Responsive regulation (2): Evolution and success

It is not easy to capture the essence of responsive regulation[i]:

“Responsive regulation is not a clearly defined program or a set of prescriptions concerning the best way to regulate. (…) Responsiveness is rather an attitude that enables the blossoming of a wide variety of regulatory approaches [none of which are the] optimal or best regulatory solutions, [but they are] just solutions that respond better than others to the plural configurations of support and opposition that exist at a particular moment in history”.[ii]

In a nutshell, Ayres and Braithwaite ask regulators to be flexible and attune their regulatory reactions to the situations they face in practice. To them, good regulation is about meeting the spirit of the law, and good regulation “is that which advances freedom as non-domination”.[iii] Ayres and Braithwaite were, however, not the first to use this understanding of “responsive regulation” in a socio-legal context.  

Pre-Responsive Regulation ideas about regulatory responsiveness

For example, in 1978, Philippe Nonet and Philip Selznick discussed the notion of “responsive law” and “purposive regulation”; ideas that have parallels with Ayres and Braithwaite’s responsive regulation. Nonet and Selznick conceptualise responsive law as a stage in the evolution of the legal order. A first stage, so they argue, was repressive law. This form of law allowed rulers to enforce social order but ultimately fell short in providing certainty as rulers were not bound in their application of repressive law. The second stage of legal order sought to solve this problem: autonomous law. Autonomous law binds the rules as well as rulers (“the rule of law”). This form of law ultimately falls short in that the certainty it seeks to provide asks for ever more detailed forms of law, which will eventually stifle economic and social development. The third stage of law, responsive law, may provide an answer to this challenge. “[It] presumes a far wider and inclusive conception of the legal process. In that perspective law is a problem-solving, facilitative enterprise that can bring to bear a variety of powers and mobilise an array of intellectual and organisational resources”.[iv]

It did not take long for scholars to point out the risks of such a responsive approach to law and regulation. For example, in 1984, Susan Silbey argued that the then widely experienced failure of public regulation in the USA was a result of “the responsiveness of regulatory agencies to their public constituencies”. [v] Silbey observes “responsive regulation” (her terminology) at the level of individual regulators (where an inspector seeks compliance through cooperation with a regulatee), at the level of regulatory agencies (for example, where an agency seeks compliance through case-by-case consumer complaints), and even at the systemic level of regulatory governance in the USA. Particularly this latter one appears problematic. Silbey points at a general move away from a flexible and cooperative stance by regulators (responsive regulation at the street level) towards an inflexible and legalistic one “as a result of [societal and political] demands for greater control of discretion [of street-level regulators]”. Yet, such early insights on a responsive approach to regulation have not gained much traction.[vi]

What explains, then, the success of Ayres and Braithwaite’s take on responsive regulation?

Transcending the clash between proponents and opponents of regulation

In hindsight, the success of Responsive Regulation is easy to explain. At the time the book was published, discussions on regulatory governance had split into two broad camps. One the one hand, there were those who looked at regulation as hampering economic progress. They called for drastic deregulation, cutting of red tape, and a laissez fair stance of government towards the economy. On the other hand, there were those who looked at regulation as being captured by (big) industry and ineffective because of how it was implemented. They called for more regulatory transparency and stricter monitoring and enforcement of non-compliant behaviour.

Ayres and Braithwaite’s book offered a way out of the “stalemate” these debates on (de)regulation found themselves in. The subtitle of their book illustrates this ambition, Transcending the Deregulation Debate. The easy explanation of the success, then, is that the book supported both camps and provided a synthesis of their arguments rather than a deepening of the trenches the camps found themselves in. An additional appeal of the book is that it illustrates its normative (and sometimes prescriptive) arguments with hands-on solutions to the type of problems regulators (agencies and individuals) face on a day to day basis—largely inspired by Braithwaite’s various (advisory) roles in (Australian) regulatory agencies and commissions in the late 1980s and early 1990s.[vii]

With these practical examples, Responsive Regulation not only transcends the deregulation debate among academics, but it also provides a bridge to regulatory practice. The book is one of the first practical academic books for regulators in a time where governments around the world were seeking to reinvent themselves.[viii] As Christine Parker sums up well, “Ayres and Braithwaite put a language, a rationale, and a frame around a particular set of practices that they had observed in everyday regulation, and hoped to expand and improve. In doing so, they invented a new theory and a new technique that was grounded enough in existing practice to not seem unrealistic, but was aspirational enough to be challenging”.[ix] Or, as Braithwaite puts it, responsive regulation is influential “because it formulate[s] a way of reconciling the clear empirical evidence that sometimes punishment works and sometimes it backfires—and likewise with persuasion”.[x]

But more is at stake.

Responsive regulation as a set of heuristics

Another explanation of the success of Responsive Regulation (and not the earlier takes on the topic) is that it is many things at once. The most succinct way to put it is that the book is both descriptive (explaining how responsive regulation works in practice through examples) and prescriptive (presenting an argument for how regulation ought to be implemented). While we are now used to the mixing of evaluative and normative lines of reasoning in public administration, public policy, and socio-legal scholarship, it was fairly novel but highly desired at the time Ayres and Braithwaite published their book.[xi]

From a normative point of view, Responsive Regulation provides a set of heuristics or guidelines for how regulators should organise regulatory governance at different levels. These heuristics include:

• First-order regulation (the direct interaction between regulators and the targets of regulation): Seek compliance through the least intrusive response possible and acceptable. If that response does not yield desired outcomes, the regulator should escalate upwards to a more intrusive response.
• Second-order regulation (the institutional arrangement of this interaction; or, if you wish, the regulation of regulatory interactions): Seek compliance through institutional arrangements that provide as much plurality, industry and citizen participation, and forgiveness as possible and acceptable. If these arrangements do not yield desired outcomes, the regulator should escalate upwards to more restrictive (that is, more command-and-control like) institutional arrangements.
• Third-order regulation (the principles that guide this institutional arrangement; or, if you wish, the meta-rules of regulatory governance): Seek compliance by providing the target of regulation the largest amount of freedom (“as non-domination”) possible and acceptable. If the target of regulation does not show compliant behaviour within the freedom provided, the regulator should escalate upwards and reduce this freedom.

These heuristics (or guidelines) leave regulators with degrees of freedom to develop their own detailed understanding of responsive regulation, and to apply these heuristics in regulatory practice.

Responsive regulation as a set of (utilitarian) strategies

From a practical point of view, Responsive Regulation provides a set of hands-on strategies (illustrated with examples and some evidence) of how regulators can operationalise the heuristics in regulatory practice. These include[xii]:

• Tit-for-tat enforcement (also referred to as “the benign big gun”): “The regulatory design requirement we describe is for agencies to display two enforcement pyramids with a range of interventions of ever-increasing intrusiveness (matched by ever-decreasing frequency of use). Regulators will do best by indicating a willingness to escalate intervention up those pyramids or to deregulate down the pyramids in response to the industry’s performance in securing regulatory objectives”.
• Tripartism: “[P]olicies that secure the advantages of an evolution of cooperation between regulatory agencies and industry are policies that also run the risk of an evolution of capture and corruption. Tripartism—empowering citizen associations—is advanced as a way of solving this dilemma”.
• Enforced self-regulation: “[O]ne of the creative options available to escalate the interventionism of regulatory strategy to a middle path between self-regulation and command and control government regulation. This option is enforced self-regulation. It means that firms are required to write their own set of corporate rules, which are then publicly ratified. And when there is a failure of private enforcement of these privately written (and publicly ratified) rules, the rules are then publicly enforced”.
• Partial-industry intervention: “[I]n some regulatory settings, regulating only an individual firm (or a subset of the firms) in an industry can promote efficiency by avoiding the costs associated with industry-wide intervention or laissez-faire. The existence of a single (or a few) competitive firm can have a dramatic effect on the competitive conduct and performance of an entire industry. (…) partial-industry regulation uses the spur of competition to affect the unregulated portion of the market. But unlike across-the-board industry regulation, jf government decisions go awry, the mistakes do not need to affect adversely the unregulated firms”.

As with the heuristics (or guidelines), these suggested strategies leave regulators with enough degrees of freedom to develop their own tailored strategies for the targets of regulation and regulatory contexts they deal with.

Beyond hindsight

To conclude this blog post, the book Responsive Regulation presents a set of strong ideas about how regulation ought to be implemented illustrated with examples and strategies of how it can be implemented. The book appears to have presented these ideas in the right format (combining prescriptive and descriptive arguments), at the right time (when governments were actively “reinventing” themselves), to the right audience (an interdisciplinary scholarly audience and an audience of regulatory practitioners).

Since its publication, Ayres and Braithwaite’s ideas on responsive regulation[xiii] have been applied in a wide variety of policy areas and in a wide variety of countries—I will explore some examples in the next blog post. It remains unclear, however, how successful responsive regulation is across the board—the fourth blog post in this series will explore the evidence we have. Overall, scholars and practitioners appear to be supportive of normative arguments presented in Responsive Regulation, but some question whether it is possible to apply these in regulatory practice. These questions will lead us to explore the epistemic and ethical challenges of responsive regulation—the topic of the final blog post in this series.

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[i] Braithwaite, J. (2011). The essence of responsive regulation. University of British Columbia law review., 44(3), 475-520.

[ii] Ayres, I., & Braithwaite, J. (1992). Responsive regulation. Transcending the deregulation debate. New York: Oxford University Press.

[iii] See note [ii].

[iv] Nonet, P., & Selznick, P. (2009 [1978]). Law & society in transition: Toward responsive law. Transaction Publishers: New Brunswick.

[v] Silbey, S. (1984). The consequences of responsive regulation. In K. Hawkins & J. M. Thomas (Eds.), Enforcing regulation (pp. 147-170). Boston: Kluwer Nijhodd.

[vi] For example, the book by Nonet and Selznick has attracted less than a hundred citations, as has Silbey’s article (source: www.scholar.google.com, 17 June 2020).

[vii] Lehmann Nielsen, V., & Parker, C. (2009). Testing responsive regulation in regulatory enforcement. Regulation & Governance, 3(4), 376-399.

[viii] Osborne, D., & Gaebler, T. (1992). Reinventing government: How the entrepreneurial spirit is transforming the public sector. Reading: Addison-Wesley Publishers. Another successful “how to” book for regulatory practitioners that appeared in this period is Malcolm Sparrow’s The Regulatory Craft (published in 2000).

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

[x] See note [i].

[xi] Raadschelders, J. (2011). Public administration: The interdisciplinary study of government. Oxford: Oxford University Press.

[xii] All quotes that follow are from Responsive Regulation, see note [ii].

[xiii] Ideas that, according to Ian Ayres, were largely developed by John Braithwaite, see further: Ayres, I. (2013). Responsive regulation: A co-author’s appreciation. Regulation & Governance, 7(1), 145-151..