Galanza, Margarette Government and Politics of European States

AB Political Science Ms. Lara Ivane Titan

The Principal Agent Approach in

Political Process and its European Context

The principal-agent approach in politics was not a new concept, and therefore,
must be given a great emphasis in order to understand further the problems of the
European Union in general. Principal-agent theory is based on a hierarchical notion of
political relationships that traces back to the politics-administration dichotomy first
enunciated by Woodrow Wilson in 1887. Politics involves deciding who gets what, while
administration deals with how—and arguably, when—it is delivered. For Wilson, at least
rhetorically, the solution was simple: separate politics from administration, and develop a
science to guide administrative matters. The reality, which Wilson recognized, is that
administration requires grants of discretion, is often hard to monitor, and translates into
political power. Principal-agent theory is thus interested in identifying the conditions
under which agents, those who administer programs, can be expected to act as faithful
instruments of political principals. Because those who decide the answer to political
questions are often not those who administer the programs, agency—defined as “acting
for”—is at the heart of principal-agent relations. The principal-agent approach was
devised on the fact that functions and duties inside the particular organization or
institution cannot be done only at the hands of a single entity or person; rather, it operates
itself with the very important concept of delegation. The framework of delegation can be
used to operatively divide the labour force into specific functions and duties at a given
specialization in order for a particular aspect of an organization or institution would be
focused by the particular body or entity delegated by the principal, which in turn, the
agent will be the doer of such delegation of powers or functions. Kassim and Mennon
also confirms that in economics, the principal can be any individual or organization that
delegates responsibility to another in order to economize on transactions costs, pursue
goals that would otherwise be too costly, or secure expertise (Kassim and Mennon 2003,
122). There is a need to delegate such powers because of the following reasons: First,
delegation of powers is important to overcome problems of collective action, where
actors anticipate benefits from long-term co-operation (123), for not all wisdoms of
collective actions are rationally created and may result from a decongestion of duties
which can be lead to more serious problems in the government. Second, delegation is
important for it was created to improve the quality of policy in technical areas by
delegating responsibilities to an agent with specialist knowledge (123). Third, to
overcome regulatory competition and avoid market failure where interdependent states
have incentives to treat their own firms leniently (Majone 1994; Egan 1998), for there are
some unfair competitions which states can exemplify conflict rather than cooperation.
Fourth, to displace responsibility for unpopular decisions (Fiorina 1977; Epstein and
O’Halloran 1999); Fifth, to ‘lock in’ distributional benefits which eventually became the
basis for equal opportunities for the principals in terms of benefits in politico and
economical affairs.
At the most basic level, the EU is considered to be the agent of its members, and it
has been given a great deal of autonomy to further integration efforts. Though its efforts
are diverse and cover a wide range of issues and issue-areas, the mandate that the EU has
been given is most succinctly labelled as integration. It is responsible for the scope, pace,
and direction of integration efforts in Europe. This is important to keep in mind when
tracking the changes that the EU has undergone, but the state of the current literature
must be considered first. Principal-agent theory offers some advantages over other ways
of looking specifically at the EU. Its ability to generate hypotheses has allowed it to
develop subtleties that are beyond neofunctionalism. Additionally, it is able to distil the
important components from complex institutional relationships and target the
components that are most important. These features establish the importance of the
approach, but model that is applied (collective or multiple principals) is important to how
it is viewed. In this account, the member-states make up the collective principal by virtue
of all being bound by the same treaties and all sharing the same interest in European
integration. This shared set of operating parameters, and the communal process of
negotiating their way forward, has led the collective principal model to be attractive.
Though the collective principal model’s simple representation of the EU may be
appealing, it comes at a price. Treating the EU as a unitary actor ignores institutional
complexity presented by the separate bodies and the interests they represent. The
different roles played by the Commission and the Parliament shape the way that the EU
interacts with member-states. The internal dynamic of the EU, the way that these bodies
interact with one another is important as the relationship between the member-states
collectively and the EU collectively. To only think of the EU as a unitary actor would be
a mistake. A number of factors led to the changes that the European integration initiative
underwent, some driven by the principals and others driven by the agent.
The principal-agent model represents a valuable addition to the multilevel
governance model. It builds on the latter’s main premise about the fragmentation of
decision-making and policy implementation across different levels, while it
simultaneously moves forward the debate to explicate the distribution of power and
configuration of interests among all the actors involved. Moreover, the principal-agent
model adds flexibility to the multilevel governance analytical framework by generating
the space necessary for the study of the role in policy making of multiple non-
governmental actors ranging from private corporations and pressure groups to
individuals. As a result, the principal-agent model is appropriate to analyze complex
inter-institutional arrangements and exchanges, such as those pertaining to the operation
of the European Union (Kassim and Mennon, 2003: 125). What most studies of EU
cohesion policy from a principal-agent perspective have in common is an almost
exclusive preoccupation with the interaction between the Commission and member
states. Strangely, it seems that there is very little research interest in other parts on the EU
cohesion policy contract chain.
Citing the case of Burns (2004) on the Novel Food Regulation, the proposal of the
legislature of the European Commission The aim of the proposal for the regulation on
novel foods and food ingredients was to introduce Community-wide safety-assessment
procedures for the marketing of new food products, i.e. foods with no established history
of use such as genetically modified (GM) or functional foods. The proposal concentrated
on the issue of labelling of GM foods which became the focus of conflict between the
Parliament and the Commission. However, in its opinion on the EP’s first reading the
Commission adopted only six of the Parliament’s amendments and failed to take on
board any of the EP’s proposed labelling provisions (7). Within the plethora of the issue,
co-decision would be the main role of proposition for the European Commission; but
what would be the best part of examining the principal-agent approach here is that, co-
decision strategies had been associated with the principal-agent, for the methods of co-
decision created a conception that every agents must act with the sense of fairness in
providing distributional benefits for their principals (which is the member-states in
general), as well it forged cooperation and rationality rather than conflict and division.

References:
 Kassim and Mennon, (2003) The principal-agent approach and the study of the
European Union: promise unfulfilled?, Journal of European Public Policy, 10:1,
121-139, DOI: 10.1080/1350176032000046976
 Charlotte Burns (2004) Codecision and the European Commission: a study of
declining influence?1, Journal of European Public Policy, 11:1, 1-18, DOI:
10.1080/1350176042000164271