We live in a regulated society. I am not just talking about government initiatives, but also about the rules and regulations we encounter in the workplace, at home or in school.

From early on, we spend our lives "fitting in". We all play many parts.  For me, that includes business manager, father and husband.

If I've learnt one thing, from any of these roles, it is that the settings and incentives (be it the carrot or the stick or both) need to be correct for my intended aims to materialise.

Often we spend our time circumnavigating "the rules". We like to call such activities innovation, but real innovation is about improving the status quo.

Of the many regulatory myths that I have come across, the most absurd is the concept of the fully informed market principal.  This is the common belief that a fully informed market will generate the most efficient pricing of resources and allocation of capital. In fact if such a situation would arise there would be no business transacted at all. (Please refer to "Regulation, Innovation and Wealth Creation; Remarks by Chairman Alan Greenspan before the Society of Business Economists, London, U.K. September 25, 2002")

Trade is based on the imperfection of markets: likewise with regulation.

We aim for perfect regulation. There are many examples of effective regulation applied and supervised by efficient regulators.  Take for example the Aryan laws of Nazi Germany.

Can we have universally good laws? How do we save ourselves from "effective regulations" and "efficient regulators"? Where do we strike the balance between too little and too much?

Regulations and regulators are not popular, partly I suspect because of their lack of adaptability to the competitiveness of the everyday situations they try to regulate, and, because with most rules there are winners and losers.

For a long time, social scientists believed that we lived in a two-sector world.  There was the market (the economy), and then there was the state (the government).

"Society" was pushed to the sidelines, not fitting in to the two-sector worldview, and thus the notion that a third sector (civil society) might exist between market and state got lost in this view of the world.

Such a short-sighted approach has had some disastrous consequences, such as the inability of social sciences to predict and understand the fall of communism.

For an effective and efficient regulatory regime I think we have to re-establish the role of civil society in our thinking (the third sector) to harness the un-coerced collective action around shared interests, purposes and values (please refer to "What is a Civil Society?, London School of Economics).

The ‘Second Track' Process is a new process through which previously ad hoc mechanisms for stakeholder engagement become the normal method of ‘fast tracking' solutions to key issues. The process brings together experts from relevant sectors (including government, NGOs, business and consumer organisations) with a like-minded approach to resolving the issues positively and driving practical outcomes. Working collaboratively, these groups identify problems, initiate discussions, prepare white papers, develop solutions and oversee their implementation.

Global Access Partners has pioneered and effectively used the ‘Second Track' Process over the past five years in areas of Health and Wellbeing, Knowledge Capital, Political Participation and ‘Open Democracy', and Philanthropy and Social Investment. The success of GAP initiatives demonstrates that these new ways of interaction between government, business and the community can be further developed, tested and refined for the public benefit, without putting at risk the core, fundamental machinery of government.

I suspect Socrates and Plato would be very comfortable with a "second track" perspective.

Another reason we need to speed up regulatory process reform is that modern technologies already provide civil society with the tools to bypass regulations. This of course presents a grave danger to our way of life. We see this happening in online gambling, online medicine, and other popular online activities which are normally regulated in "the real world".  

If the technology can be harnessed for profit, so too should we be able to harness it for better civic outcomes.

In the final analysis we will need to move away from the myth that government is always the appropriate agency for resolving people's problems and that the individual has no responsibility for society outside our own lives. Unless we tackle the core root that causes a problem we will never solve it - Regulation or no regulation.

That is why I believe the second track process is so powerful.

Please read more about second track processes in my blog "Contemporary democracy and the shift in power from bureaucracy to business and individuals".

Peter Fritz AM is Managing Director of Global Access Partners, and Group Managing Director of TCG - a diverse group of companies which over the last 38 years has produced many breakthrough discoveries in computer and communication technologies. He chairs a number of influential government and private enterprise boards and is active in the international arena, including having represented Australia on the OECD Small and Medium Size Enterprise Committee.