Social regulation refers to the set of rules identifying permissible and impermissible activity for individuals, firms, or government agencies as well as the accompanying sanctions or rewards for such behaviour. These rules are meant to restrict practices that threaten public health, safety, welfare, or well- being. These include environmental pollution, unsafe working environments, unhealthy living conditions, and social exclusion.
Social regulations are generally put in place through regulatory programs established by legislation that defines their purpose and objectives.
Social regulation must be distinguished from economic regulation, which aims at ensuring competitive markets for goods and services. Recently these two modes of regulation have followed opposing trends: whereas there has been a rapid expansion of
social regulation, there has been a tendency towards a deregulation of the global economy.
Opposing Theories
Since the 1970s, "the role of the State in the regulation of the economy and the precepts of the welfare state have been challenged in a move to emphasize the importance of individual autonomy and market forces as a basis for
social regulation. This neo-liberal ideology has spread rapidly throughout the planet, notably as a result of the internationalization of the economy and the role of the international institutions associated with the Bretton-Woods agreements. This phenomenon has weakened the classic mechanisms of
social regulation at both national and international levels and challenged the legitimacy of any form of regulation other than that of the market. This weakening of traditional forms of
social regulation has sparked a profound rethinking of the nature of such regulation […]."
(Murray, G. and G. Trudeau,
Towards a Social Regulation of the Global Firm?,
Industrial Relations, n. 59, 1, 2004, visited 2009-08-03)
Opposed to neo-liberalist theory is the functionalist approach to
social regulation. This approach advocates the creation of an international public space which would play an integral role in the definition and implementation of global
social regulations. The development of international communication and exchanges as well as emerging networks between NGOs and transnational corporations support this theory. Increasingly, non-state actors are fighting for the inclusion of social instruments at an international level and they continue to gain influence in the processes of global societal and economic integration.
On the National Level: the Welfare State
In most OECD countries, the welfare state system has served as the main vector for
social regulation. "A welfare state" is a political system under which the state (rather than the individual or the private sector) has responsibility for the welfare of its citizens, providing a guaranteed minimum standard of living and insurance against the hazards of poverty, illness, and social deprivation. Services usually include health and education systems and are typically financed through taxation.
However, as globalization increasingly reduces the importance of national borders, this state-run model seems to be in decline. Governments are confronted with financing difficulties due to an aging population and mounting pressure to create a more competitive market.
In developing nations, welfare systems or other systems of social protection are largely insufficient or completely absent.
An Emerging International Network
In response to globalization, international bodies have become increasingly involved in
social regulation, although the approaches of these different organizations can vary greatly.
The United Nations, for example, introduced the Global Compact, a voluntary initiative representing a commitment from signatory parties to adhere to ten principles concerning human rights.
The International Labour Organization, created in 1919, attempts to reconcile discrepancies between international commerce and
social regulation. It helps to define and promote labour standards through international conventions in hopes of creating an economically and socially viable situation for workers.
"The ILO Declaration on Fundamental Principles and Rights at Work and its Follow-up, adopted in 1998 as a response to the challenges of globalization for
social regulation, is now becoming a universal point of reference on the subject. [However], this initiative was born in controversy, notably because of the purely declaratory nature of the Declaration which made it more like an instrument of "soft law," void of any judicial obligations or constraints."
(Murray, G. and G. Trudeau,
Towards a Social Regulation of the Global Firm?,
Industrial Relations, n. 59, 1, 2004, visited 2009-08-03)
The International Monetary Fund and the World Bank adopt an economic approach. They maintain that the reduction of poverty and the improvement of the social situation can be achieved through economic growth and they therefore provide economic support to developing countries with this goal in mind.
The World Trade Organization, however, has only recently become involved in
social regulation. Until not long ago, there was no social provision in the documents defining the functions attributed to the Organization. Protests during the Seattle summit in 1999 led to the reconsideration of this position that is underway.
In addition, nongovernmental agencies are contributing to the growing body of regulatory instruments:
"Transnational
social regulation is increasingly the product of private (as opposed to public) interventions into the sphere of global trade. In recognition of the widespread failure of corporations to sufficiently address the socio
-economic externalities borne by workers (inadequate wages, poor working conditions, forced overtime, child labor, and lack of the right to free association), various non
-governmental organizations have begun to design and implement systems of rules intended to influence corporations and bring to an end a transnational ‘race to the bottom.'"
(Ronnie L.,
Regulation for the Rest of Us? Global Social Activism, Corporate Citizenship, and the Disappearance of the Political,
Center for Global, International and Regional Studies, 2003, visited 2009-08-03)
Regulating Multinationals
Multinationals pose a particular challenge to traditional modes of
social regulation.
"The global firm is subject to highly fragmented forms of
social regulation, the content of which can vary from one place to another, according to the geography of its investment strategies. There is no global system of
social regulation affecting simultaneously all of the component parts of a global firm and making it responsible for all of its activities.
[…]
This weakening of traditional forms of
social regulation has sparked a profound rethinking of the nature of such regulation and the role of both such instruments and the traditional actors of the regulation of work and employment, particularly as regards the global firm."
(Murray, G. and G. Trudeau,
Towards a Social Regulation of the Global Firm?,
Industrial Relations, n. 59, 1, 2004, visited 2009-08-03)
New Instruments
"Several new forms of
social regulation can already be discerned. Sometimes national and sometimes international, stemming from positive law or more private initiatives, both formal and informal, what is most striking is that they are not likely to replace more traditional mechanisms for the regulation of work and employment in the short term. Rather, they complement them and sometimes enhance their efficacy."(p 20)
These new forms include the increasing number of "soft laws" being established at the international level.
Since public initiatives have failed to address the case of multinationals effectively, transnational
social regulation is increasingly the product of private interventions in the sphere of global trade. These mechanisms call on the social responsibility of corporations and their role as global citizens. This approach generally takes the form of voluntary initiatives, particularly with regard to social and environmental concerns, and tends to go beyond the minimum legal obligations.
(adapted from Murray, G. and G. Trudeau,
Towards a Social Regulation of the Global Firm?,
Industrial Relations, n. 59, 1, 2004, visited 2009-08-03)
These new forms of
social regulation include instruments such as social charters, codes of conducts or social clauses. In some respects, these tools could prove to be extremely efficient, being implemented by fast moving corporations using the most modern methods of communication. However, the approach and content of these documents tend to be extremely heterogeneous, and the outcomes are generally not monitored by any outside credible source or organization.
Other initiatives such as social labels and ISO norms are also considered to be forms of
social regulation. As with other private initiatives, their lack of penalties for non compliance and their varied definitions and applications tend to weaken their regulatory function.
Combination of Approaches
"If some combination of the intervention of state and non-state actors is required to influence the behaviour of global firms, the problem is dynamic and qualitative because the relevance of the older forms of
social regulation is increasingly open to question. We therefore need to look at some combination of national and international political institutions, direct or indirect ("hard" or "soft") legislative framing, the actions of trade unions and civil society groups and, indeed, the direct pressure exercised by consumers preoccupied with the ethical and planetary ramifications of their decisions."
(Murray, G. and G. Trudeau,
Towards a Social Regulation of the Global Firm?,
Industrial Relations, n. 59, 1, 2004, visited 2009-08-03)
