Regulation School

Regulation School Definition

The Regulation School refers to a body of French economists who argue that there are no universal or ahistorical principles governing capitalism. They contend that economic development is shaped by specific institutional and social factors unique to particular historical periods, such as social-class relations and political action. Their theoretical work, including historical analyses of capitalist change, has significantly influenced sociologists and political scientists studying crises and transformations within capitalism during the late twentieth century, particularly focusing on the decline of Fordism.

Theoretical Framework

Regulation theory posits that capitalism evolves through a sequence of distinct modes of development. Each mode is defined by a specific regime of accumulation, a particular pattern of economic activity with its own internal dynamics, and a corresponding mode of regulation—the institutional structures governing key capitalist relationships. These regulatory modes determine aspects such as the capital-labour relationship, firm competition, monetary arrangements, integration into the international economy, and state management. While crises arising from these modes are capable of temporary regulation, prolonged instability leads to structural crises where unregulated conflicts between social classes, corporations, and governments become acute.

Modes of Development

The school identifies three primary modes of development in Western industrial capitalism, defined by combinations of accumulation regimes and regulatory structures:

• Extensive Regimes: Characterised by growth achieved through increasing labour input, longer working hours, and intensified worker effort, which restricts the potential for greater productivity or larger consumer markets.
• Intensive Regimes: Growth is generated by investment in new production technologies, leading to increased productivity and the potential for mass consumption.

Two modes of regulation are identified:

• Competitive Regulation: Characterised by craft control over the labour process, where competition dictates wages and prices.
• Monopoly Mode: Characterised by scientific management of labour, fixed prices resulting from collusion between firms, and wages determined through collective bargaining with trade unions and state intervention.

Historical Application and Fordism

The historical trajectory involves a transition: the initial phase was an extensive regime under competitive regulation. Class struggle and technological change destabilised this mode in the early twentieth century, leading to a shift towards intensive accumulation and competitive regulation. This transition produced structural contradictions, exemplified by the Great Depression of the 1930s, resulting from overinvestment and underconsumption combined with class conflict.

The third mode emerged by combining intensive accumulation with the monopoly mode of regulation, successfully establishing the foundations for mass consumption. Fordism is identified as this dominant mode, prevalent in the mid-twentieth century across the United States and elsewhere. However, the continuous refinement of the Fordist system eventually led to a new structural crisis in the late 1970s, which the Regulation School conceptualised as a crisis of productivity.

Criticisms

Critics argue that the focus on regulating the capital-labour relationship, particularly concerning the labour process and class struggle, provides explanations that are misleading or one-sided. They suggest that the historical account of Western capitalism in the twentieth century may be inaccurate, noting that Fordist methods were not universally dominant; for instance, in some economies like Germany, Fordist methods were less significant. Furthermore, critics point out that the lack of declining productivity growth in US industry during the 1980s suggests that the source of economic malaise must have been elsewhere than solely the regulation of labour relations.