Regulation Theory and Sustainable Development: Business Leaders and Ecological Modernization

Citation

Michael Howes (2016), "Regulation Theory and Sustainable Development: Business Leaders and Ecological Modernization", International Journal of Social Economics, Vol. 43 No. 3, pp. 340-343. https://doi.org/10.1108/IJSE-10-2013-0215

This book offers a concise critique of key economic approaches to environmental issues and promotes a synthesis with institutionalism and regulation theory as an alternative. The book is divided into two main parts: the first reviews a range of theoretical perspectives, while the second analyses business and sustainable development. The introduction offers a brief history of selected environmental issues and incidents, along with some headline international responses since 1970. The underlying argument is that the social dimensions of ecological modernisation have not been adequately addressed by economic analyses, and that the social construction of both environmental issues and economic institutions are at the centre of the conflicts and compromises that shape development. While very brief, this chapter clearly sets the tone and maps out the rest of the volume.

Chapter 1 offers a critical tour of environmental economics, ecological economics and institutional analysis. It finishes with a summary of the limits of economic approaches to environmental issues. References are made to key thinkers throughout this chapter, from Malthus, to Pigou, Coase, Hardin, Pearce, Jacobs and Stiglitz. The environmental economists are divided into three schools:

1. The Property Rights School that advocates the dividing up of nature into private property as a solution to environmental issues;

2. The Neoclassical School (both radical and applied) that views the environment as a provider of goods and services which can be priced to internalise externalities; and

3. The Macro-Economic Neoclassical School that adds natural resources to the production equation inputs of capital and labour.

The section on ecological economics compares the London and American Schools with key debates about economic growth and the role of technology. The author finds flaws in each of these schools then moves on to consider the prospects of institutional analysis as a way to understand the social construction of norms and values which guide economic behaviour. The chapter finishes by advocating a regulation theory approach. Overall this chapter provides a concise and easy to read critique of some key schools of economics but terms such as “ecological modernisation” and “discourse” appear without being defined, so it is not clear which version is being used by the author. Further, while an institutional analysis is favoured, there is no context given in terms of the different schools of institutionalism (i.e. functional, historical, political or sociological). There is also a little slippage where the author starts to refer to “our view” towards the end of the chapter, despite this being a sole-authored book.

Chapter 2 reviews various versions of regulation theory and considers how they might be useful in understanding environmental crises. The theoretical schools discussed are a blend of 1970s structural Marxism with variants of institutionalism. It starts with a general theoretical framework operating at three levels: production mode (i.e. relations between capital, labour and the state); the regime of accumulation (i.e. how surplus value is distributed); and, institutional forms (i.e. modes of regulation such as the law, negotiated compromise and a system of shared values). It then offers a typology of crises and makes reference to the global economic crises of the 1890s, 1930s, 1970s and the GFC that started in 2008. There are critiques of capitalism and Fordism, particularly with regards to the economic crisis of the 1970s, and some discussion of political ecology. Key thinkers are cited, such as Boyer and Lipietz, although the latter tends to get more consideration throughout the chapter. The author locates themself within the Quebec School. The underlying argument is that both social structures and ecological modernisation are products of social struggles that can lead to institutional compromises which may accumulate over time to transform society. The author’s goal is to use this approach to explain how environmental concerns can be injected into the links between social relations and institutions. Students of Marxism will find much of the early parts of this chapter familiar. Many of the sources cited are several decades old, however, so the analysis seems a little dated. Perhaps this is because the world of the early twenty-first century is quite different to the 1970s (when regulation theory emerged), particularly since the collapse of communism at the end of the 1980s.

Chapter 3 is the last of the theory chapters and addresses the issue of collective action, new social movements and regulation theory. It argues that regulation theory is able to link economic and social spheres because economic institutions are socially constructed. While regulation theory has not addressed environmental issues in the past, the author asserts that it can be used to explain environmental concerns as social constructions by broadening the definition of the social sphere to include the mobilisation of the environmentalist movement. The chapter works through the problems that other schools of thought have in explaining this movement. It suggests that the School of Collective Behaviour focuses too much on the individual and ignores macro-political factors, while the School of Resource Mobilisation focuses on organisation and strategy but still has trouble explaining new social movements. The New Social Movement School is then explored in some detail, with particular reference to the work of Touraine, Offe and Melucci. In this discussion the idea of the post-industrial society is raised with social conflict based on cultural perceptions rather than class, although it is noted that many actors in the new social movements come from the middle class. The labour movement remains a key player but as it has declined, the environment movement has grown. In place of class struggle, the author looks at the struggle between economic elites and the environmental movement, particularly with regards to the opportunities for compromise. The chapter finishes with a discussion of ecological modernisation based on the work of Buttel, Mol and Hajer. This chapter may have benefitted from some discussion of Beck’s Risk Society, its links to ecological modernisation and its influence over these three authors. There are also several parallels between Beck’s concept of reflexivity and Touraine’s idea of historicity as both argue that society is acting upon itself. Beck also proposes that the class struggle over the distribution of “goods” has been transformed into a struggle between risk-winners and risk-losers over the distribution of “bads” (e.g. hazards such as contaminated sites and pollution).

The second half of the book starts with chapter 4 that considers how much business leaders have taken on the views of environmentalists. The chapter is based on free ranging interviews with 50 of the most influential business leaders in Quebec. The results suggested that business leaders relied heavily on the media for the representation of environmental issues and that they see these issues as global in nature. They identified three main causes: overpopulation (particularly in developing countries like China and India); deficiencies in government and public management; and, the lack of environmental values amongst consumers. The business leaders were aware of the concept of sustainable development but their understandings still preference economic growth over environmental damage or resource depletion. They looked for solutions in technology, better public management by government and education to raise community awareness. The leaders noted the limited room to manoeuvre by companies in improving their environmental performance because of the pressures of international competition to keep costs down. The author concludes that this thinking is very different from that of the environmentalists and none of the business leaders in the sample could be classed as being in the vanguard of change. While these findings are interesting, they are not startling, and a reasonable question to ask would be just how generalisable the results are given that the sample was taken from one province in one country. The term “discourse” makes another appearance in the analysis, but the simple definition of social practice does not allow it to be fully utilised. The work of Dryzek would have assisted greatly in the analysis of discourses, particularly if coupled with the insights of Hajer (whose work the author does use).

Chapter 5 broadens the analysis of the interviews with business leaders to establish the context of their views on economic institutions and the state. The company was seen as a key entity of the market, being defined as a group of people providing goods and services (as well as contributing to innovation, wealth and jobs). Most respondents appeared to have the view of the small to medium-sized enterprise as the ideal model in their mind. Markets were defined in terms of competition between companies that is driven by consumer demand. The state was seen as the embodiment of democratic will with the purpose of providing security, health, education and infrastructure. While deregulation was generally seen as a positive thing, the business leaders were divided into two groups: one supporting a non-interventionist stance; and, the other supporting state intervention. The business leaders rejected the political role of companies and were “impervious” to the economic arguments about externalities. There was some ambiguity on globalisation, with both threats and opportunities being identified. Pressure groups were also viewed with ambiguity, some seeing them as a part of democracy, others seeing them as distortion. There was a general resistance to the idea of giving pressure groups a formal role in companies but some support for increased community consultation. Unlike chapter 4, this chapter used quotes from the interviews to add some weight and context to the arguments being made. There was no attempt, however, to explain the divisions within the group. Were, for example, leaders from particular types of companies more likely to be non-interventionist?

The conclusion reiterates and summarises the findings of each of the preceding chapters. The author argues that their analysis has synthesised three schools of thought – Environmental Economics, Regulation Theory and New Social Movements – to fill the gap that has formed between environmental economics and environmental sociology. The mechanism is to re-establish the link between the economic, social and environmental spheres. While the majority of business leaders acknowledge environmental degradation as a problem, they blame third parties such as the growing population in developing countries, government and consumers. Sustainable development is a term that has been appropriated by business leaders, but economic growth and consumption are still seen as essential pillars of the economy. These findings suggest that it would be better to move away from demands for a zero growth economy and focus on dematerialisation using better technology, low ecological intensity production and changes to consumer demand. Attempts to internalise externalities will meet strong resistance, but the rise of indicators such as the Human Development Index and the Sustainable Development Index are a positive sign. The state will need to be strategic in facilitating this ecological modernisation process. Readers who are interested in environmental issues from an economic and sociological perspective will find this a concise and interesting book. Students of political science may find the conclusions too brief and wish for more detail on the praxis required to bring about ecological modernisation. They might also want to see a deeper analysis of the power relations between business, the state and civil society that engages with more recent theorists. The empirical findings are limited, as noted before, by the fact that all respondents were drawn from one province within Canada. That being said, the results are still useful in helping to understand the response of some business leaders to environmental issues.