The term may be meaningless political sloganeering, but it does capture a mood. We are dealing with a bewildering set of new conditions and daunting challenges, of a magnitude we have not seen in close to half a century. They have the potential to impact every corner of regulation and public policy. Are we also at a regulatory inflection point?
Regulatory thinking has undergone a notable shift in the years since the financial crisis. There is renewed interest in recognising the important roles the public sector plays in spurring private sector innovation and growth (see, eg, Mowery, Mazzucato), and in re-socialising the benefits of that growth (see, eg, Hockett & Omarova, Rahman). New crises, convictions, and design choices brought forward by the pandemic are likely to reinforce this trend and to further reshape regulation, including business and financial regulation. Does this mean an end to the Regulatory State model (1990s- ), and a return to the post-war Welfare State?
In a new chapter in the forthcoming Elgar Handbook on Regulatory Agencies (Martino Maggetti, Fabrizio Di Mascio & Alessandro Natalini, eds), I argue that an effective post-pandemic regulatory model must learn from experience. It must be able to handle change and uncertainty better than the post-war Welfare State model could. It must also attend to inequality and precarity better than the Regulatory State approach did. The chapter sets out three contemporary challenges bedeviling regulatory effectiveness, and four requirements to respond to them.
In retrospect, the importance ascribed to economic efficiency and to its kindred spirits, private sector growth and innovation, displaced too many normative commitments and aspirations over the last three decades. Writing from the vantage point of mid-2021—battered by a poorly managed global pandemic and the undeniable persistence of racism and discrimination; terrified about climate change; having lived through years of political tumult and populist anger following the financial crisis; and having recognised once again that there is more to a person’s value than the quantum of their economic productivity—it seems clear that at the height of the Regulatory State, the pendulum swung too far away from the humane, collective, dignity-affirming priorities that animated much of the post-war Welfare State agenda.
And yet, was Welfare State sustainable? By the late 1970s, in many countries including the US and the UK, its credibility was under siege. Public actors were being criticised for having become inaccessible, ineffective, non-transparent and unaccountable in their decision-making, and pathologically observant of rigid rules and procedures. The Welfare State was also facing stronger headwinds as a result of increasing globalisation and novel technological and transportation developments—in other words, as a result of widespread and accelerating innovation. These phenomena caused Americans in particular to worry about their competitiveness. Forceful government interventions into the economy, such as interest rate caps, tax-and-spend powers, and state-owned utilities came to look indefensibly burdensome.
We sometimes forget that the Regulatory State defined itself against this discredited status quo. In this sense, while the Regulatory State had real shortcomings, it can also be seen as an imaginative and pragmatic response. Even as a fresh response arises in turn to address those inadequacies, we should not lose sight of the crucial civic republican, justice-oriented, egalitarian instincts that characterised many Regulatory State strategies. The same imperatives that now drive initiatives as disparate as human-centred design, community-based financing and empowerment, and broadly inclusive deliberative democratic initiatives drove a good portion of the ideas behind the Regulatory State.
The problems of change and uncertainty that helped undo the Welfare State persist. If anything, they have increased as the pace, scope, and variety of innovation has increased. Innovation has transformed the landscape: consider communications and platformisation (social media, reputational networks, data as an asset), record-keeping and transacting (distributed ledger technologies and smart contracts), finance (cryptocurrencies, decentralised finance), retail (global supply chains, e-commerce), health and science (nanotechnologies, genetic engineering via CRISPR), transportation (ride-sharing, drones, autonomous vehicles), and security (biomedical tracking, online surveillance). We are only beginning to understand the implications of these technologies, and there is little sign that even a global pandemic will meaningfully limit the dynamism and complexity that innovation continues to generate. On the contrary, in many areas, innovation has accelerated.
Innovation should concern regulators because it can outstrip existing regulatory structures, undermine assumptions, and alter the landscape seemingly overnight. The chapter focuses on three particular problems that innovation poses: information and data problems, visibility problems, and legibility problems. An unreconstructed, 1960s-style Welfare State apparatus would have no ability to manage in real time, with imperfect information, the challenges that fast-moving, global, and highly innovative contemporary society produces. The Regulatory State’s many and varied regulatory tools and strategies are a better foundation for post-pandemic regulatory architecture.
Yet, in order to make any new regulatory approach effective, robust, and credible, with a genuinely public-oriented and principled voice, it must have more capacity at its disposal than many Regulatory State agencies had. There is no silver bullet. However, I argue that if regulators have four key capabilities (adequate resources,independent-mindedness, a data-driven mindset, and awareness of how politics intersects with the regulatory task), they will have the capacity to reconceive legacy models and adapt to the challenges that post-pandemic innovation poses.
Regulation is often at the leading edge of politics and policy, in ways that we do not always fully grasp in the moment. It is a complicated task within which crucial but distinct priorities—growth and equality, freedom and respect, safety and privacy—must be balanced. In this time of enormous flux, innovation continues to fundamentally reorder economies, politics, and regulation. We must reckon with it if we value human dignity, equity, prosperity, democracy, and justice.
Cristie Ford is a Professor at the Peter A Allard School of Law, University of British Columbia.