ECPR Joint Sessions, Edinburgh, 29 March - 2 April 2003 Report Workshop Directors Delegation in Contemporary Democracies (ws 15)

5) Dietmar Braun and Fabrizio Gilardi (Universit de Lausanne)

Papers David Epstein and Sharyn O'Halloran have addressed the question of why some policy areas are delegated and others not. They have explored the institutional incentives for elected officials to delegate substantive policy making authority to executive branch actors, and shown that it is those policy areas characterized by high levels of expertise, low interbranch conflict, and high intralegislative conflict that are the best candidates for delegation. Therefore, they have argued that delegation follows a path of political efficiency, meaning that it will tend to maximize legislators reelection probabilities. They have discussed applications of this logic to both the U.S. and to comparative political systems. Victor Lapuente Gin has studied one of the controversial questions of democratic theory, namely up to which point bureaucrats implement what elected politicians have decided. He has analysed which institutional settings characterized according Tsebelis theory of veto players (1995)- make bureaucrats more responsive to political instructions written on laws and statutes. For most delegation theories, a situation of one political principal (or one veto player) will lead to a more responsive bureaucracy who will implement policies better than a polity with two or more principals (or veto players). On the contrary, for some organization economists like Miller (1992), a situation of separation of powers will create an environment with better incentives for bureaucrats to transcend minimum levels of effort required. In order to explain these contradictory predictions Lapuente has developed a model composed of two games (the Credible Promotion Game and the Delegation Game), each one addressing one of the two separate problems that lay on the relation between politicians and bureaucrats: the problem of the negative control politicians must design incentives and sanctions to avoid that bureaucrats follow their own purposes- and the problem of the positive control politicians, like private executives, must create incentives that inspire bureaucrats to transcend minimum levels of effort required. The theoretical model and some intuitive empirical findings show that countries with multiple veto players easily reach social optimum in the Credible Promotion Game, and, in order to solve the Delegation Game, they need a fragmented administration. On the other hand, countries with single veto player easily solve Delegation Game, but, in order to obtain social optimum in Credible Promotion Game, a strict limitation to partisan appointments is needed. Gl Sosay has studied the practice of delegation to independent non-majoritarian institutions and its consequences, and particularly those related to legitimacy and democracy. She has discussed two possible scenarios. Although they are based on similar requirements of legitimacy within the framework of a madisonian democracy, the scenarios emphasize different aspects of these requirements. In the first scenario, the establishment of a strictly rule-based system relying increasingly upon knowledge and expertise in a complex and fragmented environment leads to bureaucratic/technocratic rule. On the other hand, the second scenario accentuates diffusion of power and potential for increased public participation as significant attributes of delegation to INMIs and involves a shift towards a more participatory form of democracy than majoritarian institutions allow.

Fabrizio Gilardi has studied delegation to independent regulatory agencies in seven sectors (electricity, telecoms, financial markets, competition, food safety, pharmaceuticals, and environment) and seventeen countries (EU member states plus Norway and Switzerland). He has first described the characteristics of IRAs in terms of formal independence, and then carried out a quantitative analysis to explain variations across sectors and countries. He has tested two main hypotheses. The first is the credibility hypothesis, stressing that IRAs are created by governments so as to increase the credibility of their policy commitments. The second argues that IRAs are a means for governments to cope with political uncertainty, i.e. the risk that policy choices will be undone after losing office. The analysis has shown that these two elements matter at different stages. Credibility explains why IRAs are set up, and to a lesser extent why some are more independent than others. Political uncertainty, on the other hand, has an effect only on the amount of formal independence granted, and not on the decision to establish a separate regulator. Mark Thatcher has examined the stage after delegation- how IRAs have behaved in practice and in particular, their relationship with their political principals, namely national governments and legislatures. He has studied two vital aspects of IRAs after their creation. The first concerns the relationships between elected politicians and IRAs, and in particular the independence of the latter from the former. The second aspect is the relationships between IRAs and regulatees, focussing especially on suppliers and capture. A quantitative approach is used, by offering indicators of the two aspects across the four countries. Qualitative discussion then illustrates and supplements the quantitative data. To analyse these issues, Thatcher has studied key market regulators in four countries- Britain, France, Germany and Italy. IRAs in key economic domains in have become more independent than was expected at the time of their creation and given formal institutional arrangements would suggest. In particular, it suggests that elected politicians have not followed strategies of politicising IRAs and have made relatively little use of their formal controls over IRAs. There is some national variation, with much less overt politicisation in Britain than in Italy. The data concerning the relations between IRAs are mixed. On the one hand, they suggest that the revolving door remains relatively limited, except in Britain. On the other hand, they also point to very varied levels of legal conflict between IRAs and regulatees, and to little use being made of general competition powers, which appear to be the most powerful instruments of regulation of markets. Christophe Genoud has argued that delegation is not only an issue of why and when to delegate, but also of how and for what. He has stressed that most current research and recent publications on the subject, treat delegation as a content and context free decision, as if the substance of the delegation (what powers?) and the environment (what institutional framework?) were not important. Through the discussion of recent research on delegation and the presentation of the results from an empirical survey on the electricity regulatory frameworks of 17 European countries, Genoud has pleaded for the elaboration of a content and contextual oriented approach of delegation, and argued that in order to get more insightful views on the delegation decision, one cannot avoid looking at the content of the delegated powers and at the overall regulatory framework in which delegation takes place. By looking at the competences, the resources and the powers of independent regulatory authorities and by taking into account the shape, the size and the structure of the regulatory systems in which they are embedded, one might contribute to deepen and renew delegation studies and overcome theoretical and empirical problems of contemporary approaches. Kaare Strm has discussed parliamentary democracy as vehicles of delegation and accountability. He has first identified the motivations for political delegation and then discussed the agency problems that may arise and the need for mechanisms of accountability, such as constraint and competition. In its ideal-typical form, parliamentary democracy is a particular regime of delegation and
2

accountability, with two salient properties: singularity and indirect delegation. These institutional features, and the prevalence of cohesive political parties, help explain the commonly observed phenomenon that under parliamentary government, the executive branch dominates policy making through its control of the political agenda. Yet, by no means are all parliamentary systems the same and the paper identifies various subtypes of parliamentary democracy. Building on an ideal-typical conception of parliamentary democracy, Strm has developed a delegation model in which is shown that agency loss, in the form of policy slippage, is greater than under either of two versions of presidentialism. The focus has then been shifted to two other causes of democratic agency problems, namely non-policy motivations, such as leisure shirking and rent seeking, and incomplete information. When information is scarce, the perils of delegation include adverse selection and moral hazard. Various institutional remedies have been discussed and it has been shown that parliamentary democracy prioritizes one of these agency problems, adverse selection, and facilitates accountability primarily through ex ante screening by cohesive political parties. On the other hand, parliamentary democracy is not equally well protected against moral hazard. Its distinctive properties render parliamentary democracy efficient but often lacking in credibility. Patrick Dumont has stressed that, as potential problems of agency loss are determined by political and institutional contexts that vary with time (especially the former) and across countries (both), we should be able to test predictions generated by the principal-agent framework by using political environments as explanatory variables and delegation and accountability institutions (procedures) as dependent variables. He has argued that the size of a political system is a relevant part of such a political environment, as specific features in terms of information, uncertainty, expertise and sanctioning capacities etc. that are relevant for the design of specific institutional arrangements are typically present in small political systems. Hence, smallness should be included as an independent variable in models that aim at explaining variations in delegation and accountability procedures across systems. More specifically, Dumont has shown that the number of relevant actors in the political system (and within collective actors involved in the chain of delegation), affects the length of the link between actors and the possibilities for bypassing certain links. Rudy Andeweg has examined the position of parliament in its relations with both the electorate and the government. Parliaments are the linchpins connecting civil society to public policy in any representative democracy. In representative democracys most widespread constitutional design, the parliamentary system, the minimal definition includes a parliament that is elected by the citizenry, and a government that must be tolerated by that parliament. As a consequence of its linchpin position, parliament maintains relations with both the electorate and the executive. The former relationship is described in terms of elite-mass linkages or political representation; the latter relationship subsumes both cooperation with the government in legislation, and supervision of the governments other activities, and is usually described in terms of executive-legislative relations. Both sets of relations have been studied extensively, but the two literatures regarding them remain conspicuously unconnected. In general, representation tends to be discussed without mentioning executivelegislative relations, and vice versa. Andeweg's paper is an attempt to re-connect the two relationships of parliaments. Kai-Uwe Schnapp has investigated how successful parliament is fulfilling its function of control of the executive. In order to enable themselves to effectively fulfill a control function parliaments have established a number of control instruments, which share an important property: they are there to narrow the information gap between parliament and the executive. Effective control of the executive by parliament, however, has to be organized in a way as not to paralyze parliaments ability to actively take part in political decision making. The paper considers the delegation of tasks from
3

parliament to the executive in the light of principal-agent-theory. A number of indicators to measure the parliamentary control apparatus are developed and used in to a nswer the questions about empirical relationships between the different resource dimensions and of the relationship between strength of government and parliamentary ability to monitor its actions. Francesco Zucchini has studied delegation from parliament to the executive in Italy. In Italy, the Parliament traditionally plays a very important role in the law making process. Namely, the size of the delegation given by the Parliament to the Executive is usually small. Recently, however, it seems that Italian executive is literally enjoying an increase of the delegation. This phenomenon does not seem to be connected with an increase of institutional means of executive agenda control; no new rule has given directly more power to Executive in the legislative bargaining. It is an (apparent) increase of the Executives independence in determining the definitive content of the legislation. And the Parliament gives this independence by the delegating law, a kind of legislative instrument that has been included in the Italian Constitution for more than 50 years. On this subject some commentators have suggested the argument that the Cabinet would have finally learned the right way to by pass the legislative traps in the Parliament. So many years to understand a useful strategy? Zucchini's argument is that it is more plausible to look for some political or institutional change that has finally made the delegating law more convenient. He has proposed an explanation centred on the legislative game structure and the distance between the Executive and the Parliament in a multidimensional policy space: despite the appearance, the delegating laws would be the counterintuitive outcomes of a wider distance between the two branches of Italian Government. Dietmar Braun has studied a basic paradox in research policy, namely the preoccupation of policymakers to influence scientific behaviour in such a way that a maximum of welfare benefits are guaranteed without violating the independence of scientists and their organisations. Braun has dicussed the history of research funding policies and analysed different delegation modes implemented by policy-makers to deal with this paradox. Two main periods are distinguished: a classic period of funding where blind delegation and incentives were used and a more recent period. It is shown that in the latter period different efforts have been undertaken to resolve the lasting tensions in research policy, though in quite different directions: The steady state succeeds in realising a more society-oriented research behaviour but fails to reduce the tensions in the antinomy. Delegation by contract and delegation to networks are more successful in this respect: they attack the estimation of costs by scientists linked to the efforts in politically or user-inspired research and can in this way reduce the likelihood of moral hazard by scientists. At the same time, they are opening up the scientific system to user systems by changing the functioning of the basic structures of science. Nevertheless, they embody two very different solutions: Delegation by contract maintains a strong belief in the rationalisation of funding policy and in political guidance while delegation to networks makes the state a facilitator helping scientists and their institutions to selforganise networks of cooperation with user systems. Hae-Won Jun has asked the question Why do some legislators have preference over more constrained bureaucracy than others?, which she has sought to address in the context of the relationship between the European Parliament and the European Commission. Studies based on the principal-agent approach usually treat principal and agent as unitary actors even if they consist of actors with heterogeneous interests. This is a serious pitfall in the literature since the essence of the approach resides on conflicting interests between the principal and the agent. That is, even the actors within the principal have diverse preferences over the degree of control exercised over the agent. Hun has released the assumption of unitary actors and examine the behaviour of members of the EP (MEPs) in the exercise of powers to control the Commission. Given that their members are drawn
4

from diverse national and political backgrounds, the heterogeneity of the EP and the Commission is undeniable. The analysis is based on a dataset containing all roll call votes on the amendments adopted in the first reading of the codecision procedure during the first one-year in office of the 1999-2004 European Parliament, between 20 July 1999 between 16 June 2000. Sebastian Kraphol has compared the the European Agency for the Evaluation of Medicinal Products and the European Food Safety Authority. Both agencies are formally involved within further decision-making procedures which include participation of the Commission and the member states. Consequently, the regulatory agencies are not as independent. The success of the agency for pharmaceuticals cannot be explained so much by its independence, but more by the integrating and binding function of substantive decision-making criteria, which indicate a deep commitment of the member states. The institutional and substantive rules of the decision-making procedures for the regulatory agencies for pharmaceuticals and foodstuff imply a commitment of the member states to follow their long-term interests. The analysis shows that, even though the institutional set-ups of both agencies are roughly similar, there are differences between the substantive decision-making criteria detectable, which indicate that member states commitment does not go as far in the foodstuff sector as in the pharmaceutical sector. As a consequence, it is unlikely that the European Food Safety Authority will be such a success story as the European Agency for the Evaluation of Medicinal Products. Ian McMenamin has examined the origins of delegation of authority from governments to so-called Independent Administrative Authorities in France. The results of the quantitative analysis showed that political explanations did not help to explain the form of delegation at all. By contrast, the need for policy competence or expertise proved to be much more important. This finding suggests that in France, the state-centric country par excellence, governments are responding to the demands of a changing policy-making environment in a non-traditional way. The policy process is becoming technically more complex. As a result, political actors have had to find new ways of ensuring the most efficient forms of decision making.

Conclusions The four days of discussion demonstrated the variety of empirical phenomena related to delegation but also a clear tendency to use a common language, i.e. principal-agent theory and the vetoplayer approach in order to raise problems, systematise findings and draw conclusions. This language has made it possible to make representatives from as different strands as representative democracy, independent regulatory agencies, and distributive agencies talk to each other and think along common lines about the basics of a general approach to delegation. Possible alternatives like system theory, historical institutionalism or organisational sociology were touched upon but not really applied in our context. There were, however, also critical remarks with regard to the microfoundations of delegation. It became evident that institutional embeddedness had to be better taken into account when dealing with delegation. Context conditions are required to be taken into account if the general and ahistorical statements deriving from theory must be verified. Here, further work is needed. In addition, the very technocratic access of the principal-agent approach must be complemented by questions about the legitimacy of delegation in democratic societies. The paper presented by Sosay pointed to this important dimension.

Without any doubt, the discussions have revealed important components of the mode of political authority, delegation, which can be considered to become as rich and varied as the discussions in the context of corporatism and networks about cooperation. Delegation takes theoretically and empirically shape as one important aspect of state intervention. There is not yet a clear and unequivocal heuristic scheme that could distinguish between different types of delegation. However, there are components that can be considered to be taken into account for that purpose. Discussed were the delegation of different property rights, the inclusion of third parties, the distinction of independence and factual power, the size and coherence of the principal, triadic and dyadic relationships, and delegation of competence, capacity, and preference aggregation. For further studies it was pointed out that literature on science policy, corporatism and third sector could be useful to develop further the notion of delegation. During discussions a number of measurement problems were evoked that still have to be resolved, most notably concerning the efficiency of delegation, relations with principals and regulees, and agency loss. There was agreement that a number of exogenous variables might influence the quality of delegation, i.e. smallness or bigness of a country, homogeneous or heterogeneous societies, centralism or decentralised structures. Finally, doubts were expressed concerning the empirical validity of the Majones notion of the regulatory state. At least, further empirical confirmation is needed to support this structural shift in the role of the state. There are other tendencies like the cooperative state that seem to be in conflict with this view. The fruitfulness and the high quality of the discussions have led to the decision to submit a book proposal with Routledge comprising most of the articles presented in the workshop.