, Noll, and Weingast, 1987, 1989) has its roots in this perspective. This latter discussion also extends to those accounts that stress the importance of establishing devices that provide credibility in the face of time‐inconsistent policy preferences. If delegation to non‐majoritarian agencies is seen as a strategy for impeding policy‐makers from giving effect to their short‐run preferences, then improved accountability (and, hence, responsiveness) ‘upwards’ may even undermine the effectiveness of regulation (see Levy and Spiller, 1994).

The vertical relationship between democratic government and independent agencies has attracted considerable and changing debates among administrative lawyers, especially in the United States. Initially, regulatory agencies were first seen as a technocratic and ‘clean’ (i.e. non‐political) device, insulated from the factional politics of Congress and the Presidency, and also capable of bringing to bear greater professional expertise than the judiciary.1 However, concerns were soon expressed with the growing discretionary powers of these administrative bodies. For example, (p. 353) the 1937 Brownlow Commission warned about regulatory commissions being an unaccountable ‘fourth’ branch of government. While the subsequent political science literature fretted over the possible biases of regulators, in extremis the ‘capture’ of the regulator by the regulated industry (Bernstein, 1955), administrative lawyers turned their attention to how the discretion of regulators could be constrained within substantive and procedural limits, and made accountable for their decisions. Trial‐type hearings, notice‐and‐comment provisions, internal review procedures, as well as judicial review were advocated as providing an appropriate compromise between agency expertise and accountability. The influence of this approach can be seen in many pre‐war regulatory statutes, as well as in court decisions of the time. The triumph of this approach arguably only came with the enactment of the Federal Administrative Procedure Act in 1946. During the period of ‘social regulation’ in the US, discretion was increasingly checked by ‘hard look’ judicial review (see Rodriguez, 2008). The trend towards increasingly ‘hard look’ judicial oversight waned during the 1980s. The Chevron2 decision in particular, has been seen as restoring an earlier emphasis on the professional expertise of administrators, requiring a reviewing court to defer to the agency's interpretation of its legislative mandate, thereby restricting lower court's authority in reviewing regulatory agency decisions.3 In the context of accountability, this judgment was seen as asserting the idea of accountability of agencies, as part of the executive, to the President.

A number of theoretical developments went hand‐in‐hand with the application of notice and comment requirements and other participatory devices of ‘regulatory democracy’ (Cuéllar, 2005). These developments sought to articulate the means to reassert control over regulatory agencies, but also represented, to some extent, a shift away from the pluralist view of regulation as the outcome of interest group politics towards an emphasis on the ‘rational’ assessment of instruments (see Rose‐Ackermann, 2008). In particular, the principal–agent perspective changed views regarding the possibilities of control, the utilisation of different types of instruments to hold to ‘account’, the impact of judicial review, and rival views as to whether conflict was exercised through ‘presidential’ or ‘congressional’ dominance (Epstein and O'Halloran, 1999; McCubbins, Noll, and Weingast, 1987; McCubbins and Schwartz, 1984; Moe, 1984).

The adoption of formal ‘cost–benefit’ testing of regulation has been advocated as a procedural way of enhancing the ‘rationality’ of rules, while ensuring accountability (in practice, to the executive branch) for the broader economic impact of regulatory decisions. Accountability is obtained by informing decision‐makers as to what is the appropriate (‘rational’) option (McGarity, 1991; also Baldwin, 1995: 193–9). Conversely, critics such as Peter Self (1972: 212) have argued that, far from making decisions more transparent, a reliance on cost–benefit analysis serves only to make the decision‐making process impenetrable to all but special interests, while also establishing particular biases. Following the argument of increased ‘ (p. 354) rationalising’ of rule‐making through procedural devices, ideas regarding ‘regulatory impact assessments’ and ‘regulatory budgets’ flourished throughout the 1990s and 2000s as devices to control bureaucratic and political regulatory ‘instincts’. At the same time (anticipating our argument to come) the application of cost–benefit testing of regulation in the United States and elsewhere arguably reflected a particular, contestable understanding of rationality.

15.2.2 The ‘new’ context of the regulatory state

While neither the practice nor the analytical discussion of polycentricity in regulation is a recent discovery (Hancher and Moran, 1989), the wider context of regulation has changed considerably over the past 30 years. Without claiming to offer an exhaustive account, we point to three key changes that made discussions regarding accountability more pertinent, both in terms of accentuating existing debates and in terms of challenging traditional understandings of regulation. Each of these three contextual elements links accountability issues regarding legitimacy, ensured integrity of decision‐making and enhanced performance, with ‘contemporary anxieties’ (Mashaw, 2005: 15; Mulgan, 2004).

First of all, the contemporary era of the regulatory state raises a number of distinctive issues that go beyond traditional concerns (see Yeung, 2010; Lodge, 2008; Lodge and Stirton, 2006). The ‘regulatory state’ is characterised by privatisation and marketisation of public services (regardless of the widespread ‘nationalisation’ of banking sectors that occurred during the autumn of 2008), the rise of non‐majoritarian regulatory bodies, as well as a greater degree of formalisation of relationships between actors within a regulated policy domain (Loughlin and Scott, 1997). While long‐standing concerns in the North American context, these policy trends challenge traditional notions of accountability (at least in the setting of liberal democracy). They are said to signify the ‘hollowing out’ of the state, requiring additional elements to the traditional components of accountability, usually signified by reporting duties to parliamentary bodies, if not by the idea of political responsibility over distinct public service activities.

The idea of privatised public services has been seen by some as a direct challenge to social citizenship rights that emerged in the context of the post‐Second World War welfare state, at least in (West) European states. In addition, the creation of ‘regulatory bodies’ proved to be problematic for the traditional legal understandings of administrative structures (and their implicit accountability requirements). Such difficulties of formal standing became further confused with the rise of novel legal constructs, such as the one chosen for the British communications regulator Ofcom in 2003. However, the rise of these agencies also raised in a European context concerns about discretionary powers of such supposedly independent regulatory agencies, in particular when it came to issues of balancing economic, (p. 355) social, and environmental objectives. Such concerns can be seen as a direct parallel to the preoccupations that had earlier dominated the North American literature.

While these concerns related to changing relationships between ‘government’ and ‘regulator’, the increasingly private nature of public service provision created a new context in which demands for greater accountability were raised. In this new context, the change in emphasis towards ‘transparency’ in the sense of disclosure requirements is often seen as problematic. According to this argument, the past decade has established a new type of emphasis on performance management, requiring ‘accountability’ of output measures rather than of inputs and procedures. According to critics, this emphasis has led to a reduction in accountability, especially as the favoured devices are said to reduce public involvement and undermine ‘positive’ definitions of accountability that stress the importance of individual attitude rather than a reliance on quantifiable output measures.

Second, the diversification of regulatory arenas in terms of reliance on self‐ (or co‐) regulation, the rise of international standards, whether negotiated through international organisations by national states or by international industries themselves (for example, the Forest Stewardship Council), and the rise of bodies with international reach or the international agreement by private parties on binding standards, indicate that regulatory authority is fragmented and polycentric (and mandated by varying bases). Such diversification makes problematic any attempt at locating accountability in any one source (Black, 2008).4

A particularly pessimistic view of the effects of polycentricity is put forward by Patrick Dunleavy (1994), who argues that contemporary governments are outmatched in terms of expertise and resources by international service providers, not merely because of a lack of financial resources and understanding technical complexity, but also due to a lack of bureaucratic competence in the area of procurement or control. According to this view, the traditional problem of concentrated corporate power is therefore even more problematic in this supposedly globalised era than in the days of ‘national’ capitalism. While in an earlier era Woodrow Wilson (echoing Bentham's canon) could advocate greater transparency as the regulatory commissions' remedy for corporate misbehaviour—‘turn it [light] on so strong they can't stand it. Exposure is one of the best ways to whip them into line' (cf. Cook, 2007: 96)—such accountability requirements ultimately face challenges in an environment that is counter‐learning and international. The problem with ‘putting on the lights’ was particularly prominent during the debates regarding the perceived regulatory failures in financial markets in the mid‐to‐late 2000s. The financial system was condemned for non‐transparent financial and international interdependencies that was further characterised by inadequate instruments of control both from within the banks themselves and from outside, via national regulators.

Third, there are also those who point to the societal sources for the perceived rise in the demand for more accountability. Society is said to have undergone a change (p. 356) towards more egalitarian and individualist worldviews, each of them united in their opposition and distrust of authority and official discretion. The tragic consequence of a non‐trusting society is that those instruments supposed to address this distrust are likely to jeopardise existing mechanisms rather than advance the overall quality of the regime (see Power, 1997, 2007).

In contrast to those who diagnose a decline of overall accountability and transparency in the context of the contemporary regulatory state, others suggest that complexity and differentiation across levels of government and between private and public spheres have not led to a reduction in accountability and transparency. First of all, regulatory activities impose compliance costs on regulated parties. As a result, this means a high degree of likely mobilisation given the lack of an information asymmetry between standard‐setters and the regulated (whose experience of the compliance cost of regulation makes them well‐informed) (Horn, 1995). Such mobilisation is likely to be partial, given different degrees of concentration of costs incurred across regulated actors. However, the formation of ‘fire alarms mechanisms’5 for salient groups has been considered, as has the co‐opting of public interest groups in the regulatory process (see Ayres and Braithwaite, 1992). Some have noted that procedural devices have encouraged regulatory agencies to consult widely and extensively (Thatcher, 1998), while others, following Majone (1994), have noted the technocratic and apolitical nature of regulatory agencies providing for ‘credible commitment’. A third view points to the growing redundancy of various accountability channels given greater differentiation among regulators and private and public actors in the provision of public services in the regulatory state (Scott, 2000). Traditional concerns with the discretionary activities of regulatory bodies, prominent since the early twentieth century in the United States, have encouraged the search for procedural evaluation devices, such as cost–benefit analysis, regulatory impact assessments and ‘standard cost models’ to allow for a greater questioning of administrative decisions, as already noted.

In short, debates regarding accountability in the contemporary regulatory state to some degree echo traditional concerns with administrative bodies, such as regulators, and the exercise of discretion and delegation. At the same time these debates take place under the conditions of polycentricity (in both the vertical and horizontal senses), whether this is the distribution of authority (i.e. to international organisations and non‐state organisations) or the transnational nature of corporate power in areas that traditionally were reserved for national states (especially in the area of utilities, such as telecommunications). And debates over whether the regulatory state has led to a rise or decline in accountability, or to a shift from one set of understandings and instruments to another remains inconclusive.

More broadly, these debates point to a wider set of phenomena and contested arguments regarding the qualitative implications of these phenomena on citizenship that go beyond traditional debates. These debates reflect fundamental (p. 357) disagreements regarding the nature of the state, rival understandings regarding democracy and the relationship between the state and markets, as well as the basis of human motivations. And such debates are reflected also in those contributions that discount the continuing centrality of national states in shaping behaviour. Therefore, in the next section we point to the various aspects within regulatory regimes that, while central to these debates are not often articulated. By boiling down the various debates to their distinct grammar, it is possible to suggest that these debates, while plural, are nevertheless of a finite diversity.

15.3 Accountability in the Regulatory State: Doctrines and Tools

Despite the acceptance that authority in any domain is fragmented rather than concentrated in any single agency (of whatever organisational status), the standard response has been to continue the search for ‘who is accountable for what, how, and to whom’. In particular, while the administrative law literature (understandably) has concentrated on legal, administrative, and political understandings of accountability, such accounts usually neglect alternative accountability mechanisms, that rely on professional or market‐based processes. Related to such questions are the types of obligations that underline such accountability requirements, the type and degree of openness of the forum in which ‘account’ has to be given and what the purpose of disclosure is (to allow for sanctioning and/or learning, for example) (see Bovens, 2007; Fung, Graham, and Weil, 2007). These questions are then translated into different social contexts, in order to highlight the diversity and potential contrary nature of different accountability and transparency devices (see Mulgan, 2000; Pollitt, 2003; Hood, 2006; Mashaw, 2006). Different devices, ranging from the market, the political to the social, can be discussed in various types of taxonomies and typologies. Such discussions reflect the diversity of accountability and transparency mechanisms and suggest that the quest for the way to hold authority to account is unlikely to be ever fulfilled. Our focus on doctrines and tools of accountability avoids the temptation to make ever more fine‐grained distinctions, pointing instead to a limited repertoire of basic arguments and instruments. We develop this argument in two stages. First we discuss five dimensions of regulatory design which face demands for accountability in any regulatory regime. Second, we point to four worldviews regarding accountability. Given the multiplicity of debates, it is important to go back to the grammar of such arguments and point to the finite nature of arguments regarding diverse accountability mechanisms. (p. 358)

15.3.1 Dimensions of regulatory design

In a polycentric setting those actors that are supposed to give account or whose activities are required to be transparent will vary substantially—and so will the relationships among these actors. As noted elsewhere in this volume, the study of regulation has increasingly utilised the notion of a ‘regulatory regime’ to highlight that regulatory activities include three essential components, namely regulatory standards, behaviour modification (enforcement) and information gathering components (Hood, Rothstein, and Baldwin, 2001). These three components are essential to keep the controlled system within the preferred subset of all possible states. Elaborating slightly, we can identify five crucial dimensions that require separate analysis and consideration in any discussion of accountability:

  1. (i) the decision‐making process that leads to the creation of a regulatory standard in the first place

  2. (ii) the existence of a regulatory standard for affected participants within the regulated policy domain

  3. (iii) the process through which information about the regulated activities is being gathered and how this information is ‘fed back’ into standard‐setting and behaviour‐modification

  4. (iv) the process through which regulatory standards are being enforced

  5. (v) the activities of the regulated parties themselves.

These five dimensions stretch any discussion of accountability and transparency beyond the debates that centre on how decision‐making is to be made in a visible, reasonable, and justifiable way (i.e. the traditional administrative lawyer's concerns). The advantage of looking at these five dimensions is that it highlights the limited nature of the traditional concentration on the publicness of rule‐making. Knowing what has been decided is not a particularly extensive form of accountability (Stirton and Lodge, 2001: 474–7). The other four dimensions highlight the importance of holding the ‘information gathering’‐component to account, especially given the widely reported failures of regulation that have been associated with failures in information gathering. Equally, the openness of the process through which standards are enforced is seen by many as crucial given the high degree of discretion enforcement involves.

In themselves, these five dimensions already suggest considerable diversity of views as to ‘how to’ provide for ‘appropriate’ accountability and transparency. For example, controversies arise as to the level of public engagement in the setting of standards, the degree of openness and ‘informed consent’ through which information is gathered, the degree of openness of the regulatory actors to outside scrutiny or the degree to which ‘frontline regulators’ have to account for their activities when it comes to enforcement. Among the cross‐cutting concerns across the five dimensions is the extent to which the advocated degree and methods of holding to (p. 359) account should be in ‘real time’ (i.e. at the time when processes occur) or allow for ex‐post scrutiny only.

The five dimensions apply to all kinds of regulatory regimes, whether national or transnational, state‐centred or polycentric, and encompass the most traditional command and control type regimes, as well as pure self‐regulation. Crucially, they affect different organisations, especially as regulatory activities are fragmented across levels of government. In the case of a typical European state and the field of environmental policy, standards would often be agreed at the EU‐level, be transposed at the national level, but requiring ‘transposition’ at the regional level and enforcement at the local level. Such fragmentation across jurisdictions (and organisations) generates demands for transparency (‘level playing field’), and it also raises the issue as to the purpose of particular mechanisms to establish accountability (i.e. we may want to utilise different mechanisms if we regard the European Union as an intergovernmental organisation or as a ‘quasi‐state’).

15.3.2 Four worldviews on accountability in the regulatory state

In order to move towards a better appreciation of both the variety of ways in which institutional design can provide for accountability in the contemporary regulatory state, but also an overview over key arguments and doctrines put forward in debates over the past thirty years, we distinguish between four different worldviews that underline any understanding of what needs to be held to account, by how much, and what sorts of motivations are said to underline actors behaviours. Jerry Mashaw (2006) argues that any understanding of the ‘grammar’ of institutional design regarding accountability needs to be conscious of the different values that underpin the instrumental value of the public service in question itself. Such a discussion also suggests that there are inevitable trade‐offs between any institutional choice given contrasting answers to the traditional questions of being accountable to whom? and for what? Furthermore, it raises distinct responses to the condition of polycentricity.

This quest for a ‘grammar’ can be advanced using the framework of grid‐group cultural theory (Thompson, Ellis, and Wildavsky, 1990; Hood, 1998). This device allows for a typology to unpack and contrast accounts as to what regimes and instruments are advocated and are regarded as appropriate. As noted, institutional design is neither a straightforward nor a value‐free engineering process. And the way we see the world, hold individuals and organisations responsible, and blame them if things go wrong is fundamentally affected by views regarding the ‘nature’ of the world. (p. 360)

Table 15.1 provides for an overview of the four worldviews, the way they consider ‘failure’ and hence ‘blame’, and therefore also how they view appropriate mechanisms to hold regulatory regimes accountable.

The fiduciary trusteeship doctrine has been particularly prominent in traditional public administration and administrative law and has also been influential in the study of regulation. It resonates with those who are troubled by the ‘public–private divide’ (Haque, 2001) that is said to have increased as a result of privatisation policies as well as the growing popularity of ‘co‐regulation’ devices. According to this ‘technocratic’ doctrine, emphasis is placed on legal and political forms of accountability that make public officials responsible for their actions, either through legal means or through electoral punishment. The implication of this view of bureaucratic rationality is that experts and those in authority inherently ‘know best’ as information costs and collective action costs are high, but that this discretion needs to be checked against abuse through procedural devices and other substantive checks. Regulatory activities are to be exercised in an orderly and structured way to minimise discretion, thereby safeguarding certainty. Accordingly, (p. 361) oversight and review are to be conducted by authoritative and responsible experts with a mandate provide for accountability.

Table 15.1 Four worldviews regarding accountability and regulation

Surprise and Distrust

Fiduciary Trusteeship

‐ Failure inevitable as life uncertain and actors ‘game’

‐ Deviance from existing orders and procedures explains failure

‐ Routine requirements lead to gaming and wear‐out

‐ Authority to account for one's actions

‐ Need to maintain fundamental distrust in discretionary decision‐making

‐ Opposition to challenges against established order

‐ Reliance on surprise and unpredictability

‐ Accountability towards and on basis of rules—predictability

‐ Relates to accountability as ‘technocracy’ ideas

Consumer Sovereignty

Citizen Empowerment

‐ Failure due to personal miscalculation, given basic competence of individuals to take risk

‐ Individuals are corrupted by bad systems and trust in authority

‐ Reliance on individual decision‐making

‐ Scepticism of authority and market

‐ Opposed to prescription and collective decision‐making

‐ Emphasis on professional peer review and decision‐making in the ‘eye of the public’

‐ Relates to accountability as ‘market’ ideas

‐ Relates to accountability as ‘forum’ ideas

Fiduciary trusteeship views have difficulty in terms of dealing with the messy context of polycentricity and argue that accountability needs to be ensured through mandates and official recognition. In terms of tools, this view emphasises representation; regulatory activity is said to be suitably accountable once it is appropriately justified, especially when in front of an audience of competent representatives. Advocates of fiduciary trusteeship related views warn against subject involvement in regulatory deliberations given perceived risks of populism and ignorance, and the likelihood that such involvement will lead to extensive challenges to hierarchical authority.

The consumer sovereignty worldview, in contrast, regards citizens as the best judges of their own needs, who should be allowed to take their own decisions (others therefore refer to this view as ‘market’ (see Mashaw, 2005; Pollitt, 2003). Individuals are regarded as capable of taking informed decisions and therefore the significance of choice or competition is emphasised, with regulation playing a role as facilitator of market processes. As a result, polycentricity does not raise any particular challenges for this worldview as it emphasises the importance of individual choice and self‐regulation. Providers of goods and services find it in their own interest to be transparent and accountable in order to increase their chances of survival on the marketplace. Accountability however, need not just be provided by market participants on a voluntary basis, but different degrees of required disclosure of performance components are compatible with this particular view, and may be necessary in some circumstances to prevent ‘lemon’ choices.

The citizen empowerment worldview suggests that the two worldviews noted above offer only limited accountability. Instead, the importance of accountability through ‘forum’ devices is emphasised (Pollitt, 2003 and Mashaw, 2005: 24 broadly consider related ideas as ‘social accountability’). Fiduciary trusteeship‐type regimes are opposed as they concentrate power and rely on authority within existing hierarchies, while consumer sovereignty‐type regimes are accused of over‐emphasising the universal capability of individuals to choose, while regarding markets as desirable social order. In contrast, this worldview suggests that accountability and transparency are about reducing social distance and relying strongly on group‐based (or mutuality‐based) processes (conceptualised as ‘regulatory conversations’ by Julia Black, 2002). We can therefore imagine two distinct forms of institutional design, both of which with distinct implications for a context defined by polycentricity. One is based on self‐ or ‘professional’ regulatory regimes with strong pressures on members to account for their conduct. The second, a more demanding and overarching ‘citizen empowerment’ argument emphasises the importance of citizen participation to the greatest extent possible (and arguably beyond mere procedural provisions, such as ‘notice and comment’ (but see Cuéllar, 2005). This worldview advocates maximising input‐oriented participation and the (p. 362) placing of maximum scrutiny (‘mandating’) of anyone with discretionary power. Such participatory tools not only hold power to account, but they also have a transformative effect on the nature of citizenship (Bozeman, 2002: 148). Consequently, the emphasis of this worldview is on ‘voice’ in the sense of direct input, ‘information’, in the sense of being closely involved in each of the five dimensions of a regulatory regime, and also representation, in the sense that it emphasises close control over delegated authority, whether through extensive scrutiny or through other devices, such as rotation. Some observers also place much faith in participatory methods via modern computing devices, although whether the anonymity provided by message boards is a good substitute for the ‘face to face’ encounters in ‘town hall meetings’ is questionable.

Finally, the surprise and distrust worldview shares with the last two worldviews their scepticism regarding the granting of discretion to actors with delegated powers. This view is however doubtful about the capability of individuals to undertake meaningful choices (and thereby force units to be accountable through the fear of ‘exit’), while it also shows scepticism about the possibility of social participatory processes to achieve accountability. Accordingly, those in positions of authority need to be treated with distrust and subjected to constant surprise—thereby offering a distinct take on Wilson's constant light or Bentham's close watch, as already discussed. The argument is that ‘good behaviour’ will be achieved as those who are supposed to be accountable do not know when they are being watched, or when the lights will ‘go on’. One example of such a device is Freedom of Information legislation—given that those in authority do not know what will be unearthed, so it is argued, they have to adjust their behaviour. This particular worldview stresses that the context of polycentricity challenges the possibility and attractiveness of accountability as seen through formal oversight (as advocated by fiduciary trusteeship views). Instead, ideas regarding the possibility of redundancy, overlaps, and elements of surprise, such as through ‘fire alarms’, offer the only way to establish some form of accountability in a polycentric context.

For some, pointing to ‘surprise and distrust’ as a conscious strategy may seem surprising. Indeed, it is notable how this advocacy of unpredictability is absent in the wider literature on accountability. One reason for this absence could be that this strategy is fundamentally opposed to the view that the (liberal) state is ‘transparent’ and ‘accountable’ only if it is rule‐oriented and predictable (see Hood, 2006 for this ‘rule’‐strain in transparency debates). Unpredictability, in contrast, is exactly the kind of strategy widely associated with dictators and despots past and present. However, distrust of those in authority is a viable strategy—although it may not qualify as a distinct view regarding the nature of democracy.6 Indeed, it is often used as a control method within administrative accountability relationships, for example, prisons, and it is also widely used in aspects of keeping private firms ‘accountable’, for example in the area of slaughterhouse and meat processing inspections.

(p. 363)

Table 15.2 Four worldviews and regulatory regimes

Fiduciary Trusteeship

Consumer Sovereignty

Citizen Empowerment

Surprise & Distrust

Decision‐making regarding rule (standard)‐setting

Professional & authoritative decision

Competition between different standards

Participative deliberation

Ad hoc adaptation

Standard

Authoritative statement

Allows for information to advance individual choice

Available for public understanding

Fixed, but uncertainty regarding enforcement

Information‐gathering and feedback mechanisms

Review by experts

Market selection process

Participation

Ad hoc and contrived randomness

Behaviour‐modification

Procedural application of sanctions

Via market selection mechanism

Persuasion

Unannounced inspections

Disclosure of activities of regulated parties

Formal disclosure requirements

Disclosure requirements

Maximum exposure to population

Formal standards but unpredictable requirements

We have over‐emphasised distinctions when, at the margin, there is overlap and hybrids are possible (Table 15.2). In the next section we turn to the limits of accountability and institutional design. We stress inherent systemic weaknesses in each of these perspectives that reinforce certain tendencies, while arguably weakening others. We also note wider issues that highlight that simply advocating ‘more accountability’ in regulation is unlikely to have entirely benevolent effects.

15.4 Limits of Accountability

Having first pointed to the background of accountability debates and then considered various strategies as to ‘how to’ hold to account, we now turn to the consideration of potential limitations of accountability ideas. While ‘more accountability’ is likely to generate universal support, the discussion in the previous section suggests that the way we achieve ‘more accountability’ is contested and (p. 364) therefore, what is regarded as ‘more’ is similarly likely to attract controversy (Lodge, 2005). Without seeking to offer a comprehensive discussion, we consider two areas in which calls for ‘more accountability’ are likely to face limitations, namely in terms of unintended consequences and trade‐offs.

In terms of unintended consequences, distinctions can be made between those effects that are due to adaptive responses and due to systemic weaknesses. We briefly consider each one of them in turn. First, as studies regarding government responses to Freedom of Information legislation and requests have shown (Roberts, 2005), those who are being watched will seek to hide away from being held to account. Thus, ‘real’ decision‐making takes place by way of ‘post‐it notes’ and informal meetings once official minutes are likely to be released. Official minutes therefore become relatively meaningless documents. Similarly, target‐setting encourages creative gaming responses exercised by risk‐averse organisations (Hood, 2007). In other words, considering inherent blame‐avoiding tendencies within organisations (public and private), demands for ‘more accountability’ are likely to generate creative compliance responses with the overall effect of reducing, rather than advancing the overall standard of information. Second, as Andrea Pratt (2006) has shown, the types of incentives required to achieve particular types of outcome vary according to activity. For example, it could be argued that requiring European Central Bank committee members to reveal their voting patterns would expose them to undue national pressures. In that sense, ‘too much’ accountability may reduce the overall decision‐making process.

Third, each one of the four views regarding accountability discussed in the previous section has inherent systematic weaknesses. One weakness is that each worldview advances particular institutional mechanisms and thereby weakens others. Placing emphasis on hierarchy not only re‐affirms that hierarchical ordering, but also arguably weakens participatory elements and market‐oriented approaches. Similarly, placing trust in distrust may reduce possibilities of gaming, but may be seen as undermining the basis for having confidential and ‘high‐trust’ relationships, seen by many as essential for having an informed regulatory relationship that goes beyond the adversarial or box‐ticking variety of regulation. Emphasising ideas of consumer sovereignty may advance the possibilities of exercising choice on the market place, but may expose limitations when it comes to those products associated with high information costs and ideas of equality of treatment, and peer‐review. And as all critics of ‘self‐regulation’ would suggest, putting faith in professional forms of accountability is likely to advance ‘closure’ to outside demands for accountability and responsiveness.

A consideration of trade‐offs also points to the need to establish some balance between difficult choices. For example, answers as to how open and punitive the holding to account should be in the case of a ‘failure’ vary between those who argue for a ‘pointing the finger’ at the individual who is seen to have been at fault, while others note the organisational conditions under which individuals make errors (p. 365) (i.e. corporate manslaughter provisions). Others will also note that in order to encourage learning, accountability needs to be limited to small and closed settings to encourage open exchanges and overall improvement. Similarly, accountability in all but its most impoverished notions is fundamentally linked to a degree of responsiveness. How such responsiveness looks is however again contested, with answers as to ‘how much’ and, more importantly, ‘to whom’ varying across the four views on accountability noted above.

Furthermore, calls for ‘more accountability’ also conflict with wider core administrative values, such as efficiency, equity, and resilience. For example, calls for extensive participation and input can be seen as standing in the way of decisive action. Similarly, embracing extensive information to facilitate choice could fundamentally affect ideas regarding fairness and equity as some groups within society are more likely than others to identify, digest, and act on information regarding choice. For example, the ‘transparent’ quality and pricing information regarding utilities services is one thing, but their accessibility and availability might be a different matter. And the platform on which information is being provided is also likely to show different degrees of ‘attractiveness’ to different groups within society.

In short, asking for ‘more accountability’ is a too simplistic and potentially highly problematic demand. It is too simplistic as it does not acknowledge key differences in different forms of institutional design regarding accountability, but it is also dangerous as it does not sufficiently take into account potential limitations. As a result, ideas regarding institutional design of accountability need to be reconsidered. We take up this question in the conclusion.

15.5 Conclusion

Over a decade ago, Cosmo Graham (1997) enquired whether there was a crisis in regulatory legitimacy, especially in relation to British utility regulators, reflecting a contemporary discussion that reflected the move from a ‘privatisation’ to a ‘regulation’ phase in British politics. Such debates regarding the legitimacy of regulatory institutions and overall regulatory processes can be traced back to the early twentieth century in the US and have been at the centre of wider thinking regarding the ‘publicness’ of political decision‐making for much longer.

We have argued that the study of regulation over the past thirty years or so has not just been about the recycling of debates that have flourished in the administrative law field since the rise of regulatory agencies in the North American context. First, empirically the context of regulation has moved further towards one of transnational polycentricity that ‘old’ understandings of distributed regulatory (p. 366) authority within a ‘regulatory space’ do not fully capture (see Hancher and Moran, 1989). Furthermore, there have been analytical developments, first of all, the growing interest in utilising the language of principal–agent relationships to account for the political foundations of regulatory regimes and their accountability provisions, and second, a growing appreciation of having to consider not just the institutional design of accountability mechanisms, but also realising the contested and diverse nature of different doctrines. There are three main implications that arise from these observations.

One is a greater explicit awareness of the trade‐offs that are inherent in any institutional choice, and therefore also in the way in which ‘publicness’ is designed into a regulatory regime. Side‐effects, surprises, and unintended consequences are hardly a new item on the menu of the social sciences (see Merton, 1936), but advocates of ‘more accountability’, especially considering perceived regulatory failures, often seem to neglect the side‐effects of various instruments. Similarly, Bovens (1998), noting the inherent limitations of different understandings of accountability in the light of generic cooperation problems (which he terms the ‘many hands problem’), suggests that therefore more emphasis needs to be placed on encouraging and facilitating acts of individual responsibility. Furthermore, ideas regarding trade‐offs also point to the inherent limited variability of options. One key development in the wider literature regarding accountability and regulation has been a shift away from a close focus on devices to hold an administrative‐regulatory unit accountable and towards a wider interest in different ‘modalities’, modes, or tools of accountability across different aspects of a regulatory regime. However, these different conceptions have not been collected in a very systematic manner so far.

The second avenue is to acknowledge more explicitly the argumentative nature through which advocacy of accountability devices is conducted. This triggers the question why particular words flourish (such as ‘transparency’) and, arguably more importantly, why particular dominant meanings that are attached to words rise and fall. In the worlds of practice and research, there needs to be a greater awareness about the doctrinal nature of much of the ‘recipes’ for supposedly ‘better’ regulation. It also encourages the search for appropriate codes in which these conversations can take place. As Julia Black (2002) noted in a different regulatory context, understanding institutional design as a process of a conversation requires agreement regarding the norms and standards in which these conversations take place. Much of the conversation regarding regulation has been very limited in its focus and attempts at codifying standards of argumentation have also been restricted. The former has been due to the dominance of a focus on formal regulatory institutions and formal procedural rules, the latter has to do with the tendencies of any worldview to claim exclusivity. For the study of regulation to advance, especially in its polycentric incarnation that goes beyond the ‘national’ (p. 367) and ‘public’, we need to have more accountability and transparency among the contributors to this debate.

Third, and finally, our discussion regarding institutional design of accountability also takes issue with the inherent engineering perspective that is part‐and‐parcel of the ‘institutional design’ terminology. On the one hand, the illustration of the four views regarding accountability and their side‐effects and limitations suggests that the discussion needs to consider ‘mixes’ of different tools rather than rely on any single one approach. Similarly Mashaw (2005) has called for an increased attention to differing modalities. However, given the competing incentives of different actors within any regulatory regime and given the high demands placed on each one of the five dimensions of a regulatory regime that needs to be accountable or transparent, it is not likely that accountability will ever be ‘complete’ or that attempts at ‘avoiding’ or ‘gaming’ accountability requirements will not take place. In addition, inevitable crises and failures and subsequent demands for ‘more’ accountability and transparency suggest that any institutional design for accountability is exposed to endogenous and exogenous sources of change. In short, we expect a continued revision and alteration of the tools and instruments that are supposed to ensure accountability.

As a result, simple dichotomies between state and market, private and public, or state and non‐state will not do. Instead, the debates can be advanced through the use of theoretical devices that make the plurality of views explicit and transparent, but such debates need to take place within a setting of regulated conversations, as noted. Accountability and any attempt at designing a regime to advance accountability is fundamentally linked to different aspirations inherent in regulatory activities. These aspirations are multiple and conflicting and therefore it is not surprising that competing ideas regarding accountability persist (Mashaw, 2005). The study and practice of accountability is therefore not about whether there is ‘less’ or ‘more’ accountability, but it is about understanding and managing the tensions between different competing objectives and interpretations, as well as coming to a closer understanding of how to make all aspects of a polycentric regulatory regime more visible. Such a challenge is unlikely to allow for headline grabbing reform announcements, but is less unlikely to improve the functioning of regulatory regimes.

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                                                                                                                        Notes:

                                                                                                                        (1.) Majone (1997) has been accused of resurrecting this image of ‘neutral’ regulators in his discussions of the supposed rise of the regulatory state across European countries.

                                                                                                                        (2.) Chevron v. Natural Resource Defense Council 464, US 837.

                                                                                                                        (3.) The scope of Chevron has arguably been reduced since United States v. Mead Corp. 533 US 218 (2001).

                                                                                                                        (4.) In other words, the fragmentation of roles within the regulatory state has accentuated the ‘many hand's problem’, i.e. the problem in identifying any one source that is responsible within a co‐production setting (see also Bovens, 1998).

                                                                                                                        (5.) In the principal–agent literature, fire alarms are seen as mechanisms to control against agency shirking in that affected constituencies raise the ‘alarm’ among political principals in view of particular agency actions.

                                                                                                                        (6.) Admittedly, we hereby move beyond the classic texts of grid‐group cultural theory. More broadly, there has been the use of lotteries in the allocation of school places (thereby arguably removing the need to be accountable for decisions regarding place allocation, while also removing the linkage between wealth, neighbourhood, and school place). More broadly, Calabresi and Bobbit (1978) suggest that lotteries and therefore randomisation offers one important way of making decisions about ‘tragic choices’.