Regulatory Capitalism
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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.
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Chapter 6: Can Regulatory Ritualism be Transcended?

John Braithwaite


WHY DOES REGULATORY CAPITALISM CONDUCE TO RITUALISM? Public providers of services in the era of provider capitalism (until the 1970s) suffered much criticism for their inefficiencies. Yet they enjoyed a kind of legitimacy, based often on rather settled patterns of crosssubsidization and on a history of expanding access to services. So public telecommunications providers basked in the continuous improvement to service access that decades of technological progress in telecommunications allowed. And they drew legitimacy from settled cross-subsidization of rural by urban consumers, of residential by business users. A similar story might be told of public railways and many other services. Privatization unsettled these arrangements: competition made it difficult for business subsidization of residential users, and other cross-subsidizations, to survive, for example. This unsettling challenged the legitimacy of privatization. It fuelled demands for the privatized providers to be held more accountable to public values. The political elites that drove privatization had to defend its legitimacy by building community service obligations and other accountabilities into privatization packages. Because their commitments were neoliberal, they believed in markets, but not in the importance of these accountabilities. The latter were palliatives to placate spooked publics who needed to be helped to learn how to trust the efficiency of markets. True believers in achieving any kind of outcome are rarely enthusiasts for accountabilities that might question their belief. Chief executive officers of private corporations who want to believe that their company is recording good profits do not enthuse about accountants...

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