The Regulatory Crisis: Does it Exist and Can it Be Solved? Some Comparative Remarks on the Situation of Social Regulation in the USA and in the European Economic Community

The ‘regulatory crisis’ has become a common paradigm on both sides of the Atlantic. It seems to be corroborated by economists pointing to inefficiencies of regulation. Political scientists have discovered implementation lags, and legal scholars complain about an overburdening of the legal system.

By reviewing some witnesses of the US discussion and by comparing this discussion with trends in Europe [European Economic Community (EEC) and member state level] I attempt to reshape the issues. Regulation has to be discussed with reference to perceived market failures and instruments used by the political system to cope with them. Pressure is put upon ‘social regulation’, that is, regulation of market deficiencies affecting ‘diffuse interests’ of consumers, environment, etc. Despite the rhetoric, the welfare state has not regulated too much but too little: It suffered from the reductionism paradox which is seemingly inherent in social regulation and becomes more apparent in federal (USA) or quasi-federal (EEC) vertically integrated political and legal systems. The modern discussion about ‘deregulation’, regulation ‘by incentives’, or regulation ‘by negotiation’ has not been able to overcome the structural deficiencies which limit attempts at social regulation.

The regulatory crisis is defined in terms of the dwindling legitimacy of the welfare state to keep markets both running and ‘clean’. The more people perceive this dilemma, the more the crisis will shift from ideology to reality.