Exchange

Serotonin

Thoughts that make me feel good

I thought that I might write about different thoughts that make me feel good.

One of the most feel good thoughts that I return to again and again is the idea that there is no failure only feedback. On of the difficulties that people experience is that they are so afraid to fail that they do not do anything because they are paralyzed with fear. The thought that not getting something right the first time or discomfort are all part of the natural course of life is a very helpful thought to have.

Another thought that causes me to feel good is something that I read in Carl R Rogers' book. In those Rogers suggests contrary to the Freudian notion that at bottom we are base ids all selfishly pursuing our own end we possess an 'organismic rationality' that inclines towards advancement, maturity and sociability.

Another thought that I return to when I needs a lift is the palliative effect of nature. Near my home there are hospital grounds which are covered in trees and there is an arrangement of rocks where people sit and have coffee I presume. In nature one can think that particular natural phenomena have existed before and will exist long after our problems.

Another idea, this time from Rogers again, that is helpful to me is the notion of viewing all people as units of inherent worth and dignity. The problem with the Purely Freudian and coldly analytical model of looking at people is that it leaves no room to experience the other person's potential and leaves no room to actually be there with the person at that particular moment. I like to think of it as being a bit like the Heisenberg uncertainty principle which states that you cannot know the speed and position of an electron at the same time except in this instance it is you cannot be there with the person experiencing at the same time as treating them as a series of mental phenomena of which you can work out the causal roots.

Other ideas that I get from Rogers are that I need not be anxious about difficulties in the way that I constantly ruminate about what may happen in the future. I take from Rogers that all of the things that I need to approach problems is contained in the moment in which I have to deal with and experience those difficulties. Also I learn that I can place a trust in my own feelings and experiences in that moment as things that will bring me in the right allbeit spontaneous direction.

I also take from Rogers that there is something inherently valuable and worthy in the way that I directly experience the world. The way of perceiving that is sometimes thought of as a problem also can be the source of the most inspired creativity. I also take that I must accept myself and other people and this means that I no longer label things that I do that are unsavoury as being instances of 'not me'.

Another idea that makes me feel good is a feeling that I sometimes feel that we are passing tests in areas of life that we don't even know we are passing. We definitely seem to recognize all of the tests that we fail in life be they academic, social or otherwise but we do not seem to see a whole lot of ones that we pass that just pass us by. Also there are so many different areas in which there are tests. The tests do not just exist in a few  areas that we think of as big areas. They exist in all areas.

Mixed symbols

Method to Madness part 2

The last blog entry (method to madness part 1) should have been clearer as to what it meant. The basic underlying thesis of that piece was the notion that can be found on nearly every page of Frank McLynn's biographies of historical figures  there is method to madness and rationality to irrationality.

Perhaps I was running away with that idea. I presented an example of Carl Jung's clear Fordham lectures as coming from seemingly the same internal source that produced his largely inaccessible and self-indulgent book about symbols. I suggested that a delusory red man the visited Napoleon was an example of an irrational element that provided rational advice. ie. do not invade Russia. I further selected what were described as 'blundering and inept interventions' on the part of Napoleon during the 18 Brumaire coup as being involved in a greater rationality.

The problem with all of this was that I should have been tighter with my concepts. I was a little too comfortable in eliding different strands together to present an almost alchemical notion of personality change. I should have focused more on the underlying process concerning this rationality. What inspired me to write the original piece was the Jungian concept of enantiodromia. Perhaps it is to that idea that I should return in an effort to save the original post. The idea of enantiodromia suggests that the superabundance of one force necessarily produces its opposite within the personality. The absolutism of conscious attitudes produces absolutism of the opposite sort at the unconscious level. The point to be drawn from this concept is actually that the opposites exist together in the organism and do not lend themselves to ready separation. In the same sense the dichotomy between rationality and irrationality is a false one and it is that to which the preponderance of examples in the original piece point.

Another helpful thing to do would be to lay out the different instances of the ideas of rationality used in the last post and in my thinking more generally. First of all there is rationality in the sense of the thought processes of the individual and then there is rationality in terms of the actual actions of people as considered by history or in a more objective sense at the very least. There is further what is described as organismic rationality by Carl Rogers. This is the underlying rationality of the total organism. This organismic rationality is supposed to basically drives towards advancement and maturity in the person who is open to all of his experience and feelings.The original post then ends up supporting the notion of this false dichotomy between the rational and the irrational. The Red Man in the original post can be taken as being an instance of both rationality and irrationality at the same time. The Red Man is rational as related to the historical sense of not invading Russia (or rational in that they took Moscow, or perhaps even more rational if the tide of military events had continued to roll in Napoleon's favour) but on the level of the individual's thought processes it could be considered both as an irrational thought process or alternatively as a thought process that while being irrational produces rational ideas. But then are not all rational thought processes beholden to some basic underlying cognition which could be viewed as irrational.

The books Incognito and the social animal help to smash the false dichotomy that perhaps came across in the first blog entry. Underneath what one might call level 2 cognition or conscious cognition (dealing with what you can quanitfy, formalize and understand) is what you might call level 1 cognition (which is cloudlike, non-linear, hard to see and impossible to formalize). Anotonio Damasio's tests of decision making failures in persons with reduced emotional responses illustrate the inseparability of emotion and cognition. Damasio developed the 'somatic marker' hypothesis' on the role of emotion in human cognition. Basically what he said was that emotions measure the value of something and help to unconsciously guide our decision making. 'Reason is nestled upon emotion and dependent upon it. Emotion assigns value to things, and reason can only make choices on the basis of those valuations.' Kenneth Dodge says that 'All information processing is emotional in that emotion is the energy that drives, organizes, amplifies and attenuates cognitive activity, and in turn is the experience and expression of this activity. The line in the Napoleon book about reason being the servant of Napoleon's imagination then fits perfectly with the notion of a false dichotomy or 'of one substance' idea.

Now one might refute the blending of emotions and cognition by saying that surely I can make decisions on the basis of the direct empirical evidence as presented to me by my senses. We might say that sure some thought processes are compromised by emotions but there are some sensory inputs which are free from such interference but if we read icongnito and the social animal we find we cannot actually be as sure of the senses. In Incognito various forms of sensory looping and sensory compensation are described. The brain for example fills in the gaps in relation to sight and the senses themselves actually change the way in which other senses are actually perceived. A visual image of a mouth moving in a particular way can change the way in which a sound is actually heard. When one answers the phone to an unknown person and they announce their name we then recognize the voice and hear it differently. If we try and identify a suspect from a police line up and then try to help the police by giving a description of the suspect's physical appearance or vice versa we find that we are compromised in whatever function we undertake second. So to the person who thinks that they can take refuge in the 5 senses as a logical bastion they must face the inherent changiness of the human organism to use Carl Rogers terminology. Furthermore it is suggested in The Social Animal that peripheral vision actually improves with mood and it has been established in many studies (none of which I care to look up or cite) that memory is extremely labile and we are essentially re-remembering things  every time we recall them and this is a process that is again driven by emotion. So in short if you think that you are the paradigm of logical thinking (Ahem! Krishna.) you might be somewhat persuaded by this that like everybody else you are hopelessly compromised/ enhanced by emotions.

So at this point I have revised or reframed what I was saying in the original blog entry. I seem to be talking about the dialogue or the interaction between the level 1 and level 2 types of cognition described above. Jung talked in terms of a conscious dialogue with the unconscious and others refer to it as metis. I thought I might finish this piece by taking a look at some of my own thoughts where I feel this interaction between the conscious and the unconscious is evident and talking up that interaction rather than talking up some pure non-existent strand of irrationality. I have a joke that I respond sometimes to the emotional truth of social interactions rather than the social or logical truth. What this might mean in my hyperbolic joke is that someone might tell me to get my own ketchup from the fridge and I might hear something along the line of I am resentful of your happiness and am angry and unwilling to discuss this anger.

In Carl Rogers' book on becoming a person he speaks at length about accepting ourselves and about unconditional positive regard. In one part of the book he talks about the artist El Greco and says isn't it great that he thought this is not how good artists do things but this is how I do things. He mentions Einstein in the same context this is not how physicists behave but this is how he behaved and aren't we very thankful that that is the case because of all of the achievements they both accomplished. In the same vein I suppose the peculiar dialogue between the unconscious and the conscious is part of me or rather part of the way in which I see and experience the world and it is to that I turn to give you a small taster of.

So here goes. When I talk to people I like to watch the references and allusions that are made consciously or otherwise throughout the conversation. I will take them to be a part of the conversation even though I must pretend that they are not part of the conversation. This goes down to anything as little as the symbolism and imagery contained in words. For example if someone says something like 'he's some buck' I start thinking how would deer or stag or buck imagery relate to this does it make me think of something apt to say. If as has happened we are all jokingly comparing ourself to early psychoanalytic figures and someone chooses 'Adler' I take it that that person possibly meant to get at the exclusion of Adler from the movement and perhaps make some sort of hint at the inferiority complex that he was heavily involved in developing theoretically. If I am talking with someone and I look at a billboard and it says something that makes me think of a conversation topic there is a part of me that thinks that this is the most inspired and appropriate choice of topic.

If I hear people use the same words or phrases in conversation with me that I use in conversation with somebody else I will for a moment think that those two people have been talking. I am fully aware that this is a form of paranoid thinking but that does not detract from its usefulness. It is something which can be used or not used and it makes me think of the concept of functional paranoia as I think it is referred to in Bentall's madness explained which  I intend to read.

I also think that there is a value in terms of drawing people to you if you let them inside your thought process. Another thing that I watch when I am in conversation with someone is the juxtaposition of thoughts. If they talk for an extended period about a car accident and then go on to talk about a horse at length I will wonder if the car crashed into the horse, if the horse was driving the car, if the horse was meant to be in the car but stayed at home that night and is secretly being held responsible for the car accident. If someone uses the same types words to describe different things I will wonder whether there is a relationship between them. The words thing, in particular, was reinforced by watching the drama in treatment to do with analysis where Sunnil is talking about his daughter in law. He relates a dream about a dead dog or something but uses the same words to describe something else thus linking the concepts. Now I know that the genesis of these ideas should really be something sturdier than in treatment but it provides me with what I need in little 20/ 30 minute chunks. Other things I have taken from In Treatment including that things to do with paying for things and making a show of paying for things assert dominance. In the episode introducing April to the show Paul reinforces another lesson for me. He suggests that the stories that April is telling are not just stories from her life but instructions to her therapist on how she wants to be treated. So this is another thing that occurs with me if somebody tells me a story about how they beat up people giving them grief they are saying don't mess with me.





This is just a small taster of some of the things that go on under the hood of me but the real fun part is that you are not supposed to say any of these things because they are 'crazy' and they are. There is no objective proof for any of the conclusions these processes lead me to but they are nearly always bang on. They can be debilitating and feat and anxiety inducing and you can let them go and you can be happy. You can turn down the volume sort to speak but you can't deny the value of these imaginative processes. It reminds me of the Red Dragon scene in which Hannibal Lecter is telling the protagonist that what they share in common is that fear is the price of their instrument.

My drawing of a Madonna statue in a graveyard covered in volcanic ash during an eruption on the Icelandic island of Heimaey in 1973.

My Albatross drawing

Can self-regulation be legitimate and effective without substantial state involvement?

Introduction

Self-regulation has been characterised as an ‘attempt to deceive the public[1]’, as ‘placebo policy[2]’, and as mere ‘cosmetic effects[3]’. It has been viewed as ‘a useful way of organizing issues out of politics[4]’ and perhaps most colourfully as ‘a wicked weapon of agenda management[5]’.

The reality, however, can be quite different. As Julia Black notes, ‘self-regulation’ does not refer to individualized regulation but ‘describes the situation of a group of persons or bodies, acting together, performing a regulatory function in respect of themselves and others who accept their authority. [6]’

In contrast to the bogeyman conjured up by the above comments, self-regulation does not offer free reign to regulated industries. In fact it allows regulation to access the most powerful of social forces which were previously off limits to it.

In the absence of substantial state involvement self-regulation can remain legitimate and effective. This is because self-regulation is itself ‘conditioned[7]’ by an array of regulatory and institutional forces outside the realm of traditionally conceived regulation. The title question will be addressed under the following four headings: The power of social norms, general effectiveness of self-regulation, legitimacy and institutional embeddedness.

Seeing everything through the regulatory lens

Regulatory governance, in academic terms, induces the ultimate Damascene conversion. Everything is viewed through a new lens. First of all, everything is regulation. ‘[I]t can be holding a child’s hand at a pedestrian crossing, encouraging a work mate to take recreation leave or reminding a family member to put their dirty clothes in the laundry basket. [8]’

 Secondly, soft-regulation is hard-regulation like, for example, social norms. Last of all, self-regulation is not self-regulation. What initially sound like newspeak slogans out of 1984 make sense through this new lens.

The context for this argument in favour of the efficacy and legitimacy of self-regulation then is also one of the most powerful prongs of the argument. Self-regulation is not actually self-regulation. Self-regulation, following Braithwaite’s idea, is itself enforced[9]. This will be dealt with in more detail later.

The power of social norms – Soft regulation is hard regulation

Teubner’s autopoietic view of regulated industries shows us that systems are self-generating and self-referring[10]. He views actors as bounded by the rationality of their own environments[11]. These systems are described as ‘normatively closed, but cognitively open[12]’. In short, there are regulatory areas that can be reached only indirectly by a form of ‘conditioned’ self-regulation.

Traditional legal norms are simply viewed as ‘external ‘noise’’ and are filtered and reconstructed in keeping with a system’s own rationality[13]. This is evidenced in the economic system where its rationality of efficiency leads to the concept of ‘efficient breach of contract’[14].

When self-regulation speaks the language of the system a force without parallel in state regulation can be brought to bear upon a company. Can you imagine, for example state regulation imposing a fine that would do away with 57% of Nike’s share value and 16% of its revenue in one year? [15] There are places that state regulation simply cannot reach.

Self-regulation then can effectively operate without substantial state involvement because it already does wherever traditional regulation cannot reach. Lisa Bernstein’s examination of the use of extralegal contractual relations in the diamond industry is informative in this regard[16].

There the institutional premium on secrecy means that ‘parties are rarely willing to pay the reputational price of violating [...a norm...] simply to gain access to the courts. [17]’ She also portrays the New York Diamond arbitration board as a jury black box[18]. It does not give written opinions and is designed with deterrence of challenges in mind[19]. This is similar to Shasta County rancher’s ignorance of the formal law relating to cattle trespass incidents in favour of reputational norms[20].

Empirical research by Macaulay also illustrates that contract law is often times ignored in preference of non-legal norms in business transactions[21]. Additionally, Beale and Dugdale note that, in many cases, where businessmen while expressly agreeing upon primary obligations still govern issues related to their business relationship with tacit non-legal norms[22]. Social norms then are more powerful than legal norms alone.

Put simply self-regulation is more effective in the absence of substantial state involvement because there is a certain point past which it cannot make its direct influence felt. Where command-and-control style regulation can influence industry its approach is often ham-handed and lacking the regulatory fit offered by self-regulation.

Self-regulation’s benefits over traditional regulation in terms of intelligence and dynamism have already been thoroughly canvassed by others. Briefly though, self-regulation can provide regulation that is tailored to a specific scenario, bring to bear industry expertise and keep abreast of fluid and ever changing situations.

That self-regulation can, in this way, be very effective is very much the easy sell. This is especially the case when one compares it to traditional regulation. This regulation can penalize a company for permitting work on a bridge without life jackets over a dry river bed[23]. It can attempt to reduce the number of cars in Athens and end up increasing car ownership overall[24]. It is the regulation of unintended effects and unwanted paradoxes[25].

More generally, voluntary participation provisions offer industry more input into the design process and can act as a powerful means of overcome regulatory resistance[26]. Participating firms have a sense of ownership[27]. Social norms really are the elixir of regulatory governance. This can be seen from research suggesting that the act of negotiating on regulation alone provides industry with a greater insight into improved environmental management practices[28].  

Self-regulation is not self-regulation

In the legal context, ‘the ‘self’ in ‘self-regulation’ is not used in the literal sense[29]. ‘Rather it connotes some degree of collective constraint, other than that directly emanating from government, to engender outcomes which would not be reached by individual market behaviour alone. [30]’

The notion that self-regulation is not self-regulation will be fleshed out mainly through an examination of transnational private regulation (TPR) and institutional embeddedness in environmental self-regulation more generally. Transnational private regulation will be discussed in terms of it being a form of conditioned or enforced self-regulation. The terms of private transnational regulation are ‘hopelessly vague[31]’, ‘bristle against[32]’ those ‘who see legitimate political order stemming only from Sovereignty and constitutions[33]’ and are ‘much more often regional and sectoral than global. [34]’

Take the Forest Stewardship Council (FSC) for instance. It is not the only forest certification scheme to exist. There is the US Sustainable Forest Initiative (SFI), the Lembaga Ekolabel Indonesia (LEI), the programme for the endorsement of forest certification schemes (PEFC), the Malaysian Timber certification council (MTCC), etc[35]. The main difference between FSC certification and others is that the FSC essentially employs a form of self-regulation compared to the others[36]. The FSC is completely performance based rather than system based[37]. TPR will be discussed as presenting the model form of self-regulation.

General effectiveness of self-regulation

Reservoir of pre-existing norms

Self-regulation is effective because it takes advantage of pre-existing norms. The FSC serves to demonstrate this point. In 1992 there was a failed push to bring about a binding forest convention in a Nations conference on environment and development (UNCED) in Rio[38]. The FSC on the other hand tapped into ISO and INFOAM things that were going on at the same time[39]. It was developed ‘out of an amalgam of discourse, participatory, multi-stakeholder, policy-making processes, technical standard-setting Convention’s and emerging trade rules. [40]’

The inability of predominantly state led regulation to harness pre-existing norms where self-regulation can weighs in favour of self-regulation’s efficacy. Self-Regulation can draw from a pool of pre-existing norms which means that the cost for different self-regulatory regimes is reduced and they all receive the aggregate benefits of other regimes’ expertise.

 In Uganda forest certification is pursued within the framework of forest carbon sequestration projects. Certification can be done as a kind of add-on standard as a proof of sustainability[41]. In Swaziland the plantation industry is a stronger driver of the certification schemes[42].

In Uganda for the most part, (94%) of the certified area, it is occupied by recent plantations of the FACE foundation, a not-for-profit organization created by a consortium of five Dutch power companies[43]. There the FSC certificate is used as an add-on standard for sustainable forestry in addition to the certification that proves that carbon is sequestered[44]. The FACE Foundation has also been the first to establish the FSC in places like Ecuador and Malaysia[45]. Often FACE is the first to establish the FSC in developing countries[46].

There are clear trends towards the growth of SFM certification as an add-on standard[47]. A sizeable amount of projects certified against the climate, community and biodiversity alliance (CCBA) standard are certified against the FSC standard too[48].

Smartwood South America, for instance, only audits for CCBA in conjunction with the FSC[49]. Additionally, the FSC runs a forest working group to give the review of its principles and criteria to control carbon claims in terms of their FSC certified operations[50]

Power of contracts

Another feature of self-regulatory regimes that makes them so effective is that all of the powers to make and enforce rules are concentrated within one regime[51]. As John Willis has suggested these self-regulatory regimes can be like ‘Governments in miniature’[52].

The powerful contractual power of self-regulatory regimes is interesting. Another interesting thing is the degree to which self-regulatory regimes influence the regimes and contracts of others.

The enforced self-regulatory regime of the FSC has been targeting governments to adopt their standards in government procurement policies[53]. This shift towards targeting procurement policies is important given large states ability to affect markets through their buying power[54].

 Multilateral development banks in cooperation with UN organizations, the OECD, the Canadian government, and non-governmental organizations have established an ‘Environmentally and socially responsible procurement working group. [55]’ The really exciting thing about the power of contracts, in examples like the one above, is the degree to which the strong private powers of one self-regulatory regime can be tapped into by others.

This point adds a reservoir of contractual powers point to the previous reservoir of pre-existing norms point. Self-regulatory regimes also foster the emergence of forms of institutional regulation at each contractual stage in the chain of custody. This can be seen in the FSC chain-of-custody certification (CoC) [56]. This certificate indicates that a product is made out material originating from an FM-certified forest[57].

Free rider problem

The self-regulation problem presented by free-riders and weaker actors stuck at the bottom can often be addressed. In the context of forest certification, for example, since the United Nations Framework Convention on Climate Change the concept of paying developing countries to protect their forests has been gaining support[58]. This concept is embodied in the mechanism known as reduced emissions from deforestation and forest degradation (Redd+)[59].

Also the scheme’s measurement, reporting and verification (MRV) requirement is already partly done by third-party certification[60]. In this way the networking or pooling of norms and expertise can help overcome the free rider problem.

Legitimacy

The first part of this essay dealt more generally with the positive case for the effectiveness of self-regulation. The second half will argue the more negative case against the notion that self-regulation is doomed to operate solely in the narrow self-interest of the self-regulated industry. This argument takes place under the headings of legitimacy and institutional embeddedness.

Legitimacy refers to the social credibility and acceptability of regulation[61]. It relates to ‘a generalized perception or assumption that the actions of an entity are desirable, proper, or appropriate within some socially constructed systems of norms, values, beliefs and definitions. [62]’

Commonly held perceptions of self-regulation view it as compromised by self-interest. While this can be the case the opposite can also be true especially where self-regulation is in anyway transparent. The state’s regulation on the other hand benefits from its perception, often undeserved, of having derived from the democratic will of the people and as being de facto legitimate.

Often the legitimacy of state regulation is taken for granted as being credible or acceptable. The difference between the Marine Stewardship Council’s fishery certification and Japan’s State certification programmes illustrate that self-regulation can be much more deserving of legitimacy[63].

MEL Japan, Japan’s state fishery certification scheme, does not appear to be run wholly, or even primarily, by elected officials which raises accountability challenges which should in theory affect the legitimacy of the certification scheme[64]. Furthermore serious accountability issues are raised by the strong link between MEL Japan, the Japanese government and the fishing industry[65].

Transparency

Transparency can exert tremendous influence over self-regulatory regimes and ensure that they remain legitimate. Khanna’s research into the US’s Toxic Release Inventory programme (TRI) indicates that the companies that suffer the most at the hands of investors are not the largest emitters but those emitters who were not ‘known’ to be polluters on the basis of prior environmental information available to investors[66]. Thus even a little bit of transparency goes a very long way.

One of the most effective and simple ways of improving the transparency and accountability of self-regulation is to require that regulators give reasons for their decisions[67]. This requirement activates at minimum four additional mechanisms for controlling regulatory discretion and enhancing regulatory legitimacy[68]. These include public participation and debate, complaint procedures, peer review, and judicial review[69]. In an environment that is fully transparent actors become subject to what Habermas calls the ‘forceless force of the better argument. [70]’

Extended accountability

This transparency in turn enhances the accountability of self-regulation. Colin Scott’s idea of extended accountability again suggests that self-regulation’s legitimacy can exist in the absence of substantial state involvement[71]. Dialogic and transparent processes of self-regulation offer a means of extended accountability. Scott argues that overlapping mechanisms of accountability take away from the need for any individual accountability mechanism to play a central role. He likens this process to ‘collibration’ described by Andrew Dunsire[72]. Scott refers here to the way in which the balance of accountability mechanisms shifts in order to maintain legitimacy[73].

Under this model legitimacy can be constructed and legitimacy communities can be developed to ensure the legitimacy of self-regulatory regimes in the absence of substantial state involvement. Multiple sources of accountability can be harnessed to add legitimacy to a self-regulatory regime. The regime might not be able to respond to all potential accountability claims at once. It has, however, the ability to respond to them individually. It dynamically balances itself so that it can rely on the collective legitimacy endowed by all of the accountability mechanisms[74].

Fighting for legitimacy

This dynamic response to legitimacy claims brings us on to the next point. Self-regulation’s need to respond to legitimacy claims in and of itself actually adds legitimacy to a self-regulatory regime. Given the earlier point about a reservoir of norms the best administered regimes are likely to naturally emerge above the melee.

It is interesting that legitimacy within self-regulatory regimes is based to a much larger extent on effectiveness. The Marine Stewardship council, discussed earlier, was established by the World wildlife fund and Unilever in 1996 and was initially criticised due to perceived industry capture and lack of transparency and participation within its standard-setting procedures[75]. In view of these criticisms, the MSC became a fully independent non-profit organization in 1998, and undertook a comprehensive governance reform to enhance participation, representation and transparency[76].

The MSC’s standards garner further legitimacy from their use of objective third-party assessments based on scientific evidence, transparent processes with built-in stakeholder consultation and objection procedures, and guidelines that ensure the sustainability of target species, ecosystems, and management practices[77].

Not only does fighting for legitimacy actually improve the self-regulatory regime but winning a legitimacy contest also adds to the perception of legitimacy. The perception of legitimacy is itself a part of legitimacy. A fight for legitimacy also seems to trigger a move towards democratization and transparency within a regime.

The alliance of voluntary accreditation bodies ISEAL’s flagship document is the code of good practices for setting social and environmental standards[78]. Under section 7.2 multi the code explicitly requires multi-stakeholder consultations, and section 7.2 requires that all interested bodies ‘be provided with opportunities’ to contribute to the elaboration of a standard[79]. There is also a feedback loop in that the legitimacy of these bodies is enhanced because they are democratized and made more responsive to legitimacy claims in response to legitimacy claims.

This inclusive approach to decision making reinforces the legitimacy of such self-regulatory regimes. Specific examples of this trend include codification in principles such as the Rio Declaration principle 10 (which states that environmental issues are best handled with participation form all ‘concerned citizens on the relevant level’) and the Aarhus Convention on the access of information, public participation in Decision-making and access to justice in environmental matters, which came into force in 2001[80].

Self-regulatory regimes, at least as enforced by transnational private regulation schemes, are moving in the direction of a normative consensus on the need to ‘democratize’ global governance[81]. Fighting for legitimacy is a catalyst that enhances a regime’s legitimacy provided it survives.

Dealing with instrumental theories of self-regulation

In order for a self-regulatory regime to acquire legitimacy then it must be transparent and its norms must be institutionally embedded in the other organizations to allow for extended accountability. In regimes enforced by TPR and in otherwise effective regimes there is an institutional body speaking the same language as the company and allowing them to regulate themselves. That may be NGO’s in the case of TPR or it could be, more broadly, banks insurance companies and various market actors at different stages in a supply chain.

Parker thus puts forward an ideal type of ‘permeable’ self-regulation in which corporate management is open to a broad range of stakeholder deliberations about values and legal regulation facilitates and enforces this permeation[82]. Institutions can operate as instruments which can transmit information that educates actors not only about the substantive content of rules, but also the objectives that underlie norms and methods by which norms can be complied with. In this way norms are crystallized[83].

One of the problems critics allege with self-regulation is that it operates only in its narrow self-interest. Cashore, Auld and Newson have argued that the key factors which lead business to support the FSC were pragmatic evaluations related to the possibility of either increased market access or the protection of market share, and not through normative evaluations relating to participation, transparency, and so on[84]. A number of points can be made about this. First of all, there is an element of transformation of the market so that market forces are aligned with regulatory objectives. Secondly, businesses do not support the FSC for solely pragmatic reasons legitimacy is very much a social construction.

If legitimacy were a purely instrumental concern then the FSC, for example, would not place such an impetus on institutionalizing ‘an elaborate governance structure which is based upon ‘participation’, ‘democracy’ and ‘equality’[85]. The reality is that the FSC has many stakeholders concerns to take into consideration including other NGO’s[86]. The general assembly of the FSC has a tripartite governance structure of social, economic and environmental[87]. Each of these chambers has equal voting rights. The chambers themselves in turn have a North and a South[88]. The chamber operates to maintain a balance of voting power between the different interests without having to limit the power[89].

In an effort to maintain its legitimacy the FSC constrains all of the various actors which subscribe to its accreditation scheme. In this way, in an institutional sense, the implicit social licence of companies is recognised in the makeup of the FSC. It is not just about narrow self-interest.

The effort to maintain legitimacy requires inclusion which of necessity takes us away from self-regulation’s potential narrow self interest. Specific standards, for the purpose of certification, are developed by national standard working groups and they are reviewed internationally via a two-tier consultation process[90]. To maintain legitimacy the FSC has to become inclusive and in becoming inclusive it maintains its legitimacy.

In terms of legitimacy, neo-institutional theory stresses that not all choices made by business are the result of manager’s rational economic decisions[91]. Di Maggio & Powell suggest that managerial discretion is constrained by the need to possess social legitimacy long term[92]. Furthermore, Suchman defines the construct of legitimacy as ‘a generalized perception or assumption that the actions of an entity are desirable, proper, or appropriate within some socially constructed system of norms, values, beliefs and definitions. [93]’ In short, legitimacy reflects the degree to which a social entity’s actions are socially acceptable[94].

Sometimes compliance with the ‘social licence’ will offer a company respite in terms of the ‘regulatory licence’[95]. Research on mills illustrates that community relations are used to achieve additional regulatory leverage[96]. In one case good community relations meant that the community sided with their mill on the issue of the location of a superfund site[97]. Regulatory action is in part determined by the community[98].

Legitimacy in the arena of self-regulation is not just about instrumentality. The way we conceptualize legitimacy is not insulated from normative concerns like those derived from constitutional, democratic, performance or value-based evaluative criteria. A survey carried out in 2007 by ISEAL, an alliance of social and environmental TPRs, highlighted the importance of normative evaluations in the legitimation of standard-setting organization’s including TPRs[99]. The results of the survey showed that inclusiveness, participation, fair representation, and independence of auditing all played a crucial role in the assessment of the credibility of standards which in turn, feeds into the legitimacy of TPRs[100].

In the case of TPR these normative evaluations are actually also the specific concerns of certain actors. TPR shows the future of self-regulation. It allows for the enforcing of self-regulation where institutions that can generate norms and educate companies are included in a process of self-regulation.

The role of institutional educators is paramount in self-regulation. In the case of the FSC for example the Rainforest Action Network played a very important role in the socialization of companies[101]. It spent 2 years and held roughly 600 actions to persuade home depot to start using stocking FSC accredited products[102]. By the time they approached Lowes anecdote has it that it only took two phone calls and one meeting for Lowes to follow suit[103]. In this way companies learn from experience with these institutions to pre-empt the forest campaigners and just regulate themselves.

Critics of self-regulation again argue that companies will only voluntarily subscribe to schemes that are instrumentally useful to them in the strictest sense. Those critics should take a closer look at the nature of legitimacy. The Sullivan principles which were used for measuring the responsibility of US corporations in apartheid South Africa bear out this idea[104]. In 1986, Sullivan disassociated himself from the principle and the programme became discredited[105]. Before that point, 25% of local and state laws concerning US corporations in South Africa used the Sullivan principles[106]. After he disassociated himself 9% of local and state laws used them. This demonstrates that the instrumental usefulness is but a small part of the taxonomy of legitimacy[107]. Any self-regulatory scheme that wants to be successful in the long run ought to be more than just useful to its regulatees.

This is evidenced by many examples of organizations responding to crises of legitimacy by becoming more democratic, more inclusive and more transparent. The legitimacy of ISO standards were initially assessed by reference to the degree of expertise and the extent to which ISO standards rationalised technical standards[108]. However, when the ISO branched out to include a new social responsibility standard, ISO 26000, expertise and rationalisation were insufficient in and of themselves to legitimate the new standard[109].

Again and again, when confronted with the legitimacy dilemma instrumentality does not provide the answer.  ISO recognized this and given the potential users of its standard it adapted its standard-setting procedure to open it up to wider stakeholders such as NGOs and consumer groups[110]. In order to do this, the ISO set up six specific stakeholder categories and created new procedural rules so that all stakeholder views were represented[111].

When the regime for the enforcement of a self-regulatory regulatory regime also represents the institutions that actually align the market with regulatory goals the problem of self-interest is drastically reduced. Self-interest becomes much closer to regulatory goals.

Institutional embeddedness

In addition to being instrumentally useful inclusiveness is required to maintain legitimacy. When this inclusiveness includes institutional players like NGOs or ethically conscious banks these regimes become extremely effective.

Earlier in this essay reference was made to the importance of institutions and institutional embeddedness. In the context of legitimacy that included writing transparency into the DNA of TPR regimes in response to challenges to their legitimacy. It also included a look at the role of outside institutions as educators of companies. Now this essay will take a more detailed look at institutional embeddedness.

One can liken banks and insurance companies to NGOs and voluntary accreditation organisations. Teubner argues that the role of law should be to stimulate indirectly the controlling of the internal organizational structures of companies[112]. He sees the desired outcome as the ‘mobilization of internal self-control resources. [113]’

As former UN Secretary General Kofi Annan said: ‘We are not asking corporations to do something different from their normal business: we are asking them to this business differently. [114]’ Regulatory demands would achieve the most results if they were sensitive to the corporation’s capabilities[115].

Asking firms to do what they do best, rather than something they do not do at all, is the easiest way to create positive results[116]. Selznick has talked in terms of institutionalizing responsibility, or building moral competence into an enterprise’s structure[117]. The US Green Lights programme is an example of where self-regulatory instruments have been specifically designed to exploit win-win outcomes[118].

Institutionalizing norms in conditioned self-regulation can steer massive amounts of private wealth, unavailable to state regulators, towards regulatory ends. Since January 2001, Swedish State-run pension funds have been required to incorporate ethical investment strategies and report to the government annually with respect to how they are fulfilling this policy[119]. These obligations apply to the five largest state-controlled pension funds in Sweden[120]. A 2008 survey for the Responsible Investment Association of Australia valued portfolios at A $ 15.7 Billion which represented 1.9 % of all managed investment portfolios in Australia[121]. In 2001 France created a pension reserve fund obliging annual reporting to trustees on social, environmental and ethical considerations. This fund is to have 150 billion euros by 2020[122].

In the Netherlands, environmental agreements are negotiated on a self-regulatory basis between government and entire industry sectors[123]. These ‘environmental covenants’ allow the states scarce resources to be used to best effect[124]. In Australia, the Victorian environmental protection authority rewards ‘good performers’ by getting rid of much their regulatory burden This includes things like works’ approvals and multiple licences across different sites[125].

Large institutional investors are another massive source of private wealth that could be used to induce companies to self-regulate[126]. In selecting, and then in monitoring, their investments, large activist institutional investors in the US have placed corporate social responsibility on their agendas[127]. TII-CREF, Calpers, NYCERS, as well as labour union pension funds, such as textile workers (amalgamated clothing & textile workers, or ACTV) or the carpenter’s union of pension funds, have become up-front socially responsible investors[128].

Environment Australia is similarly ahead of the curve on the institutional embeddedness front. It took part in drafting the financial services reform Act of 2001(FRSA), which introduced new ethical investment disclosure requirements for financial organizations. The act is ambitious in that it covers an extensive range of investment products[129]. It obliges issuers of financial products to include disclosure statements (PDS) information about the extent to which labour standards and environmental, social or ethical considerations are taken into account in the selection, retention, or realization of the investment[130].

In the Netherlands a Dutch green investment directive issued by the Government in 1995 offers tax deductions for interest payments and dividend yields from approved environmental investment funds[131]. In order to qualify, the fund has to have at least 70% of its assets invested in environmentally friendly projects recognised as acceptable by the Dutch environmental agency[132]. The interest rates are attractive and investors now see benefit in funding progressive new projects that were originally perceived as risky with limited return[133].

In Canada, the securities commission actually encourages corporations to use their internal organization apparatus to look at the environmental problems. It does so by requiring corporations to report the current and anticipated financial or operational effects of environmental protection requirements in an annual information forum[134].

Finally, Institutionalization means embedding norms in supply-chains[135]. This means that socialization and reinforcement of regulatory norms take place mainly through market forces. Accountability, transparency, legitimacy and effectiveness are all woven into the fabric of inter-institutional and intra-institutional dealings as regulation is carried out again and again at every stage of the market.

Conclusion

Self-regulation does not mean entirely abdicating existing regulatory responsibilities[136]. It gives regulatory opportunities to the state to draw on the capacities of other actors to create a chain of primary and secondary regulatory controls[137].

TPR offers the perfect model for ‘conditioned’ self-regulation. Under this model institutions ensure that self-regulation can remain effective and legitimate. That self-regulatory regimes can have legitimacy beyond strictly instrumental corporate reasons means that self-regulation can be effective and remain legitimate.

Perhaps the current institutional trend can be built upon and there can be more focus on rewarding good behaviour rather than just punishing bad behaviour. Parker hopes, for example, that more deliberation earlier will allow open companies to ‘reap the reputational rewards of leadership and innovation. [138]’ If regulation becomes a self-regulating market based process regulation will no longer just be a box ticking exercise. In a regulatory regime of reputational norms performance can far exceed modest traditional regulatory goals.

Perhaps the title question of should instead read:-

Can substantial state involvement be legitimate and effective without self-regulation?

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[1] Cunningham, ‘Environment, Self-regulation and chemical industry: Assessing Responsible Care’, (1995) Law & Policy 17(1) 57,  at 58

[2] Ibid., at 91

[3] Ibid.

[4] Ibid.

[5] Ibid.

[6] Black, ‘Constitutionalising self-regulation’, (1996) Modern Law  Review 59 24, at 27

[7] Alders and Wilthagen, ‘Moving beyond command-and-control: Reflexivity in the regulation of occupational safety and health and the environment’(1997) Law & Policy 19 415, at 429

[8] Valerie Braithwaite, ‘Ten things you need to know about regulation but never wanted to ask’, (2006) Australian Law Librarian 14(3) 19, at 19

[9] Cunningham, ‘Environment, Self-regulation and chemical industry: Assessing Responsible Care’, (1995) Law & Policy 17(1) 57,  at 89

[10] Teubner, ‘Substantive and reflexive elements in modern law’, L & Soc Rev 239 (1983) 17

[11] Black, ‘Constitutionalising self-regulation’, (1996) Modern Law  Review 59 24, at 44

[12] Ibid.

[13] Ibid., at 45

[14] Ibid.

[15] Conroy ‘Branded! : How the certification revolution is transforming global corporations’ (2007) New Society Pub, at p12

[16] Lisa Bernstein, ‘Opting out of  legal system: Extralegal contractual relations in the diamond industry’, (1992) Journal of Legal Studies 21(1) 115

[17] Ibid., at 135

[18] Ibid., at 127

[19] Ibid.

[20] Robert Ellickson, ‘ Of Coase and cattle: Dispute resolution among neighbours in Shasta County’(1985-1986) Stanford Law Review 38(3) 623

[21] Scott and Casey,  ‘The Crystallization of regulatory norms’, (2011) Journal of Law and Society 38(1) 76, at footnote 30 on  p86

[22] Ibid.

[23] Grabosky, ‘Counterproductive regulation’, (1995) International journal of sociology of law 23 347, at 353

[24] Lecture, Colin Scott

[25] See Grabosky, ‘Counterproductive regulation’, (1995) International journal of sociology of law 23 347

[26] Darren Sinclair, ‘Self-regulation versus command and control? Beyond false dichotomies’, (1997) 19 529, at 545

[27]Ibid.

[28] Ibid.

[29] Anthony Ogus, (1996) University of Manchester , ‘Self-regulation’ 587, at 588

[30] Julia Black, cited Ibid.

[31] Steven Bernstein, ‘When is non-state global governance really governance?’, (2010) Utah Law Review 91 91, at 91

[32] Ibid.

[33] Ibid.

[34] Ibid.

[35] Axel Marx & Dieter Cuypers, ‘Forest certification as a global environmental governance  tool: What is the macro-effectiveness of the FSC’, (2010) Regulation & Governance 4 408, at 410/411

[36] Ibid., at 411

[37] Ibid.

[38] Errol Meidinger, ‘The administrative law of global private-public regulation: the case of forestry’, (2006) European journal of international law 17(1) 47, at 50

[39] Ibid., at 52

[40] Ibid.

[41] Axel Marx & Dieter Cuypers, ‘Forest certification as a global environmental governance  tool: What is the macro-effectiveness of the FSC’, (2010) Regulation & Governance 4 408, at 418

[42] Ibid.

[43] Ibid., at 419

[44] Ibid.

[45] Ibid.

[46] Ibid.

[47] Ibid., at 429

[48] Ibid.

[49] Ibid.

[50] Ibid.

[51] Colin Scott and Ciara Brown, ‘Regulatory capacity and networked governance’, second working paper in series within the regulatory capacity and networked  governance Project

[52] Colin Scott, ‘Regulatory governance  and the challenge of constitutionalism’, EUI working paper, RSCAS 2010/ 07, Private Regulation Series -02, at 4

[53] Steven Bernstein & Erin Hannah, ‘Non-state global standard setting and the WTO: legitimacy and the need for regulatory space’ (2008) Journal of International economic law 11(3) 575, at 581

[54] Ibid.

[55] Ibid., at 582

[56] Axel Marx & Dieter Cuypers, ‘Forest certification as a global environmental governance  tool: What is the macro-effectiveness of the FSC’, (2010) Regulation & Governance 4 408, at 411

[57] Ibid.

[58] Ibid., at 428

[59] Ibid.

[60] Axel Marx & Dieter Cuypers, ‘Forest certification as a global environmental governance  tool: What is the macro-effectiveness of the FSC’, (2010) Regulation & Governance 4 408, at 429

[61] Julia Black, ‘Constructing and contesting legitimacy and accountability in polycentric regime’, (2008) Regulation and Governance 137, at 144

[62] Ibid.

[63] Patricia Moye, ‘Private certification versus public certification in the international environmental arena: The marine stewardship council and Marine eco label Japan fisheries certification schemes as case studies’ (2010) Vanderbilt journal of transnational law’ 43(2) 533

[64] Ibid., at 561

[65] Ibid.

[66] Richardson, ‘Enlisting institutional investors in environmental regulation: Some comparative and theoretical perspectives’, (2008) North Carolina journal of international law and commercial regulation 28 247, at 280/281

[67] Majone, ‘The regulatory state and its legitimacy problems?’, (1999) West European Politics 22(1) 1, at 14

[68] Ibid.

[69] Ibid.

[70] Habermas cited it, Thomas N. Nale, ‘Transparency, accountability and global governance’, (2008) Global Governance 14 73, at 86

[71] Colin Scott, ‘ Accountability in the regulatory state’, (2000) Journal of law and society 27(1) 38

[72] Colin Scott, ‘ Accountability in the regulatory state’, (2000) Journal of law and society 27(1) 38, at 57

[73] Ibid.

[74] See Julia Black, ‘Constructing and contesting legitimacy and accountability in polycentric regulatory regimes, (2008) Regulation and Governance 2(2) 137, at 152, Her argument that accountability relationships are not necessarily substitutable one for the other such that if one fails another can take its place is the exception rather than the rule

[75] Scott and Casey,  ‘The Crystallization of regulatory norms’, (2011) Journal of Law and Society 38(1) 76, at 89/90

[76] Ibid.

[77] http://www.msc.org/about-us/credibility/how-we-meet-best-practice

[78] Steven Bernstein & Erin Hannah, ‘Non-state global standard setting and the WTO: legitimacy and the need for regulatory space’ (2008) Journal of International economic law 11(3) 575, at 595

[79] Ibid., at 596

[80] Steven Bernstein and Benjamin Cashore, ‘Can non-state global governance be legitimate? An analytical framework.’ (2007) Regulation & Governance 1(4) 347, at 353

[81] Ibid.

[82] Robert Baldwin, ‘The new punitive regulation’, (2004) Modern Law Review 67(3) 351,  at 376

[83] Scott and Casey,  ‘The Crystallization of regulatory norms’, (2011) Journal of Law and Society 38(1) 76, at 82

[84] Ibid.

[85] Scott and Casey,  ‘The Crystallization of regulatory norms’, (2011) Journal of Law and Society 38(1) 76, at 90

[86] Ibid.

[87]Ibid.

[88] Ibid.

[89] Axel Marx & Dieter Cuypers, ‘Forest certification as a global environmental governance  tool: What is the macro-effectiveness of the FSC’, (2010) Regulation & Governance 4 408, at 411

[90] Ibid.

[91] Jorge Riviera and Peter Tashman, ‘Are members of business for social responsibility more socially responsible?’, (2010) Policy studies journal 38(3)487, at 492

[92] Suchman cited, Ibid.

[93] Ibid.

[94] Ibid.

[95] Cunningham, Kagan and Thornton, ‘Social license and environmental protection: Why businesses go beyond compliance’, (2004) Law and Social Inquiry 29 307, at 331

[96] Ibid.

[97] Ibid.

[98] Cunningham, Kagan and Thornton, ‘Social license and environmental protection: Why businesses go beyond compliance’, (2004) Law and Social Inquiry 29 307

[99] Scott and Casey,  ‘The Crystallization of regulatory norms’, (2011) Journal of Law and Society 38(1) 76, at 89

[100] Ibid.

[101] Errol Meidinger, ‘The administrative law of global private-public regulation: the case of forestry’, (2006) European journal of international law 17(1) 47, at 57/58

[102] Ibid.

[103] Ibid.

[104] Habermas cited it, Thomas N. Nale, ‘Transparency, accountability and global governance’, (2008) Global Governance 14 73, at 79

[105] Ibid.

[106] Ibid.

[107] Ibid.

[108] Scott and Casey,  ‘The Crystallization of regulatory norms’, (2011) Journal of Law and Society 38(1) 76, at 92

[109] Ibid.

[110] Ibid.

[111] Ibid.

[112] Richardson, ‘Enlisting institutional investors in environmental regulation: Some comparative and theoretical perspectives’, (2008) North Carolina journal of international law and commercial regulation 28 247, at 256

[113] Ibid.

[114] Kofi Annan cited in, Bronwyn Eyre ‘The Crusade for CSR’, European Lawyer 2004

[115] Chatterji and Richman, ‘Understanding the ‘Corporate’ in Corporate Social Responsibility’, Harvard Law and Policy Review 2 33, at 48

[116] Ibid.

[117] Cunningham and Rees, ‘Industry self-regulation: An institutional perspective’ (1997) Law & Policy 363, at 382

[118] Darren Sinclair, ‘Self-regulation versus command and control? Beyond false dichotomies’, (1997) 19 529, at 548

[119] Richardson, ‘Enlisting institutional investors in environmental regulation: Some comparative and theoretical perspectives’, (2008) North Carolina journal of international law and commercial regulation 28 247, at 325

[120] Ibid.

[121] Richardson, ‘Can socially responsible investment provide a means of environmental regulation’, (2009) Monash University Law Review 35(2) 262, at 265

[122] Richardson, ‘Enlisting institutional investors in environmental regulation: Some comparative and theoretical perspectives’, (2008) North Carolina journal of international law and commercial regulation 28 247, at 324

[123] Darren Sinclair, ‘Self-regulation versus command and control? Beyond false dichotomies’, (1997) 19 529, at 537

[124] Ibid.

[125] Ibid., at 548

[126] Douglas M. Branson, ‘Corporate Social Responsibility redux’, (2001-2002) Tulane Law Review 76 1207, at 1273

[127] Ibid.

[128] Ibid.

[129] Richardson, ‘Enlisting institutional investors in environmental regulation: Some comparative and theoretical perspectives’, (2008) North Carolina journal of international law and commercial regulation 28 247, at 327

[130] Ibid.

[131] Ibid., at 320

[132] Ibid.

[133] Ibid.

[134] Ibid., at 350

[135] Scott and Casey,  ‘The Crystallization of regulatory norms’, (2011) Journal of Law and Society 38(1) 76, at 94/95

[136] Richardson, ‘Can socially responsible investment provide a means of environmental regulation’, (2009) Monash University Law Review 35(2) 262, at 263

[137] Ibid.

[138] Robert Baldwin, ‘The new punitive regulation’, (2004) Modern Law Review 67(3) 351,  at 379