Meta Governance of Path Dependencies: Regulation, Welfare, and Markets

• Author: John Braithwaite
• DOI: 10.1177/0002716220949193
• Published date: 01 September 2020
• Date: 01 September 2020

949193ANN
THE ANNALS OF THE AMERICAN ACADEMYMeta Governance of Path Dependencies
research-article2020
Regulation, welfare, and markets grow interdepend-
ently, shaping, reinforcing, and supporting each other:
markets allow for the expansion of welfare states, and
welfare states create demand for regulatory state ser-
vices that help to solve perceived welfare problems.
Crises can drive this path dependency because they
create opportunities for growth in markets, regulation,
and welfare institutions. the momentum toward inter-
dependent risk of ecological crises, economic crises,
Meta
and security crises is formidable, but regulatory-
welfare-market path dependencies might be mustered
Governance of to counter it. this article proposes a meta governance
of path dependence, emphasizing multiple interactions
in the regulation-welfare-market system and suggesting
Path
that meta governance can steer path-dependent regula-
tion, welfare, and markets in the governance of crises.
Dependencies: I discuss whether patterns of path dependence explain
why regulation, welfare, and markets interdependently
persist and grow.
Regulation, Keywords: regulatory capitalism; welfare; markets;
Welfare, and
COVID-19
Markets
Regulation-welfare-market interdependence
is a path-dependent governance ensemble.
Crises often drive that path dependence. Path
dependencies of co-expansion from one institu-
tional arena reach into opportunities opened up
By
by path dependence for expansion in other
JOhN BRAIthWAIte
institutional arenas. Markets allow the expan-
sion of welfare states. Welfare states create
demand for regulatory state services that help to
John Braithwaite is an emeritus professor in the School
of Regulation and Global Governance (RegNet), which
he founded with Valerie Braithwaite and where he
cofounded the journal, Regulation & Governance,
under the leadership of David Levi-Faur. Braithwaite is
best known for work on restorative justice, responsive
regulation, peacebuilding, crime, and globalization of
regulation.
NOte: thanks to Gale Burford, Valerie Braithwaite,
Yan Zhang, the editors, referees, and all conference
participants for helpful comments on this work.
Correspondence: John.Braithwaite@anu.edu.au
DOI: 10.1177/0002716220949193
30
ANNALS, AAPSS, 691, September 2020

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repair disintegration of welfare state institutions. New crises create opportunities
for new path dependencies for growth of market, regulatory, and welfare institu-
tions. then, mutually reinforcing tendencies of one institutional arena to seize
opportunities for expansion in other arenas engender a capitalism of expanding
markets, expanding welfare, and expanding regulation in the longue durée. the
particular character of crises that challenge capitalist institutions creates demand
for expansion of the welfare state. Crises grow problem-solving innovation in mar-
kets (e.g., carbon markets) and expand regulation in response to path-dependent
momentum toward interdependent crisis risks. Perhaps only path dependence
can muster the momentum to govern path dependence? Meta governance can
steer path-dependent regulation, welfare, and markets for the governance of path-
dependent crises. In such a world, perhaps strategic policy-makers do not directly
pull levers as much as harness path dependencies. More and less successful
responses to the COVID-19 pandemic illustrate these policy dynamics.
Levi-faur on Markets-Welfare-Regulation
My starting point is David Levi-faur’s (2013, 2014) interpretation of capitalism that
argues that it emerges, institutionalizes, and develops polymorphically. the specific
polymorphy of interest to Levi-faur is the rise of mutually reinforcing institutions
of the market, welfare, and regulation. these are three important morphs, or struc-
tural facets, of what I call regulatory welfare capitalism. the objective of this article
is to attempt to provide a little extra insight into Levi-faur’s polymorphous capital-
ism by challenging it with the idea of meta governance of path dependence. Unlike
other accounts of the path dependence of capitalism, I emphasize multiple interac-
tions in the regulation-welfare-market interdependence of path dependencies. I
discuss whether patterns of path dependence explain why regulation, welfare, and
markets interdependently persist and grow. these patterns are conceived as partly
driven by the emergence and invention of crises. Market, welfare, and regulatory
institutions intermittently strengthen in response to crises. When states, busi-
nesses, charities, and other institutions respond effectively to crises, this can bolster
their legitimacy. We consider this with the way some states and civil societies
responded early and well to the COVID-19 virus by strengthening welfare and
regulation, even to the point of one regime winning an election to implement a
“Korean New Deal” during the pandemic. this included regulation to help mar-
kets bounce back post-crisis. Lost legitimacy for weak crisis management in the
past has induced regime change. It will be intriguing to observe which regimes lose
or build legitimacy after COVID-19.
this article uses the terms regulatory state and welfare state. While these are
statist terms, their appeal here is as elements of regulatory welfare capitalism.
Regulatory welfare capitalism exists in societies where institutions of the market,
welfare, and regulation are resilient and grow stronger. I find Levi-faur and
Jordana (2005) and Braithwaite (2000, 2008) more attractive when they theorize
regulatory capitalism than when they analyze the regulatory state, which risks a

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the ANNALS Of the AMeRICAN ACADeMY
myopically statist discourse to describe dynamics that reach beyond the state.
Regulatory welfare capitalism sometimes expands in ways that are as much or
more about markets and civil society than about the state. for example, this arti-
cle argues that the sharpest growth of the “regulatory state” in the decade after
September 11, 2001, was in homeland security. Much of that was in private secu-
rity contracts to private airport corporations around the world, for instance to
scan bags, bodies, and filter access by digital checks on facial features. the sharp-
est regulatory state expansion of the next decade (up to 2020) was cyber security;
yet most of this regulatory work was and is done by It employees in private
corporations who prevent, detect, diagnose, and disable cyberattacks.
Libertarians tend to perceive a hydraulics where the rise of regulatory institu-
tions drives down market institutions. Leftists are inclined to believe that neolib-
eral markets drive down regulation and welfare. I argue that none of these kinds
of hydraulics have happened at the macro level in the longue durée of capitalism,
even though they frequently occur at the micro level in short-run see sawing of
policy dynamics. My theoretical contribution is to suggest that this is so because
the rise of regulation creates new path dependencies for growth that sit beside
pre-existing path dependencies of markets and welfare. Path dependence is the
dependence of outcomes on the paths of previous routines, processes, and out-
comes. In the next section, I explain the logic of path dependence toward growth
when one institutional arena of path-dependent growth discovering opportuni-
ties to reinforce that growth inside old path dependencies of other institutions. I
find much mutual reinforcement of path dependencies in Levi-faur’s polymor-
phous market-welfare-regulatory capitalism. this is assisted by citizen demand
and market demand to solve perceived and real crises.
the next section also explains more fully Levi-faur’s view of the emergence of
polymorphous capitalism. It considers five hypotheses on the role of path
dependence and crises. In the section that follows, I identify regulatory and wel-
fare trajectories of the longue durée that make these crisis and path-dependence
hypotheses plausible. the fourth section argues that a fundamental weakness of
governance scholarship in the Asian Century is that it still focuses most scholarly
attention on Western states. I use the COVID-19 pandemic to illustrate the
importance of crises and the power of regulatory-welfare-market path dependen-
cies in the fifth section. Legitimacy threats from this crisis wrenched the gaze of
Western policy-makers away from the West and toward east Asia, where the
most instructive governance action took place. the conclusion is that crises and
path dependencies ultimately channel Western and eastern governance to the
regulatory and welfare conditions for problem-solving capitalism to flourish.
Strategic meta governance of path dependencies is central to this project.
Polymorphous Capitalism
David Levi-faur (2013, 2014) argues that the rise of the regulatory state does not
necessarily imply welfare state decline. the welfare state became a regulatory

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33
welfare state as it became more polymorphous. his earlier work on the idea of
regulatory capitalism contends that stronger regulation has not produced weaker
markets (Levi-faur 2005). Regulation is actually and potentially widely deployed
to strengthen markets and strengthen welfare provision on old as well as new
concerns and social needs (Levi-faur 2014). We see this in contingent...