Mohammad Rasekh; Mojtaba Hosseini
Abstract
Regulation is a modern concept which has emerged out of and evolved in the context of economic development in general and the relationship between market and government in particular. It signifies a different meaning with the past. Even nowadays we are faced with various meanings of regulation within ...
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Regulation is a modern concept which has emerged out of and evolved in the context of economic development in general and the relationship between market and government in particular. It signifies a different meaning with the past. Even nowadays we are faced with various meanings of regulation within the economic legal systems; meanings that have moved away from its early definition, and hence, it is necessary to make it clear what we mean by the term in our academic analyses. However, regulation is about managing the relationship between government and economy (especially the market); an issue with which legal and economic systems have grappled since the early days of industrial economy.
Market has always swayed between two theories of government interventionism and non-interventionism. It could be said that the idea of market dominated over the orthodox economy up to the 1929 crisis. With the outbreak of this crisis, the Keynesian theory found the upper hand in the economic systems, which defended government intervention in the monetary system and labour market. After three golden decades since the end of the World War II and along with the occurrence of the 1970s crisis, the idea of the market efficiency and necessity of reduction of the government intervention therein gained currency. In this situation, where the Keynesian theory had started to lose its prevalence, governments lost important monetary and fiscal instruments. Post-1970s era has increasingly necessitated determination of the state-market relationship.
Various economic schools and theories have taken shape in this era. Regulation is indeed one of the concepts with which theoreticians have grappled with. Some of the scholars in the field of regulation consider government as a preliminary example of intervention in the market, while some other take it as one among many intervening institutions. All of them, however, agree that the nation state and international regime are among significant and complementary elements to a functional economy and help the economic growth. Having taken into consideration the history of this era and the related theories, it may be concluded that nowadays there is no doubt about the necessity of government intervention in the market and economy. All in all, there is a consensus on this point that a lack of mechanism of managing the state-market relationship would harm all the actors involved in the field, a fact that finally damages the national interest, and causes serious economic and social losses.
In other words, the controversy now revolves around the boundaries of such an intervention and regulation of market by governments. Given the developments occurred over the 19th and 20th centuries, it seems that the state-market relationship is not of an absolute domination of government over market or a random and haphazard regulation of the institute.
The aim of regulation of market and economy – which requires government intervention in diverse ways, particularly by passing and enforcing laws and bylaws – is to enhance the efficiency and functionality of economy in various industries and jobs, on the one hand, and monitoring them with the purpose of helping correction their failures, such as environmental harms, risks exposed to the society and the labour, exploitative pricing, unfair competition, on the other hand. In this regard, in order for regulation to be effective and meet its aims, it is not only necessary to designate various meanings of the term at different levels, so that appropriate instruments may be selected for each level, it is also crucial to determine and know very well the scope and target of regulation in a precise way. No doubt, legal regulation, in both particular and sub-particular levels, can be effective by relevant sanctions.
At any rate, regulation implies various meanings and is of diverse levels. That is, regulation finds different meanings in different fields, and hence, requires different instruments. Therefore, in the first step, in this realm, we need to deal with the concept of regulation. On the basis of the above points, this essay, by briefly dealing with the history and necessity of regulation, aims to explain three meanings and level of the concept of regulation and existing approaches to the issue. To explain, from among various kinds of regulation, such as the social and cultural one, we only deal with the regulation of market, industries and jobs.
At the firs level, the general one, regulation means any enforceable social control.
At the second level, the particular one, regulation implies government intervention in the market system. At the third level, the sub-particular one, regulation signifies intervention in economy and market by legislation. It is clear that regulation in the second and third meanings relates to the relationship between government and economy/market. It is worth mentioning that, under the Iranian legal system, “Law of Implementation of General Policies of Article 44 of the Constitution” include the second meaning of regulation as it shows legal regulating of the economy by legislation. In contrast, directives or bylaws issued by the Competition Council and rules passed by the Organization of Radio Communication Regulation are instances of the third meaning of regulation.
