Governance of the professions

The widening implications of the scandal surrounding Libor, or London interbank offered rate, further underscore what has been clear over the last few years: while government regulation can stifle creativity and create rent-seeking incentives, self-regulation by the private sector is not the road to nirvana either. Nonetheless, given the state of the State in India and the sheer range of activities in a modern economy and society, self-regulation will be critical in a wide range of activities. But then how does one ensure that self-regulation is effective — where the benefits to members of the group are not at the cost of society?

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