Regulation theory - International level

How can we determine the borders between the orders of the market, the common, the collective, the public at global level? Several theoretical arguments can be invoked to distinguish collective, common, primary or public goods, as well as global or international ones. The first three, which lie within the field of economics, concern the interplay of interests and do not call into question the architecture of international relations, while the last three, within the field of transnational political economy, raise the issue of conflicting values and aims, and thus that of the political decisions which would permit the reconstitution of international relations.

a) Arguments invoking economics and the interplay of interests

Argument 1 (Neoclassical): global collective goods and market failures.

In the tradition of Samuelson (1954) or Buchanan (1999), most of these studies invoke the standard theory of pure exchange and view international and global goods in terms of the criteria of nonrivalry, nonexcludability and externality. They thus distinguish between pure collective goods and common goods (rival and nonexcludable) and mixed goods (nonrival and excludable), to which we may add externalities and natural monopoly. A pure collective good is one where profit may be extended to an additional person with zero marginal cost and where the exclusion of an additional person has an infinite marginal cost. The first area of ‘global collective goods’ is thus that of market weaknesses (indivisibilities, externalities, natural monopolies). The planetary common goods which are the object of growing rivalries are taken to be free. Collective action is thus conceived in terms of mobilising private or public players and bringing agency relations into play in order to optimise positive and negative externalities.

Argument 2 (Keynesian in an open economy): international public goods and “failed States”.

Invoking the theory of constraint and the organicist conception of the State and of general or public interest is consistent with the realist theory of ‘state-centric’ international relations which foregrounds conflicts of general interest between Nation-States. We can transpose Musgrave’s (1999) functions of the State and add the competitive rules permitting the avoidance of monopolies (Stiglitz 2000). In that case, we are confronted by failed states at international level. The monarch’s functions of providing security, stability, redistribution and regulation of competition are then limited to the borders of sovereign States, which, given their monopoly over the legitimate means of violence in the national space, are considered the only players in international relations. The second group of ‘international public goods’ consists of the national tutelary goods which are being globalised by the fact of spilling over borders and spaces of political action: education, health, physical or food security, financial stabilisation. The logic of this approach thus consists of implementing public actions in a transnational framework.

Argument 3 (institutional): collective international goods and rules failures.

The inventor of the concept of international public goods (IPG), Charles Kindleberger (1986), included among them standards of measurement, definitions of property rights, fixing of exchange rates and opening of trade. In a decentralised system of sovereign States with different interests, however, the provision of IPGs comes up against the classic risks of defection, free-rider or underproduction, and in any game of this type (e.g., the prisoner’s dilemma), the absence of cooperation leads to a Nash equilibrium (Kebadjian 1999). The IPG then presumes either a hegemon with the power to impose a system of rules and see to it that it is respected or a regime, in Krasner’s (1983) sense, with a greater or lesser degree of leadership. This third approach to ‘international collective goods’ thus goes back to the necessity of institutions and global rules in order to permit the interplay of the markets, the strategies of private oligopolies or inter-State relations.

b) Arguments from the field of transnational political economy and conflicts of values

Argument 4 (ethical): Global primary goods and rights/entitlements failures.

Many international players adopt a normative point of view and consider that there are ‘primary goods’ from which the other goods are derived, in the sense of Rawls’s ‘merit goods’ (1971) or Polyanyi’s ‘livelihood of man’ (1944) or the ‘necessities of covering human costs’ according to Perroux, which concern all of humanity. The question is no longer that of standard theory’s non-excludability but, on the contrary, the excludability of goods which are essential to the needs of the greatest number. The priority then becomes creating a hierarchy of rights and guarding against inequalities of access to these fundamental goods with concern for equity which is intragenerational (between rich and poor) and intergenerational. Making such rights effective implies both a new supra-national legal system and a transformation of the economic system. This fourth conception of GPGs thus comes back to the question of the rights of use and access for private or public goods and the effectiveness of these rights given international asymmetries.

Argument 5 (sustainable development), the common heritages.

Other authors foreground the question of ‘common heritage(s)’ to the extent that, in an uncertain world, the inter-generational management of heritages cannot obey any economic calculation. Do the States speak in the name of future generations? Is there a debt resulting from the accumulations of past nuisances? The notion of heritage relates to shared values of identity which underlie the cohesion and lastingness of the social bond, the preservation of what has been inherited. A heritage is multi-dimensional and multi-temporal: it can be applied to the areas of genetics, culture, science, environment or property. It is situated upstream from (and above) economic activity and exchange values; it represents the legacy of the past, the crystallisation of elements coming from a historic selection process and transmitted from one generation to another. It is based on the need for the persistence or reproduction of the founding elements of biological and social life. The environmental heritage conception is thus opposed to Solow’s standard, utilitarian conception of ‘natural capital’ (which presumes that the different kinds of capital—productive, human, social, natural—may be substituted for one another) and sustainability then expresses the non-decrease of the global stock of capital, for example, through allocation of the income related to non-renewable resources in reproducible capital. In the heritage conception, by contrast, the intrinsic value of the heritages refers to the values of legacy (accorded to the past), inheritance (accorded to a heritage which one wants to transmit), option (related to the possibility of using the resource later on) and existence (accorded to non-use). The trade-off between these different values, which vary from one culture to another, lies in the domain of political choice. The ways the heritages are managed (Godard 1990, Ollagnon 1989) presume the principles of preservation, precaution, uncertainty and reversibility of choices.

Argument 6 (political): global public goods as sociopolitical constructs. Finally, we can adopt a political notion of global public goods as historical constructs resulting from collective decisions by international players in asymmetrical positions: States, companies, international solidarity organisations (Hugon 1997). On the one hand, international relations express the balance of power between public and private authorities; on the other, an international company or international community constitutes a counter-power. These conflicting processes give rise to the evolving domain of the GPGs. The asymmetries of the different powers (over others and structural) between the different public, private and other players are expressed in the main ‘structures’ of the world economy: security, production, finance, knowledge. The power over others, as defined by the neo-rationalists is marked by an intersubjectivity between agents, while structural power serves to fashion and determine the structures of the entire global political economy within which the other players necessarily function. These powers operate notably in the global field, as a configuration of objective relations between the players’ asymmetrical positions and not only in the national fields.

The preceding variants allow us to establish an analytical definition of the boundaries of the ‘public’, the ‘collective’ or the ‘primary?’ at inter- or transnational level. But the public space of transnational collective

action implies a confusion of decision-making levels and thus conflicts of legitimacy between collective or public decision-makers. At this level, two doctrinal concepts—distinguished by the theoretical foundations and rhetorical arguments just elabourated—reflect the players’ two ‘anti-worlds’.

The first conception is that of economic ‘realism’, which reasons in terms of interplays of interests and market failures, States and rules and does not call into question the international architecture based on inter-State relations. It only results in giving a greater international dimension to sector-based policies and finding new incentives for private companies or States. For example, the creation of taxes on global flows (taxes on short-term capital movements, gas emissions or weapons traffic) offers the outlines of a global tax system which could finance GPGs; one solution would be the allocation of these taxes to sector-based agencies including representatives of the companies, civil society, governments, experts and relevant international organisations in order to link sectorial management and the geopolitical dimension.

The second ‘radical’ conception of the transnational public economy reasons in terms of conflicts of values and calls into question the present architecture of world governance: it places the accent on processes of political decision-making and on procedures which allow goods to be defined and placed in a hierarchy. Thus, Regulation in the strong sense of the term is not reduced to simple controls and a normative framework. It presumes the introduction of lasting socio-political compromises, with mechanisms of redistribution and social cohesion. Global Regulation implies transnational public action. How can we arrive at legitimate decision-making processes which permit these goods to be placed in a hierarchy and which take into account the heterogeneousness of systems of preferences and values? How can we define a transnational space for decision-making, a structure which generates a framework for the definition and representation of a common good or heritage and a means of co-ordinating relations between the players corresponding to it? How can we make decision-makers’ expectations about risks, costs and profits converge, in spite of the uncertainties which complicate consensus between experts, politicians, citizens and private operators? There are multiple criteria for evaluation and decisionmaking, including efficiency, equity, precaution and responsibility. Democratisation goes beyond electoral legitimacy; it brings into play deliberative policies and a defined public space, in the sense of Habermas, as the place where the interpretations and aspirations in question manifest themselves and acquire substance in each person’s eyes, where they interpenetrate and enter into synergy or conflict.

Democracy, composed of representation and tradeoffs between sometimes conflicting values, is constructed through procedures, deliberations, expert appraisals and opinions which are publicly expressed. For the time being, the national frameworks are the only ones offering such spaces of debate and regulation.

International or global democracy has no real existence which might be expressed at universal level or within international organisations. The latter function according to the principles of “one State, one vote” or

“one dollar, one vote”. Meanwhile, the various forms of participatory democratic actions (such as the Social Forums) and the appearance of a certain planetary conscience (what some would call ‘transnational citizenship’) are too limited in their structural power to do anything more than maintain the ‘radical’ position within the realm of the thinkable. At a time when the question of the inclusion of the citizens of the planet is being raised with astuteness in a context of economic globalisation, can the different specialised international organisations become veritable bodies of transnational regulation (and under what conditions)? For the longterm survival of the planet, it is imperative to go beyond the present forms of governance.

Questions and answers – examples

1. What are the reasons of transaction costs?

The essential reason is the incompleteness of information or of capacity to treat the information.

We make decisions on the basis of information at our disposal. So, we should pay (by time, by money, by efforts, etc.) for the illusion of getting the sufficient information and of correct treatment of these data.

2.What is the link between the notion of trust and the economics of conventions?

The economics of conventions is built on the idea that people collect precedents or practices, and the dcisions made by economic agents depend on the previous experience with agents.

This theory is connected with trust by the idea of belief: if earlier a company existed and was trustworthy (executed its obligations), hence, we will have no problem in co-operating with such a company in similar situations, due to its repeating of its behaviour.

Trust is forming by realised expectations: when your colleague at the neighbour desktop in the company day by day carries out his or her work correctly, you will trust him. This reliable behaviour creates the stability, the basis to make decision in acting.

Such a stable world exists in the forms of “universe” in your company, which is built on the foundation of conventions – collective cognitive disposals, the whole world of ideas, how to behave. The economics of conventions distinguishes some kinds of worlds: housekeeping, civic, trading, industrial, inspired… In each world, we expect a special type of behaviour and rely on our expectations and ideas.

3.Why in Russia of 1990s the business had the stage of “no-limit” carrying out?

The 1990s in Russia were the period of young business units without any significant past, which could be a basis for trust (or distrust).

That means, that the period of “no-limit” (also known as “bespredel”) endured until the organisations in the economic spaces had enough time to accumulate the experience of working with some partners.

4. What are the social sciences’ contribution to understanding economic behaviour ?

Studies in behavioural economics aim at providing a more realistic, empirically grounded, understanding of economic agents. Achieving this would finally make it possible to understand how - as Karl Polanyi noted long ago - economic behaviour is embedded in the social context, and the consequences thereof.

Experimental economics is used for theorising regarding the actual cognitive processes and preferences of the agents on the basis of the behaviour of subjects in experimental settings, complying with the experimenters' instructions. Bringing subjects into the lab is often interpreted as a means of abstracting from the complexity of the social context.

Economic anthropologists have studied how socialisation and enculturation influence economic behaviour, taking issue with the neoclassical economic view of decision making. They have advanced several arguments in favour of alternative ways of understanding the decision making process.

Psychological theories of ecological rationality and situated cognition suggest additional reasons for questioning the applicability of the results of experimental economics.

Herbert Simon and Gerd Gigerenzer have insisted that human rationality is ecological: it is better understood as a match between cognitive processes and the environment in which they occur. Yet, experimental methods put subjects into new, artificial, environments. How can we understand the ecological rationality underlying agents' decisions when the subjects are taken out of their usual environment? With economic cognition knowledge of the social context should be highly relevant for understanding its ecological rationality.

Jean Lave has shown that people were solving problems when shopping, that they were unable to solve in other environments, as inside the classroom. What does the behaviour of subjects in the new environment designed by the experimenter, deprived of their usual cognitive tools, reveal about the cognitive basis of their behaviour in their usual environment and the ecological rationality of their decisions?

Date: 2016-03-03; view: 701