Brief book review – Responsive Regulation: Transcending the Deregulation Debate.

Ian Ayres and John Braithwaite, (1992), Oxford University Press, 205 pages

Published in 1992, Responsive Regulation: Transcending the Deregulation Debate has become a central work in the canon of regulatory scholarship. The book is a collaboration by Professors Ian Ayres (Yale University) and John Braithwaite (Australian National University) and builds on Braithwaite’s earlier studies on regulation, enforcement and compliance.

The authors argue that strict, government-led, command-and-control regulatory policies are often not the best answer to address societal problems. Still, neither are laissez-faire policies that rely on market competition. Ayres and Braithwaite introduce ‘responsive regulation’ as a general regulatory strategy that seeks to build on the strengths of both these approaches and overcome their weaknesses. Before zooming in on responsive regulation, it is essential to keep in mind that Ayres and Braithwaite introduce responsive regulation as “an attitude that enables the blossoming of a wide variety of regulatory approaches” and not as “a clearly defined program or a set of prescriptions concerning the best way to regulate” (p.5).

As Braithwaite explains elsewhere[1]: “The basic idea of responsive regulation is that governments should be responsive to the conduct of those they seek to regulate in deciding whether a more or interventionist response is needed.” The responsive regulation strategy assumes a general willingness of citizens and firms to regulate themselves. The challenge is to find those regulatory approaches that provide the best mix of government intervention and self-regulation. Ayres and Braithwaite argue that meeting this challenge is possible. Governments must have in place a set of escalating forms of government interventions that come into force if delegated forms of market regulation or less intrusive ways of government regulation do not yield desirable outcomes.

Responsive regulation is, probably, best known for the different ‘enforcement pyramids’ it introduces. One of these illustrates the targeting of individual citizens or firms. It shows how a regulator can engage with a citizen or firm through a set of escalating regulatory interventions: from explaining the purpose of regulation to seek compliance (persuasion), via warning letters or civil penalties (deterrence), to criminal penalties or license revocations (the full force of law). The enforcement pyramid is a heuristic that seeks to illustrate how compliance is likely to be achieved through ‘soft’ regulatory interventions, but as long as the regulator can escalate to a severe response and is willing to use the most critical and ‘hard’ regulatory intervention.

The staged approach of the enforcement pyramids is but one of the possibilities Ayres and Braithwaite introduce as an example of how responsive regulation can be made operational (they refer to it as ‘Tit-for-Tat’). Other approaches presented are ‘tripartism’, ‘enforced self-regulation’, and ‘partial-industry regulation’[2]. Tripartism introduces the idea to empower citizen associations to overcome the risk of capture and corruption of the traditional two-way interactions between government and regulated industry. Enforced self-regulation requires firms to write their own set of corporate rules, which are then publicly ratified and enforced. Partial-industry regulation seeks to leverage off the competitive conduct of an entire industry by regulating some but not other firms.

When Responsive Regulation was published, in the early 1990s, it filled a gap by suggesting a ‘third way’ between intrusive government regulation and laissez-faire policies. Over time, in my reading of the regulatory literature and particularly the engagement of governments with Responsive Regulation, that specific aspect of the book seems to have gotten somewhat lost. In engaging with the book, most scholars, policymakers and regulatory practitioners focus on the enforcement pyramids (the Tit-for-Tat approach)[3] and often take these as a prescription for how regulators should work.

To date, however, little empirical work is available that gives insight into the opportunities and constraints of responsive regulation in regulatory practice. That is despite Ayres and Braithwaite ongoing calls in their book for empirical exploration to understand if the general presumption of trying responsive regulation before resorting to deterrence yields desirable outcomes. For this reason, the Chair in Regulatory Practice at the Victoria University of Wellington will carry out an evidence synthesis of the empirical responsive regulation literature over the next few months. Stay tuned.

Disclaimer In these brief book reviews, I discuss classic and contemporary books that make up the canon of regulatory scholarship. I focus on their central guiding idea or core notions and aim to keep the reviews to around 500 words. Unfortunately, this implies I must sacrifice a considerable amount of detail from the books reviewed.

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[1] Braithwaite, J. (2002). Restorative Justice and Responsive Regulation. Oxford: Oxford University Press.

[2] John Braithwaite later introduced ‘restorative justice’ as another approach to responsive regulation (above).

[3] Parker, C. (2013). Twenty years of responsive regulation: An appreciation and appraisal. Regulation & Governance, 7(1), 1-151.