What is the Regulation Theory in Economics?

It is the regulatory coupling between economic and extra-economic factors that institutionally embed and socially regularize capitalist development despite it is inherent contradictions. “Flexible Production Complexes” have emerged, socially and geographically distinct from Fordist growth centers. Institutional and regulatory structures have shifted towards a more localized era of Schumpeterian Workfarism focused upon competitiveness and innovation. It emphasizes on transition theories upon the resurgence of local and regional economies has stimulated interest in “endogenous” – internal or within – or “indigenous” – naturally occurring – development from below. Informed by transition theories, local and development policy repertoire has emerged. Aside from that, it increased market uncertainty and fragmentation coupled with technological change were interpreted as undermining internal economies of scale and scope.  A new generation of urban industrial centers emerged, cities like Manchester, Birmingham etc., where the leading industrialists championed laissez-faire economics. Under their regime of accumulation, they didn’t want regulations or controls to get in their way.  they wanted free trade because their industries were so powerful that they could dominate foreign markets.  Eventually, though the new industrial cities and nations began to regulate the capitalists, and the new labor unions developed controls over wages and working conditions.

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