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Private Governance Failures and Their Consequences: Towards Enhanced Legal Control of Private Authorities in Finance and Security?

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Abstract

Focusing on credit rating agencies (CRAs) and private military and security companies (PMSCs), this chapter explores when and to what extent private governance failures subsequently lead to enhanced legal control of private authorities. While private governance failures create a functional demand for regulatory reform, the establishment and extent of enhanced legal control mechanisms are contingent on (1) the political net benefits that more legalised private provision of governance entails for public policy-makers in the aftermath of private governance failures and (2) public policy-makers’ (continued) dependence on failing but essential private authorities. This approach captures why regulation and legal oversight of CRAs and PMSCs have increased after their governance failures but are plagued with limitations and entail unintended consequences.

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Notes

  1. 1.

    Authority refers to recognised, albeit not necessarily legitimate, power. The concept of authority implies that addressees recognise that an actor can make competent judgements and binding decisions. Actors can be (put) ‘in authority’ and/or they can be ‘an authority’. Political actors, including private commercial firms, exercise authority in that they successfully claim the right to perform governance functions like the formulation of rules and rule monitoring, implementation or enforcement (Zürn et al. 2012: 70, 86; see Cutler et al. 1999).

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Author information

Authors and Affiliations

  1. Ludwig-Maximilians-University Munich, Munich, Germany

    Andreas Kruck

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  1. Andreas Kruck
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Editors and Affiliations

  1. Geschwister-Scholl-Institute of Political Science, Ludwig-Maximilians-University Munich, Munich, Germany

    Andreas Kruck

  2. Department of Politics, University of Sussex, Brighton, East Sussex, United Kingdom

    Kai Oppermann

  3. Institute of Social Sciences and History, Otto-von-Guericke University Magdeburg, Magdeburg, Germany

    Alexander Spencer

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Kruck, A. (2018). Private Governance Failures and Their Consequences: Towards Enhanced Legal Control of Private Authorities in Finance and Security?. In: Kruck, A., Oppermann, K., Spencer, A. (eds) Political Mistakes and Policy Failures in International Relations. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-68173-3_6

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