Critical Junctures: opportunities and threats for democracies in the pandemic
Jensen Sass and Kate Henne, from the School of Regulation and Global Governance at the ANU, argue that the pandemic has opened up space for reconfiguring the relationships between states and markets.
Are the changes wrought by the pandemic superficial or enduring? Photo of face mask graffiti on a white wall by Adam Nieścioruk on Unsplash
In the course of a few months, Covid-19 has thrown into question old ideas about the character and aims of democratic governance. As we are observing widespread upheaval and growing inequalities, we are rethinking the relations linking states, markets, and civil society.
In the language of sociology and political science, Covid-19 has triggered a series of critical junctures – that is, social, political, and economic crises which reveal the inadequacies of some current arrangements and open space for alternatives. Indeed, one of the defining features of a critical juncture is that they allow ideas to secure new force—new power to persuade.
Rethinking Regulatory Relationships between states and markets
A reigning set of public ideas about government have focused on the relationship between states and markets. In English-speaking liberal democracies in particular, they have emphasized the priority of markets.
In what was once described as the Washington Consensus, markets were valued for their efficiency in distributing information and supporting decentralized decisions about the allocation of resources. In short, markets have been understood as powerful regulatory institutions.
Global trade must be equitable and resilient as well as efficient. Photo of shipping containers in a dockyard by CHUTTERSNAP on Unsplash
To refer to markets as a form of regulation may sound odd. We speak more often of the need to regulate markets. However, competitive markets -- rather than strong states or a militant civil society – have been understood as the best bet for ensuring state institutions are not captured by powerful interests. In place of the central expertise of states are the finely-tuned decisions of millions of ordinary people, who are best placed to make decisions about their welfare.
The Covid era, however, has caused us to reconsider many assumptions about the actual and preferred relationship between markets and states. For example, globalization has been viewed as maximizing efficiency and thus reducing the cost of goods. Some also argued that deeper economic integration would serve as a guarantor of world peace.
Covid 19 has dramatically revealed that economic interdependence through globalization represents enormous social vulnerability. The disruption in any node of a complex supply chain can prevent a country from maintaining access to critical goods, such as medicines, medical equipment, and personal protective equipment.
Thus, in the midst of Covid-19, we are seeing new ideas for evaluating international trade. The global distribution of production should not only enhance efficiency, it should also be resilient to shocks. Further, the production and distribution of critical goods should not only be efficient and resilient, it should be equitable, since the inequitable distribution of critical resources is itself a threat to our collective safety, security and wellbeing.
Reimagining Data and Corporations
The Covid-19 crisis has coincided with longer running debates about the regulation of large corporations and the governance of data, particularly data that reflects personal information often thought of as private. In fact, the Covid-19 crisis coincides with more interventionist government stances towards FAANG (Facebook, Amazon, Apple, Netflix and Google). Even mid-level powers like Australia have shown a willingness to play regulatory hardball with the digital titans.
Just as supply chains are now seen as objects of state management and intervention, corporations themselves are being seen from a new regulatory perspective. This is particularly pronounced, again, in the case of Big Tech, which Lina Khan reinterprets as public utilities and Jack Balkin conceives of as information fiduciaries. Some Big Tech firms, most prominently Huawei, are also being reimagined as agents of foreign states, and so their commercial operations are being subjected to fundamentally new kinds of regulatory analysis.
These developments can be seen as indicators of the structural and ideological changes affecting regulatory environments across the world.
What next?
Social scientists tend to disagree about who should lead the way in democracies. Economists have been the strongest advocates of market-based solutions, just as political scientists and scholars of public administration have advocated for bureaucratic expertise and sociologists have advocated for expanding the governance role of civil society.
Others have not typically prioritised states, markets, or civil society when diagnosing and examining ills facing contemporary societies. Rather, they have attempted to better specify how these institutional domains can both perform their discrete functions and mutually support one another. In other words, rather than question whether markets, states, or civil society should come first, good governance requires that they are all strong and that they support (rather than erode) one another’s basic functions.
Change is afoot but whether change will be widely consequential or durable is still uncertain. While critical junctures can create a new openness at the level of governance thinking, they can also be shaped by the most powerful actors. The changes wrought in such moments can also rapidly dissipate once the crisis moment passes. We need to understand these structural dynamics and the contingent qualities of regulatory responses to crises, so that we can design durable solutions and counter the fissures made visible during the pandemic.
Conversations about Change
This blog is drawn from the 2020 Conversations Series- Critical junctures: Reimagining regulatory governance, being hosted by the ANU School of Regulation and Global Governance (October 6, 13, 20, 27). The webinar series explores these important themes through discussion with experts from different fields. The four panels capture their reflections on how the new rebalancing occurring between states, markets and civil societies is liable to play out in different domains of practice and regulation.