Regulatory Capitalism

Regulatory Capitalism

How it Works, Ideas for Making it Work Better

John Braithwaite

Contemporary societies have more vibrant markets than past ones. Yet they are more heavily populated by private and public regulators. This book explores the features of such a regulatory capitalism, its tendencies to be cyclically crisis-ridden, ritualistic and governed through networks. New ways of thinking about resultant policy challenges are developed.

Chapter 3: Privatized Enforcement and the Promise of Regulatory Capitalism

John Braithwaite

Subjects: economics and finance, public sector economics, politics and public policy, public policy, regulation and governance, social policy and sociology, economics of social policy


The first two chapters were about the form of regulatory capitalism: its cyclical nature in Chapter 2, its fundamentally different character from neoliberalism in Chapter 1. It showed how regulatory capitalism resulted from securitization, corporatization and the rise of networked governance. This chapter shifts attention to how such a reconfigured capitalism creates opportunities for reconfigured regulation. It argues that the large, strong states that securitization of the national debt enabled, the growth of megacorporations, metagovernance and NGOs that are private regulators creates the possibility of a new era of hybrid private–public enforcement. Qui tam suits under the False Claims Act in the United States are seen as a harbinger of this possibility. The next section considers the history of qui tam and why it is a strategy with new promise in the era of regulatory capitalism. Then we consider the potential role of NGOs in qui tam enforcement, using the examples of trade unions enforcing breaches of labour laws and environmental groups demanding compliance with pollution standards. Then we consider the new possibilities for interplay between the financial complexity of regulatory capitalism and networking information technology with private enforcers. Finally, we consider how weak states and strong NGOs might interact to create new hybrids of privatized regulation appropriate to the crony capitalism of many developing economies. WHY PRIVATE LITIGATION MOSTLY ADDS LITTLE VALUE TO SECURING REGULATORY OBJECTIVES Pamela Bucy (2002a) has surveyed the diversity of ways that private law enforcement has been enabled in US regulation....

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