Lecture 1: Markets, Democracy & Rights in a Globalized world
Market regulation: why?
● (market) Regulation → played an important role in EU integration/important for law:
1. EU as a global regulatory power
- Today → many people speak of the EU as a global regulatory power → they
enact numerous regulations
- Regulations → influence outside EU too
- Criticism
- For some problematic project → capitalism + neocolonial in nature
- Ex: AI act
2. Private & public sector worldwide apply EU regulations
- Ex: EU supply chain regulations (companies have to implement this)
→ almost all companies have departments that deal with EU market regulation
What is Regulation?
● Regulation →
○ Not one single definition that applies → A vague & multi-disciplinary concept
○ Notion that is defined differently based on the discipline
○ Helps to think about regulation on a scale → narrow & broad definition
○ Different definitions:
1. Narrow definition →
● Regulation as → Public (state), intentional, formal, state, rule based
control
● governing through binding rules, monitoring & enforcement
2. Broad definition →
● All mechanisms/types of social control
● May be informal, unintentional
3. Decentered regulation
● Move away from seeing regulation as top-down control of society by
state
● Towards a notion that encompasses idea that a lot of regulation
comes from different sources
○ Different actors at different levels involved in regulation
○ Actors that operate as part of broader network
○ 3 dimensions/level:
a. Multiple actors
, - State, private actors (businesses) & civil
society
b. Different levels
- Local, national, international, European →
interact
c. Different forms
- Soft, networks
→ network of regulators & forms of regulation
Narrow legal perspective (this course)
● Regulation as → public intervention into the economic conduct of private enterprises to
address market problems through:
○ International & direct interventions (binding legal standards) by public sector actors
into economic activities of private sector actors
● 3 functions of regulation/intervention:
1. It sets standards for market behaviour→
- binding rules/law
2. It enables monitoring of compliance with these standards
- Information gathering
3. enforcement/sanctions of compliance
● 2 forms of regulation:
1. Economic regulation
- Sector-specific regulation of competition
- Entry, service, price control
2. Social regulation
- Focuses on environmental, health, safety, consumer protection through
uniform standards
- Often applying across industries
→ often overlap
● Dunne
○ Adopts a narrow perspective → economic regulation
,Market regulation in the regulatory state
● Developed in post-war period (1940s-1970s) → the welfare state
○ welfare state as predominant form state intervention after WWII → Big role for state
○ Focus on:
■ Public ownership
■ economic planning
■ centralized administration
● 1970s until today → the regulatory state
○ Changed of mode of operation
■ 1970s → sense of crisis & Need for reform → together with rise of neoliberal
thinking (free market ideas)
● Move to liberalization, privatization of sectors
○ State →
■ no longer provides public goods, but oversees their provision by
market/economic actors → state oversees compliance of certain standards
by economic actors
■ Economic actors provide certain services
■ State → regulates their behavior by setting standards, ensuring safety
○ Crucial rule of regulatory law: rules, standard-setting
■ Oversight compliance → rules by independent expert agencies
● But today
○ Need for reform due to global challenges such as climate change, digitalization
○ Question → can this regulation of 1970s still be maintained?
○ More complex forms of regulation today
■ Known as regulatory capitalism
→ regulation developed in 1970s/1980s during economic global crisis
, → importance law = set standards, interpret them, enforce them
Why regulate? What is the purpose of regulation?
● Not one single answer → 3 schools of thought:
1. Public interest theories
■ Regulation happens because of the need to protect collective goods
■ Public-interest oriented
2. Private interest theories
■ Regulation is serving interest groups
3. Institutionalized theories
■ See both happening & say that it depends on the institutions in place
→ we focus on public interest theories
Public Interest theory:
1. Economic variant
● Welfare economics approach
○ Dominant thinking
○ It is all about market efficiency → free market thinking assumption
○ Markets know best
● Regulation →
○ should improve efficiency economy by correcting market failures, such as
monopoly , negative externalities
○ Regulation should only intervene with market failures
● Main assumption: efficient markets are welfare enhancing
● This approach is criticized
○ Presumes primacy of market & that regulation can only come in when there
is an efficiency problem
○ All other interests to regulate must be disregarded based on this idea
○ Places a high burden on regulation
○ Narrow idea
● limited scope for pursuit of political collective goals that go beyond market efficiency
2. Political variant
● In democracies → economic variant not good / cannot be dominant model
Market regulation: why?
● (market) Regulation → played an important role in EU integration/important for law:
1. EU as a global regulatory power
- Today → many people speak of the EU as a global regulatory power → they
enact numerous regulations
- Regulations → influence outside EU too
- Criticism
- For some problematic project → capitalism + neocolonial in nature
- Ex: AI act
2. Private & public sector worldwide apply EU regulations
- Ex: EU supply chain regulations (companies have to implement this)
→ almost all companies have departments that deal with EU market regulation
What is Regulation?
● Regulation →
○ Not one single definition that applies → A vague & multi-disciplinary concept
○ Notion that is defined differently based on the discipline
○ Helps to think about regulation on a scale → narrow & broad definition
○ Different definitions:
1. Narrow definition →
● Regulation as → Public (state), intentional, formal, state, rule based
control
● governing through binding rules, monitoring & enforcement
2. Broad definition →
● All mechanisms/types of social control
● May be informal, unintentional
3. Decentered regulation
● Move away from seeing regulation as top-down control of society by
state
● Towards a notion that encompasses idea that a lot of regulation
comes from different sources
○ Different actors at different levels involved in regulation
○ Actors that operate as part of broader network
○ 3 dimensions/level:
a. Multiple actors
, - State, private actors (businesses) & civil
society
b. Different levels
- Local, national, international, European →
interact
c. Different forms
- Soft, networks
→ network of regulators & forms of regulation
Narrow legal perspective (this course)
● Regulation as → public intervention into the economic conduct of private enterprises to
address market problems through:
○ International & direct interventions (binding legal standards) by public sector actors
into economic activities of private sector actors
● 3 functions of regulation/intervention:
1. It sets standards for market behaviour→
- binding rules/law
2. It enables monitoring of compliance with these standards
- Information gathering
3. enforcement/sanctions of compliance
● 2 forms of regulation:
1. Economic regulation
- Sector-specific regulation of competition
- Entry, service, price control
2. Social regulation
- Focuses on environmental, health, safety, consumer protection through
uniform standards
- Often applying across industries
→ often overlap
● Dunne
○ Adopts a narrow perspective → economic regulation
,Market regulation in the regulatory state
● Developed in post-war period (1940s-1970s) → the welfare state
○ welfare state as predominant form state intervention after WWII → Big role for state
○ Focus on:
■ Public ownership
■ economic planning
■ centralized administration
● 1970s until today → the regulatory state
○ Changed of mode of operation
■ 1970s → sense of crisis & Need for reform → together with rise of neoliberal
thinking (free market ideas)
● Move to liberalization, privatization of sectors
○ State →
■ no longer provides public goods, but oversees their provision by
market/economic actors → state oversees compliance of certain standards
by economic actors
■ Economic actors provide certain services
■ State → regulates their behavior by setting standards, ensuring safety
○ Crucial rule of regulatory law: rules, standard-setting
■ Oversight compliance → rules by independent expert agencies
● But today
○ Need for reform due to global challenges such as climate change, digitalization
○ Question → can this regulation of 1970s still be maintained?
○ More complex forms of regulation today
■ Known as regulatory capitalism
→ regulation developed in 1970s/1980s during economic global crisis
, → importance law = set standards, interpret them, enforce them
Why regulate? What is the purpose of regulation?
● Not one single answer → 3 schools of thought:
1. Public interest theories
■ Regulation happens because of the need to protect collective goods
■ Public-interest oriented
2. Private interest theories
■ Regulation is serving interest groups
3. Institutionalized theories
■ See both happening & say that it depends on the institutions in place
→ we focus on public interest theories
Public Interest theory:
1. Economic variant
● Welfare economics approach
○ Dominant thinking
○ It is all about market efficiency → free market thinking assumption
○ Markets know best
● Regulation →
○ should improve efficiency economy by correcting market failures, such as
monopoly , negative externalities
○ Regulation should only intervene with market failures
● Main assumption: efficient markets are welfare enhancing
● This approach is criticized
○ Presumes primacy of market & that regulation can only come in when there
is an efficiency problem
○ All other interests to regulate must be disregarded based on this idea
○ Places a high burden on regulation
○ Narrow idea
● limited scope for pursuit of political collective goals that go beyond market efficiency
2. Political variant
● In democracies → economic variant not good / cannot be dominant model
