[governance] Multi-stakeholderim, Civil Society and Astroturfing/Stakeholder Capture

[Garth Graham]

Michael Gurstein identified two potential multi-stakeholder governance failures - astroturfing and regulatory capture.  I'd like to add a third potential failure to the list - the dumbing down of governmental regulatory capacity due to the use of "smart" regulation.

On 2012-12-23, at 2:39 PM, michael gurstein wrote:
> One of the illegitimate ways for exerting such influence, that has fairly recently found a name is what is being called "astroturfing" defined as "apparently grassroots-based citizen groups or coalitions that are primarily conceived, created and/or funded by corporations, industry trade associations, political interests or public relations firms".
>  ……. Another such process is called "regulatory capture" -- although in this instance it might be renamed as "stakeholder capture". This is defined: "Regulatory (stakeholder) capture occurs when a regulatory (stakeholder) agency, created to act in the public interest, instead advances the commercial or special concerns of interest groups that dominate the industry or sector it is charged with regulating. Regulatory (stakeholder) capture is a form of government (multi-stakeholder governance) failure... "
> ……… For multi-stakeholderism and particularly for CS to have an effect and role in independently representing the public interest some effective means will need to be established (and quickly) to ensure that participants in these processes purporting to "be" or to "represent" Civil Society are neither captured nor astroturfed. In the absence of this, the much praised "multi-stakeholder global Internet governance model" will die stillborn, lacking any form of credibility or legitimacy.

The roots of efforts to fix problems perceived in the role of government by introducing market forces into regulatory design and monopolistic delivery of public service goes all the way back to 1992 and Osborne and Gaebler’s “Reinventing Government.” The trend was later re-inforced by the introduction of “smart regulation,” a concept emerging out of the environmental movement,  where all stakeholders came together around one table.  In working with governments, the mistaken “what’s in it for us?” for environmental activists was the opportunity to change perspectives in public policy debates towards “whole system” (i.e. multistakeholder) views.  But, in a climate of fiscal restraint and of outsourcing the role of government, politicians did not overlooked the opportunities that smart regulation presented for diminishing the “burden” of government on business.  Smart regulation had the unintended consequence of reinforcing the governmental preference for working to regulate through hands-off approaches.
 
> “In particular, the public can potentially play a large role in controlling the actions of self-regulating bodies.  The public can act as consumers, either through directly consuming (or not consuming) the service provided by the industry (such as in the case of Green Consumerism) or through punishing those who use low quality services (such as in the case of investors not investing in companies using low quality auditors).  The public, if harmed by the decisions of the self-regulating body, may be able to use the courts to either alter decisions or obtain damages for harm.  Finally, the public can participate in the decision-making process of the self-regulating industry – providing the industry with information about issues or monitoring the exercise of self-regulatory powers.” (Green and Hrab. Self-regulation and the protection of the public interest. 2003).
 
The environmentalists did help governments to see that behavior change could best be influenced through pricing goods and services correctly – transferring responsibility for environmental impacts from government to consumers, and thus privatizing the policy dialogue and further reducing the need for government intervention.  But, to actually work, there had to be a next step.
 
> “... regulatory reform must take place in an environment of shrinking regulatory resources, making it necessary in some contexts to design strategies capable of achieving results even in the absence of a credible enforcement regime (as when dealing with small and medium-sized enterprises), and in almost all circumstances to extract the "biggest bang" from a much diminished "regulatory buck" ... This will involve the design of a "second phase" of regulation: one that still involves government intervention, but selectively and in combination with a range of market and non-market solutions, and of public and private regulatory orderings. ... In essence, achieving efficient and effective regulation and encouraging innovation is a far more complex activity than mainstream neo-classical economists believe(d) it to be, requiring a much broader range of strategies, tailored to a much broader range of motivations and harnessing a much wider range of social actors.” (Gunningham. Reconfiguring Environmental Regulation).
 
But that second phase of regulation never comes.  In practice, in the follow-up to de-regulation, there is rarely any significant capacity left inside governments for administration and oversight.  The reduction in the scale of regulation is usually accompanied by a reduction in the volume of the regulators.  In making the whole system “smart,” governments blow the brains out of the public parts of the system.  So, as the markets fail to deliver on the underlying commitment to resolve issues of the public interest over all, governments fail to step back in and honor the part of their role that remains as a consequence of the bargains they made with businesses and non-government agency stakeholders.

Although the piloting of smart regulation occurring first in the environmental sectors, it quickly spread elsewhere, to the energy, health, and ICT sectors.  In the "global" application of the multistakeholder model to Internet Governance, I suspect that "representative" civil society agencies will find their  expectations for a partnership role from national governments to be largely unmet.

GG



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