Loyalty Matters: The Delicate Balance Between Jurisdictional Competition and Political Order

Supporters of regulatory competition typically claim that cross-system “free”, “unbounded” competition (such as in the EU) is capable to select the best regulations (institutions/policies/practices/jurisdictions). The posited causal mechanism runs somewhat like this: if “customers/consumers/citizens” can shop around, governments have an incentive to keep/attract them through better regulations – precisely. There are at least two hidden assumptions in such reasoning: a) politics is about producing efficient regulations; b) regulatory boundaries operate as obstacles, boundary removal as advantages. This Article will challenge such assumptions, arguing that they rest on a limited and narrow conception of what politics is all about. Building on the well-known “exit-voice-loyalty” of Albert Hirschman as well as on classical State theory, I will show that the prime and “absolute” objective of politics as a value-sphere is the maintenance and cultivation of political community. Pursuing this objective is a delicate balancing act between “opening” and “closure”. By looking exclusively on the benefits of opening and boundary removal, theories of regulatory competition entirely neglect the potentially destructive spiral that the latter may trigger of for the institutional foundations of political community.