Opinion: is it time to look at a more cooperative and less adversarial way of overseeing economic governance? 

By David ThunderUniversity of Navarra

When experts assure us that Ireland’s economy is booming, many of us shrug our shoulders. We wonder how such a "booming" economy has managed to produce rising social inequality and a lower quality of life for many of its alleged beneficiaries. The very same globalised economy that helped propel Ireland out of poverty is now increasing our population at a rate that far outstrips the supply of housing, swelling the numbers of our homeless, depopulating our rural towns and making Dublin unaffordable to many of its own citizens.

Whatever the exact sources of this bizarrely dysfunctional economic growth, recent history makes it difficult to give credence to the philosophy that a free market will automatically raise all ships on the tide of economic growth. Commentators on the left correctly point out that a free market that helped produce the collapse of our banking system, the ongoing housing crisis, and the growing gap between the highest and lowest tiers of society is far from a social panacea.

But there are several reasons why many leftist solutions, involving a more aggressively interventionist state, are as problematic as libertarians’ confidence in the free market. They implausibly assume that the State is independent and impartial and stands above private interests. It is evident that the standing of legislators and governments as independent, disinterested regulators is jeopardised not only by their electoral ambitions, but also by their notorious dependency on international investors and regulators.

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Relying heavily on State regulation to compel businesses to serve the public interest vastly overestimates the power of centralised regulators to force a dynamic and complex economic system to obey a set of externally imposed priorities. The more state regulators intervene in the private sector in the hopes of bringing self-interested behaviour in line with the public good, the more governments and businesses tend to get sucked into a vicious cycle of "cat and mouse" behaviour. Unilateral, coercive government regulations provoke businesses to exploit loopholes in the legal system or transfer assets to another tax jurisdiction.

By seeing businesses as in need of constant State surveillance, we end up lowering public expectations of economic behaviour. This gives businesses a convenient pretext for minimising their ethical responsibilities toward the communities they serve.

How, then, might we think outside the box of an adversarial, state-centric approach to economic regulation? We might start by reimagining the relationship of businesses to their host communities in more cooperative and less adversarial terms. Business owners and managers need not be conceived as free-floating profit-maximisers. Many businesses can and do develop a genuine and deep-rooted loyalty to their customers and stakeholders that goes beyond occasional PR stunts to demonstrate their "corporate social responsibility."

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Investing social capital and resources in multilateral, cooperative networks and institutions lays the groundwork for less cumbersome and more intelligently honed regulations, designed from the bottom up, and enforced by mutually agreed institutional mechanisms. In addition, a cooperative regulatory framework reduces the need for costly State-imposed regulations, since it is built on voluntary social and economic partnerships.

The cooperative approach to economic reform relies heavily on mutual trust, information sharing, the development of shared objectives and voluntary cooperation among the relevant parties. Businesses can work with each other, with customers and with other community stakeholders to develop consensual regulatory frameworks that respond to the reasonable needs and interests of the communities they serve. One version of this multi-lateral, horizontal approach to regulation has already been used in the retail clothing industry to significantly improve the appalling conditions of some "sweatshop" workers, whose plight was not being adequately addressed by conventional state regulations.

If we hope to solve the housing crisis, provide fair and transparent banking services to citizens and ensure that the benefits of economic growth are felt by all, it is critical that we get beyond the cat-and-mouse dynamic of conventional state-imposed regulatory regimes. We need to tap into the goodwill that is already there in the business community and to build up cross-community initiatives aimed at conciliating the needs of businesses with those of the communities they serve.

Surely it is worth exploring the potential for a more cooperative, multi-lateral approach to economic regulation and governance?

Municipal and national governments could use their extensive fiscal powers to incentivise the development of bottom up, multilateral responses to economic problems, spearheaded by local economic and civil society actors. For example, real estate companies and investors could be offered substantial tax incentives for collaborating with homeowner and tenant associations to offer more affordable accommodation and help constitute a credible arbitration system for swiftly adjudicating tenant-landlord disputes.

Obviously, there will always be short-sighted, egocentric economic operators, who are only interested in private gain and we can therefore never dispense entirely with unilateral public regulation. Nevertheless, given the limited success of conventional state regulations at addressing basic problems in our economy, including an undersupplied and overpriced housing market, homelessness, and rural depopulation, surely it is worth exploring the potential for a more cooperative, multi-lateral approach to economic regulation and governance?

Dr David Thunder is a researcher and lecturer at the Institute for Culture and Society at the University of Navarra. This article is based on some of the ideas presented in a book in progress, Sovereign Rule and the Still-Birth of Republican Freedom: A Preface to Consociational Republicanism.  

The views expressed here are those of the author and do not represent or reflect the views of RTÉ