Regulation

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Regulation is an abstract concept of management of complex systems according to a set of rules and trends. In systems theory, these types of rules exist in various fields of biology and society, but the term has slightly different meanings according to context. For example:

Systems theory Interdisciplinary study of systems

Systems theory is the interdisciplinary study of systems. A system is a cohesive conglomeration of interrelated and interdependent parts that is either natural or man-made. Every system is delineated by its spatial and temporal boundaries, surrounded and influenced by its environment, described by its structure and purpose or nature and expressed in its functioning. In terms of its effects, a system can be more than the sum of its parts if it expresses synergy or emergent behavior. Changing one part of the system usually affects other parts and the whole system, with predictable patterns of behavior. For systems that are self-learning and self-adapting, the positive growth and adaptation depend upon how well the system is adjusted with its environment. Some systems function mainly to support other systems by aiding in the maintenance of the other system to prevent failure. The goal of systems theory is systematically discovering a system's dynamics, constraints, conditions and elucidating principles that can be discerned and applied to systems at every level of nesting, and in every field for achieving optimized equifinality.

Biology is the natural science that studies life and living organisms, including their physical structure, chemical processes, molecular interactions, physiological mechanisms, development and evolution. Despite the complexity of the science, there are certain unifying concepts that consolidate it into a single, coherent field. Biology recognizes the cell as the basic unit of life, genes as the basic unit of heredity, and evolution as the engine that propels the creation and extinction of species. Living organisms are open systems that survive by transforming energy and decreasing their local entropy to maintain a stable and vital condition defined as homeostasis.

Society Social group involved in persistent social interaction

A society is a group of individuals involved in persistent social interaction, or a large social group sharing the same geographical or social territory, typically subject to the same political authority and dominant cultural expectations. Societies are characterized by patterns of relationships between individuals who share a distinctive culture and institutions; a given society may be described as the sum total of such relationships among its constituent of members. In the social sciences, a larger society often exhibits stratification or dominance patterns in subgroups.

Contents

In biology, homeostasis is the state of steady internal physical and chemical conditions maintained by living systems. This dynamic state of equilibrium is the condition of optimal functioning for the organism and includes many variables, such as body temperature and fluid balance, being kept within certain pre-set limits. Other variables include the pH of extracellular fluid, the concentrations of sodium, potassium and calcium ions, as well as that of the blood sugar level, and these need to be regulated despite changes in the environment, diet, or level of activity. Each of these variables is controlled by one or more regulators or homeostatic mechanisms, which together maintain life.

A government is the system or group of people governing an organized community, often a state.

A subject-matter expert (SME) or domain expert is a person who is an authority in a particular area or topic. The term domain expert is frequently used in expert systems software development, and there the term always refers to the domain other than the software domain. A domain expert is a person with special knowledge or skills in a particular area of endeavour. The development of accounting software requires knowledge in two different domains: accounting and software. Some of the development workers may be experts in one domain and not the other.

Social

Regulation in the social, political, psychological, and economic domains can take many forms: legal restrictions promulgated by a government authority, contractual obligations (for example, contracts between insurers and their insureds [1] ), self-regulation in psychology, social regulation (e.g. norms), co-regulation, third-party regulation, certification, accreditation or market regulation. [2]

Law System of rules and guidelines, generally backed by governmental authority

Law is a system of rules that are created and enforced through social or governmental institutions to regulate behavior. It has been defined both as "the Science of Justice" and "the Art of Justice". Law is a system that regulates and ensures that individuals or a community adhere to the will of the state. State-enforced laws can be made by a collective legislature or by a single legislator, resulting in statutes, by the executive through decrees and regulations, or established by judges through precedent, normally in common law jurisdictions. Private individuals can create legally binding contracts, including arbitration agreements that may elect to accept alternative arbitration to the normal court process. The formation of laws themselves may be influenced by a constitution, written or tacit, and the rights encoded therein. The law shapes politics, economics, history and society in various ways and serves as a mediator of relations between people.

Self-regulation theory (SRT) is a system of conscious personal management that involves the process of guiding one's own thoughts, behaviors, and feelings to reach goals. Self-regulation consists of several stages, and individuals must function as contributors to their own motivation, behavior, and development within a network of reciprocally interacting influences.

Social control concept within the disciplines of the social sciences and within political science

Social control is a concept within the disciplines of the social sciences.

State-mandated regulation is government intervention in the private market in an attempt to implement policy and produce outcomes which might not otherwise occur, [3] ranging from consumer protection to faster growth or technological advancement.

State (polity) Organised community living under a system of government; either a sovereign state, constituent state, or federated state

A state is a political organization with a centralized government that exerts authority within a certain geographical territory. There is not single, undisputed, definition of what constitutes a state. A widely-used definition is a state being a polity that, within a given territory, maintains a monopoly on the use of force.

A policy is a deliberate system of principles to guide decisions and achieve rational outcomes. A policy is a statement of intent, and is implemented as a procedure or protocol. Policies are generally adopted by a governance body within an organization. Policies can assist in both subjective and objective decision making. Policies to assist in subjective decision making usually assist senior management with decisions that must be based on the relative merits of a number of factors, and as a result are often hard to test objectively, e.g. work-life balance policy. In contrast policies to assist in objective decision making are usually operational in nature and can be objectively tested, e.g. password policy.

The regulations may prescribe or proscribe conduct ("command-and-control" regulation), calibrate incentives ("incentive" regulation), or change preferences ("preferences shaping" regulation). Common examples of regulation include controls on market entries, prices, wages, development approvals, pollution effects, employment for certain people in certain industries, standards of production for certain goods, the military forces and services. The economics of imposing or removing regulations relating to markets is analysed in regulatory economics.

Price quantity of payment or compensation given by one party to another in return for goods or services

A price is the quantity of payment or compensation given by one party to another in return for one unit of goods or services.. A price is influenced by both production costs and demand for the product. A price may be determined by a monopolist or may be imposed on the firm by market conditions.

Wage Reimbursement paid by an employer to an employee

A wage is monetary compensation paid by an employer to an employee in exchange for work done. Payment may be calculated as a fixed amount for each task completed, or at an hourly or daily rate, or based on an easily measured quantity of work done.

Pollution introduction of contaminants into the natural environment that cause adverse change

Pollution is the introduction of contaminants into the natural environment that cause adverse change. Pollution can take the form of chemical substances or energy, such as noise, heat or light. Pollutants, the components of pollution, can be either foreign substances/energies or naturally occurring contaminants. Pollution is often classed as point source or nonpoint source pollution. In 2015, pollution killed 9 million people in the world.

Power to regulate should include the power to enforce regulatory decisions. Monitoring is an important tool used by national regulatory authorities in carrying out the regulated activities. [4]

In some countries (in particular the Scandinavian countries) industrial relations are to a very high degree regulated by the labour market parties themselves (self-regulation) in contrast to state regulation of minimum wages etc. [5]

Reasons

Regulations may create costs as well as benefits and may produce unintended reactivity effects, such as defensive practice. [6] Efficient regulations can be defined as those where total benefits exceed total costs.

Regulations can be advocated for a variety of reasons, including:[ citation needed ]

The study of formal (legal or official) and informal (extra-legal or unofficial) regulation constitutes one of the central concerns of the sociology of law.

History

Regulation of businesses existed in the ancient early Egyptian, Indian, Greek, and Roman civilizations. Standardized weights and measures existed to an extent in the ancient world, and gold may have operated to some degree as an international currency. In China, a national currency system existed and paper currency was invented. Sophisticated law existed in Ancient Rome. In the European Early Middle Ages, law and standardization declined with the Roman Empire, but regulation existed in the form of norms, customs, and privileges; this regulation was aided by the unified Christian identity and a sense of honor in regard to contracts. [8] :5

Modern industrial regulation can be traced to the Railway Regulation Act 1844 in the United Kingdom, and succeeding Acts. Beginning in the late 19th and 20th century, much of regulation in the United States was administered and enforced by regulatory agencies which produced their own administrative law and procedures under the authority of statutes. Legislators created these agencies to allow experts in the industry to focus their attention on the issue. At the federal level, one of the earliest institutions was the Interstate Commerce Commission which had its roots in earlier state-based regulatory commissions and agencies. Later agencies include the Federal Trade Commission, Securities and Exchange Commission, Civil Aeronautics Board, and various other institutions. These institutions vary from industry to industry and at the federal and state level. Individual agencies do not necessarily have clear life-cycles or patterns of behavior, and they are influenced heavily by their leadership and staff as well as the organic law creating the agency. In the 1930s, lawmakers believed that unregulated business often led to injustice and inefficiency; in the 1960s and 1970s, concern shifted to regulatory capture, which led to extremely detailed laws creating the United States Environmental Protection Agency and Occupational Safety and Health Administration.

See also

Related Research Articles

Deregulation is the process of removing or reducing state regulations, typically in the economic sphere. It is the repeal of governmental regulation of the economy. It became common in advanced industrial economies in the 1970s and 1980s, as a result of new trends in economic thinking about the inefficiencies of government regulation, and the risk that regulatory agencies would be controlled by the regulated industry to its benefit, and thereby hurt consumers and the wider economy.

Independent agencies of the United States federal government are agencies that exist outside the federal executive departments and the Executive Office of the President. In a more narrow sense, the term may also be used to describe agencies that, while constitutionally part of the executive branch, are independent of presidential control, usually because the president's power to dismiss the agency head or a member is limited.

Financial regulation

Financial regulation is a form of regulation or supervision, which subjects financial institutions to certain requirements, restrictions and guidelines, aiming to maintain the integrity of the financial system. This may be handled by either a government or non-government organization. Financial regulation has also influenced the structure of banking sectors by increasing the variety of financial products available. Financial regulation forms one of three legal categories which constitutes the content of financial law, the other two being market practices, case law.

Governance comprises all of the processes of governing – whether undertaken by the government of a state, by a market or by a network – over a social system and whether through the laws, norms, power or language of an organized society. It relates to "the processes of interaction and decision-making among the actors involved in a collective problem that lead to the creation, reinforcement, or reproduction of social norms and institutions". In lay terms, it could be described as the political processes that exist in and between formal institutions.

In general, compliance means conforming to a rule, such as a specification, policy, standard or law. Regulatory compliance describes the goal that organizations aspire to achieve in their efforts to ensure that they are aware of and take steps to comply with relevant laws, policies, and regulations. Due to the increasing number of regulations and need for operational transparency, organizations are increasingly adopting the use of consolidated and harmonized sets of compliance controls. This approach is used to ensure that all necessary governance requirements can be met without the unnecessary duplication of effort and activity from resources.

Government failure, in the context of public economics, is an economic inefficiency caused by a government intervention, if the inefficiency would not exist in a true free market. It can be viewed in contrast to a market failure, which is an economic inefficiency that results from the free market itself, and can potentially be corrected through government regulation. The idea of government failure is associated with the policy argument that, even if particular markets may not meet the standard conditions of perfect competition required to ensure social optimality, government intervention may make matters worse rather than better.

Regulatory economics is the economics of regulation. It is the application of law by government or independent administrative agencies for various purposes, including remedying market failure, protecting the environment, centrally-planning an economy, enriching well-connected firms, or benefiting politicians.

Securities regulation in the United States is the field of U.S. law that covers transactions and other dealings with securities. The term is usually understood to include both federal- and state-level regulation by purely governmental regulatory agencies, but sometimes may also encompass listing requirements of exchanges like the New York Stock Exchange and rules of self-regulatory organizations like the Financial Industry Regulatory Authority (FINRA).

Regulatory capture is a form of government failure which occurs when a regulatory agency, created to act in the public interest, instead advances the commercial or political concerns of special interest groups that dominate the industry or sector it is charged with regulating. When regulatory capture occurs, the interests of firms, organizations, or political groups are prioritized over the interests of the public, leading to a net loss for society. Government agencies suffering regulatory capture are called "captured agencies."

A regulatory agency is a public authority or government agency responsible for exercising autonomous authority over some area of human activity in a regulatory or supervisory capacity. An independent regulatory agency is a regulatory agency that is independent from other branches or arms of the government.

A self-regulatory organization (SRO) is an organization that exercises some degree of regulatory authority over an industry or profession. The regulatory authority could exist in place of government regulation, or applied in addition to government regulation. The ability of an SRO to exercise regulatory authority does not necessarily derive from a grant of authority from the government.

Industry self-regulation is the process whereby members of an industry, trade or sector of the economy monitor their own adherence to legal, ethical, or safety standards, rather than have an outside, independent agency such as a third party entity or governmental regulator monitor and enforce those standards. Self-regulation may ease compliance and ownership of standards, but it can also give rise to conflicts of interest. If any organization, such as a corporation or government bureaucracy, is asked to eliminate unethical behavior within their own group, it may be in their interest in the short run to eliminate the appearance of unethical behavior, rather than the behavior itself, by keeping any ethical breaches hidden, instead of exposing and correcting them. An exception occurs when the ethical breach is already known by the public. In that case, it could be in the group's interest to end the ethical problem to which the public has knowledge, but keep remaining breaches hidden. Another exception would occur in industry sectors with varied membership, such as international brands together with small and medium size companies where the brand owners would have an interest to protect the joint sector reputation by issuing together self-regulation so as to avoid smaller companies with less resources causing damage out of ignorance. Similarly, the reliability of a professional group such as lawyers and journalist could make ethical rules work satisfactorily as a self-regulation if they were a pre-condition for adherence of new members.

Insurance law is the practice of law surrounding insurance, including insurance policies and claims. It can be broadly broken into three categories - regulation of the business of insurance; regulation of the content of insurance policies, especially with regard to consumer policies; and regulation of claim handling.

Dr. John T. Scholz is the Francis Eppes Distinguished Professor of Political Science and a Courtesy Professor of Law at Florida State University. As the first political scientist to formulate the "regulation game," which was later extended in influential work on responsive regulation by John Braithwaite and Ian Ayres. Scholz is widely regarded as one of the leading political scientists addressing regulatory enforcement.

In the United States, the Financial Industry Regulatory Authority, Inc. (FINRA) is a private corporation that acts as a self-regulatory organization (SRO). FINRA is the successor to the National Association of Securities Dealers, Inc. (NASD) and the member regulation, enforcement, and arbitration operations of the New York Stock Exchange. It is a non-governmental organization that regulates member brokerage firms and exchange markets. The government agency which acts as the ultimate regulator of the securities industry, including FINRA, is the Securities and Exchange Commission.

Financial Services Board (South Africa) financial regulatory authority

The Financial Services Board (FSB) was the government of South Africa's financial regulatory agency responsible for the non-banking financial services industry in South Africa from 1990 to 2018. It was an independent body which had a mandate to supervise and regulate the non-bank financial services industry in the public interest. This included the regulation of the biggest stock exchange in Africa the Johannesburg Stock Exchange. From 1 April 2018 the FSB was split into prudential and market conduct regulators.

The Autorité des marchés financiers (AMF) is the organisation responsible for financial regulation in the Canadian province of Québec. It regulates the province's financial markets and provides assistance to consumers of financial products and services. As provided for under its incorporating legislation, the AMF's mission is to enforce the laws governing the regulation of the financial sector, notably in the areas of insurance, securities, deposit institutions and the distribution of financial products and services.

Market governance mechanisms (MGMs) are formal, or informal rules, that have been consciously designed to change the behaviour of various economic actors. This includes actors such as individuals, businesses, organisations and governments - who in turn encourage sustainable development.

The Financial Sector Legislative Reforms Commission (FSLRC) is a body set up by the Government of India, Ministry of Finance, on 24 March 2011, to review and rewrite the legal-institutional architecture of the Indian financial sector. This Commission is chaired by a former Judge of the Supreme Court of India, Justice B. N. Srikrishna and has an eclectic mix of expert members drawn from the fields of finance, economics, public administration, law etc.

Colorado Department of Regulatory Agencies

The Colorado Department of Regulatory Agencies (DORA) is the principal department of the Colorado state government responsible for professional licensing and consumer protection.

References

  1. Marcos Antonio Mendoza, "Reinsurance as Governance: Governmental Risk Management Pools as a Case Study in the Governance Role Played by Reinsurance Institutions", 21 Conn. Ins. L.J. 53, (2014) http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2573253
  2. Levi-Faur, David, Regulation and Regulatory Governance, Jerusalem Papers in Regulation and Governance, No.1, 2010
  3. Orbach, Barak, What Is Regulation? 30 Yale Journal on Regulation Online 1 (2012)
  4. Eraldo Banovac. Monitoringgrundlagen der kroatischen Regulierungsbehörde für Energie. EW − das Magazin für die Energie Wirtschaft, Vol. 103, No. 1-2, 2004, pp. 14-16.
  5. Anders Kjellberg (2017) ”Self-regulation versus State Regulation in Swedish Industrial Relations” In Mia Rönnmar and Jenny Julén Votinius (eds.) Festskrift till Ann Numhauser-Henning. Lund: Juristförlaget i Lund 2017, pp. 357-383
  6. McGivern, Gerry; Fischer, Michael Daniel (1 February 2012). "Reactivity and reactions to regulatory transparency in medicine, psychotherapy and counselling" (PDF). Social Science & Medicine. 74 (3): 289–296. doi:10.1016/j.socscimed.2011.09.035. PMID   22104085.
  7. Harris, Brian; Andrew Carnes (February 2011). Disciplinary and Regulatory Proceedings. Jordans. ISBN   978-1-84661-270-1.
  8. John Braithwaite, Péter Drahos. (2000). Global Business Regulation. Cambridge University Press.

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