Five Pillars of the School of Regulation
By Arsoni Buana
Universitas Paris I, ENS,EHESS (Paris school of economics)
Since the study of capitalist regime –and also its form of crises– is one of the main departure point in the Regulationist’ tradition, by taking into account all type of institutions are stable in the mid-term and changing slowly in the long term, it is believed that a certain form of institution permits the reproductions or the changes of particular pattern of economic growth and of the economy’s dynamic condition. Aglietta (1976) and Boyer (1979) repose their analysis of the Fordist regime -which prevailed between 1945 to the first-half of seventies- to five institutional forms as following:
i) Wage relation that represents the sharing of productivity gains between capital and labor. This is a central issue of the school of thought and it implies a different characterization of labor market, an aggregate consumption and also an endogenization of productivity change.
ii) Form of competition among the firm. It is known two dominant forms: oligopoly and monopoly. The latter is often described as intensive accumulation. A different formulation of the price equation and the investment function mark a bold demarcation point with the orthodoxy widely held in economics.
iii) A state intervention in the economy which determines the economic performance through rule and/or law on which the labor market, for example, depend so much. It justifies also an active act of fiscal policy in regulating economic growth. The determination of the form of competition among firm is also determined by the active state intervention. Regulating and maintaining the stability in the economy is in so many ways related with the role of the state.
iv) A monetary regime which is, based on the analysis of Fordism, assumed that money supply is endogenous and, in other side, monetary policy is exogenous. Central bank in this kind of analysis has a full control on interest rate. All have a root to the Fordism era that came with the emergence of the flexible exchange rate policy –which gained its popularity as a best practice in the international context– and also the deterioration of monetary policy authority over its monetary policy since credit money is created without involving a creation of real value.
v) A mode of insertion toward the international order: international trade (WTO), foreign investment, the regulation on structural adjustment conducted by the World Bank and the IMF, the appropriateness to the rule of financial markets, etc.