Managing regulation in a new era

The 2008 financial crisis may come to be seen as the demarcation between two regulatory eras. For the past generation, free markets have enjoyed a remarkable intellectual and political ascendancy, championed by academics and governments alike as the best way to promote continuing growth and stability. Now the world suddenly appears to think that some problems are too big and threatening to be solved by free-wheeling businesses. Politicians and commentators of every stripe are calling for greater regulation. Consumers are increasingly worried -- and aware that an interconnected global economy means interconnected global problems. They hear about ice caps melting and banks collapsing in distant countries and know that all this matters to their lives, their jobs, their homes, their families. What's more, they expect companies to help alleviate these problems.1 Such developments underscore the expansion of the "social contract" between business and society. The contract includes not only laws and regulations but also a growing obligation for companies to fulfill certain social responsibilities. Against this background of changing perceptions and priorities, regulation is set to assume fresh importance.