Why the Density
of Regulation for Global Issues is too high today
Recently
I was at a conference about finance and ethics. One of the discussed topics
there were regulations in the finance industry. Although the discussion was controversial
there was somewhat of an overall agreement that regulation is basically necessary
but that its density today is too high. I asked myself why there is on the one
hand an insight that regulations are needed and on the other hand a moaning
about too much regulation?
The
answer, I think, is to be found in the globalization. When the West triggered
the economic globalization by national and international market liberalization and
deregulations one consequence was the global integration of finance and other industries.
The second consequence was that especially states in the West lost control over
important political instruments for regulation. And by eliminating regulative
buffers, the development of economic and financial crises was facilitated because
unleashed financial streams could flow nearly without control.
Besides
the political instruments already given away due to deregulation and liberalization
the now established economic globalization has created new realities: according
to the political scientist Ch. A. Kupchan, still state-based political instruments
as e.g. financial- and monetary policies have become ineffective in a
globalized world because of its inherent global competition. This all shows
that states – and especially Western states which carried out deregulation more
thoroughly than others – aren’t able to provide solutions (alone) for global issues
as the challenges in the global financial system.
Because
of this inability of states and the need to solve global issues, many
international and transnational regimes and organizations have come into existence
or tried to expand their sphere of activity in the past two decades (e.g. OECD,
WTO, Basel III, Kyoto Treaty, GRI). They aim to contribute to solutions of global
issues by providing systems of regulation. Because a global coordinating authority
like a world-state is not existent, this development meant that a plethora of state
and private-actors, organizations, initiatives, conferences and summits try to
provide regulations concerning concrete issues.
The
result is that there is a mess referring regulation of global issues today. It
is not very surprising therefore that regulation concerning single issues such as
e.g. unleashed finance or labour conditions in producing countries has become very
dense and confusing. One even can speak of a market for regulation of global
issues: different international regimes and organizations etc. offer each their
“regulation-package” for one and the same issue (what leads to arbitrariness
instead to effective solutions).
Because
the mostly unintended lack of coordination on a global level can be seen as a
central reason for the high density, it is inappropriate to speak of a willfully
regulation frenzy. Thus, it is better to speak of an absence of effective
regulation on the level of single states as well as of an absence of
coordination on a global level, which principally would be the level on which
meaningful regulative solutions need to be established.
It
remains to be seen if the development of institutional structures for global
governance is on the way to a necessary simplification of regulations which are
at the same time more binding. Solutions are the aim to which regulations are
expected to contribute effectively: this is what they are needed for. Besides, also
factors such as moral, (economic) Weltanschauung or
mind-set play important roles for effective solutions. But regulations are an
indispensable part of them.
Claude
Meier
