A Short Memorandum on Law, Regulation, and Consumption
Dr. Bronwen Morgan
A. Standard Economic Approaches
A highly simplified standard (neoclassical) economic account of the relationship between law, regulation and consumption would posit that, first, the arena for consumption is constituted at a background level by law. General legal rules of contract provide the framework within which consumption choices are made, while general legal rules of tort, or wrongful harm, provide a post-hoc means of remedying a range of the possible damage or harm that might flow from consumption choices.
Regulation enters the picture in both specific and general ways, all of which aim essentially to pre-emptively correct market failures that might harm vulnerable consumers. General statutory consumer protection rules (for example prohibiting certain terms in standard contracts, or unfair pressure in situations of unequal bargaining power) are supplemented by sector-specific statutory attempts to mitigate or prevent particular harms and risks that might be suffered by consumers, whether through poor water quality, contaminated food, morally offensive publications for children or the like.
In this picture, regulation is the skeleton that gives shape and structure to a well-functioning market society. Regulation, as Karl Polanyi argued so eloquently many decades ago, constitutes the market. Neoclassical perspectives have in recent years adopted the Polanyian appreciation of the importance of institutions and in so doing have come to recognize the constitutive role of regulation much more fully than laissez-faire stereotypes might suggest. But the Polanyian resonance ends there, for the neoclassical image of regulation’s constitutive role is that it facilitates the development of an ‘active consumer’, mandating the provision of information and incentive frameworks that the consumer can wield to exert his or her power of market choice in ways that will shape the provision of goods and services. The picture of the consumer thus presented is powerful, energetic, autonomous, self-constituting: one who in a sense produces the rational autonomous actor at the heart of economic theory through his or her actions and choices. Consumption, in this vision, is far from passive: on the contrary, it is a mode of active citizenship, and regulation, properly designed, facilitates such active consumer-citizenship. Law aids the responsible consumer-citizen (by enforcing the bargains they make in the marketplace) and punishes the delinquent consumer-citizen (either by failure to enforce bargains made outside the framework of the law or by coercive responses (debt collection, disconnections, etc)
B. Regulationist Approaches
Let us now consider a very different account, again highly simplified, of the relations between law, regulation and consumption. This account is drawn from the French school of ‘regulationist theory’ which has neo-Marxist roots, but it could also be rendered compatible with a range of social welfare accounts of citizen-state relations that are inspired in essence by Keynesian approaches to political economy. Here, the sphere of consumption is the catalyst for a circuit of activities of production and exchange that facilitate accumulation. The role of different modes of regulation (one mode of which may be law) is to ensure a “relatively harmonious relationship between production, consumption and exchange” (Glerck 1996: 109).[1] To do this successfully, regulation in this view mediates (and is mediated by) “historically and spatially specific institutional forms, regulatory institutions and norms of behaviour” (Glerck 1996: 111). The peculiarities of specific local contexts are here highly salient to the structure of links between law, regulation and consumption. In particular, the quality of social relations between producers and consumers is central to the analysis. One of the consequences of this, in contrast to the perspective underpinning neo-classical economics is that while the latter account tends to generate ‘template structures’ for the organisation of production,[2]the former is much more sensitive to local contingencies. The ‘template structures’ of the neoclassical economic approach assume homogeneity amongst consumers in particular, or perhaps it would be more accurate to say that they bracket out non-economic motivations, so that variation in preferences can be quantified and subsequently dissolved by the price mechanism. By contrast, regulationist approaches focus on the local context, and pay specific attention to “the impact of non-commodity forms [of social relations] which may or may not contribute to [balancing consumption and production cycles]” (Glerck 1996: 116).
I want to contend that the regulationist approach is one that leaves space for the simultaneous appreciation of political and cultural dimensions to consumption choices, while the neoliberal model results in a dichotomous contest between ‘consumer’ and ‘citizen’, a contest deceptively belied by the rhetorical figure of an active ‘consumer-citizen’ that appears thereby (Section A). In this undeclared contest, figured as a harmonious resolution from the outset, the consumer facet of the hybrid identity in fact dominates (even if only aspirationally) any unruly citizenry practices that threaten to undermine the smooth surface of responsible consumer behaviour. In essence, the initial theoretical orientation of the neoclassical approach prefigures the new citizen as a disciplined, demanding consumer, and the implications of that stand then come into irremediable tension with politicised or cultural practices of citizenship – irremediable because the latter are premised on collective identities unaccounted for even by aggregrate consumer behaviour. By contrast, the regulationist approach begins with an initial theoretical orientation that accepts conflict (between different social groups, and between economic, political and cultural practiceswithin social groups) as not only inevitable but also constitutive of the ‘modes of regulation’ that mediate consumption and production and thus stabilise (temporarily) at least, capitalist relations. It is important to note that while the conflict is inevitable, in this view, neither the forms conflict takes, nor the institutions it generates, nor the consequences that flow from it, are inevitable. Rather, this is where the local specificity returns as highly salient.
C. Commodification
I would like to illustrate briefly the different implications of neo-classical and regulationist approaches for the analysis of commodification. By commodification, I mean the process where a set of activities not previously understood in terms of market, exchange relations is brought under the aegis of such relations (whether by force, choice, incrementally changing habits, or a variety of blends of the above). Take, for example, the topical and heated issue of providing water services by means of a for-profit business model. Political contestation around this issue often frames its objections by way of objecting to the relegation of those who use or need water – a basic and essential good – as consumers. In part the objection stems from a sense that the fundamental necessity of water to life should imply its availability as a right, and not a mere customer expectation. In fact, this sort of opposition, posed abstractly, does not take us very far. For as a right, the provision of water (as indeed of any other complex social good that must be provided at least partly by positive collective action ) inevitably implicates some degree of regulatory framework that allocates how much, to whom, and on what basis. Indeed the ambiguous valency of the English word ‘right’ illustrates the limited use of the ‘rights’ approach as a basis for political contestation of a commodification framework. For bundles of property rights are central to the legal construction of a market framework, just as much as visions of constitutional rights may (not always coherently)[3] be posed as central to a tempering of such a framework. The real point, and the way to open up that ambiguous valency of the notion of ‘rights’ in more constructive ways, is to explore how and why law and regulation intersect to frame the provision of water as a market service distributed to groups of consumers.
Now from a neoclassical point of view, drastically simplified and hedged appropriately by protective caveats, this might be one account: the activity of distributing water depends on a physical infrastructure which tends towards a natural monopoly. The distribution of water services, in this account, nonetheless benefits from efficiency and value-for-money perspectives by being run in accordance with a for-profit model. Regulation is then necessary to avoid problems of abuse of market power in the monopoly situation. Such regulation is highly technical, and primarily focused on price regulation, and ensuring minimum quality standards. As a technical, apolitical set of practices, regulation in this picture is best delegated to an arms-length institution staffed by engineering, legal and economic experts. The interests of the consumer are protected by reliance on consultative committee structures, which feed consumer perspectives into the overall technical calculus of the regulator, primarily as an indicator of diffusely conceived consumer welfare (rather than as articulated demands of specific social groups with distinct profiles going beyond their differentiated capacity and willingness to pay).
A regulationist point of view, I suggest, would begin with those distinct, multifaceted and textured profiles of different social groups at the consumer level.It would explore the quality of the social relations typifying the different groups vis a vis access to water, and consider the extent to which such relations might either orient them towards, or put them in conflict with, the practices demanded by market-based norms . The ‘active’,‘sovereign’ nature of the consumer-citizen would not only be defined by reference to claims which correct market failures, but also with reference to claims that reject the salience of that market framework. Iterated means of containing such challenges, or responding to them as the case by may, would be explored in specific historical and social context, and would result in an analysis that highlighted characteristic institutional and social dynamics mediating production and consumption. The resulting narrative would resemble a comparative historical institutionalism of political economy. By contrast with the neoclassical account where the consumer figures as a shadowy abstracted individual, the regulationist perspective embeds the consumer much more firmly in shared identities that are discontinuous across both time and space. The shift towards market-based relations that is at the heart of commodification is presented very differently in the two accounts: it is naturalised in the neoclassical account and thus made to appear (deceptively) comfortable and easy. Regulationist approaches foreground conflict and struggle over that move into the market domain: ironically though, such struggle in many ways – at least when contained within certain boundaries of regularity – constitutes the identity of consumer and embeds it more firmly in a symbiotic link to the collective identity of citizen.
D. The Managed Consumer
There is a certain tension in the above account between the rhetorical appeal of neoclassical approaches and the way they figure the consumer in practice. The key point here is that commodification is bureaucratic, managerial and potentially coercive – indeed, actually coercive in some instances, particularly those where a market economy for basic services has never operated before, as is the case in many facets of developing country contexts. This managerial dimension is elided by the neoclassical account, and reframed as self-willed discipline and responsibility. It is in that discipline and responsibility that the desirable ‘activism’ of the consumer-citizen resides. But collective political activism that challenges those norms of discipline and responsibility cannot be accommodated within the neoclassical lens. For that, a regulationist perspective is necessary.
Moreover, a regulationist perspective enables a relevant difference to be drawn between legal and illegal ‘consumer activism’. In the neoclassical account, the threshold of law and of regulation tend to coincide. The conditions according to which a consumer participates in, and benefits from, the market provision of basic services are regulated by law: law constitutes and demarcates the patterns of market activity. In practice of course, non-legal and informal practices may bolster the legal framework: for example, we find, in the context of market provision of water services in developing countries, an increasing focus on community education that encourages and explains the need for regular payment in response to bills. This flows from the lack of impact of the legal duty to pay in such a context, as well as from the negative implications of resorting to using even more law (the criminal law and the debtors prison) to enforce such payment. I would suggest, however, that the neoclassical approach designates (perhaps implicitly[4]) such efforts as stop-gap measures, or practices that respond to second-best situations. A well-functioning market would be supported by the rule of law and no more.
In the regulationist perspective, though, I would argue that a range of different kinds of practices are explicitly envisaged as crucial constituents of the balance between production and consumption. And in this range of practices, the line between legal and illegal activism is an important and productive line (rather than, as in the neoclassical perspective, a line that implicates delinquency). This is so because up to the threshold of legality, conflict between different modes of regulation is part of the process of commodification, is establishing its regularities, constituting the emerging consumer even in rebellion. But unruly activism precipitates, arguably, a moment of what regulationist scholars call ‘structural crisis’, a term that suggests the need for new alignments between producers and consumers rather than delinquent and irresponsible behaviour on the part of particular groups. Moreover, the regulationist perspective sees such a crisis as inherently and appropriately political, a situation in a sense where politics exceeds the terms of the market economy altogether, and produces the potential of new directions. Almost by definition (politics as the art of the possible) those directions are notoriously difficult to predict.[5]And in this short reflection, with so little texture and context for my allusive references to water services, I will step back from prediction or indeed specificity. Instead, I will end this reflection by simply commenting that the managerial thrust of present modes of accommodation is something that comes back at this point of the discussion to haunt regulationist accounts as much as (though for different reasons) neoclassical ones. The shadow it casts falls upon the potential for groups of consumers who are disciplined into the bureaucratic regularities of responsible market behaviour to seize the possibilities of such political transformation. The managed consumer is not by habit the figure of an active consumer-citizenship that pushes the accommodation between state and citizen into new patterns. In a space of bureaucratised consumerism that isolates, quantifies and tracks the consumption of each individual, obedient consumers are produced in the interstices of practices that wreak the violence of disconnection on those who rebel.
Managerialism is, then an under theorized aspect of both neoclassical and regulationist perspectiveson the relationship between law, regulation and consumption. The fragmentation of identities into individual units, each made accountable at the level of self-monitored behaviour for their own willed participation in the market (including due payment for services) – this fits too neatly with our assumptions of consciously willed subjectivity, or at least neatly enough that it obscures both the sheer forceinvolved in the initial production of such responsible consumers, and the sheer sameness of the behaviour induced across individuals. Such conformity may simply be the necessary price of participation and integration into current orders of social solidarity. But we should remember that it is not a process that paints onto a blank slate. Nor should we forget that it is a process that produces, arguably, its own kind of blankness as the triumphant achievement. Therein perhaps lies the deepest meaning of the cry against commodification that is welling up.
1
[1]Gilton Klerck, “Regulation Theory: Towards a synthesis in development studies”, Reconstruction Development and People (ed Jan Coetzee and Johann Graaff, International Thomson Publishing (Southern Africa) 1996.
[2] ‘Template’ reform structures typify the general approach of the multilateral lending institutions such as the World Bank and the IMF whose agenda is largely catalysed by commitments to the neoclassical perspective (albeit somewhat tempered, at least rhetorically, in recent years).
[3] In the sense that populist reliance on socio-economic constitutional rights may state them much more absolutely, as entitlements that must be unconditionally provided to all on an equal basis, a claim that is often incompatible in principle with market provision. As such it would be better to think of such rights as constituting the acceptable baseline of market activity, rather than tempering the day-to-day workings of a market.
[4] It will often be implicit but it is interesting to note that water utilities that introduce such educational programmes quickly tire of monitoring them, designate them as ‘non-core business’ and contract them out to social consultants if their continuity is deemed necessary.
[5] So difficult that ‘political risk’ lies at the very heart of the insistence of private investors of keeping productive activities, even those relating to basic services that implicate core citizenship rights, at arms-length from the effects of political discretion.