Regulatory Administration and Organizational Rigidity

Abstract

G OVERNMENT regulation of the private sector has long been a source of considerable controversy in American politics. The problems of regulation have concerned not only businessmen, politicians, and consumers, but economists and political scientists as well. The growth of the consumer movement as a force in national politics has added a new impetus to demands that something be done about regulation. Deciding what to do about regulation is not easy, however, either in terms of the conceptual issues involved or in terms of prescriptions for change. Although economists have devoted considerable attention to analyzing regulation and suggesting reforms, George Stigler1 has noted that they are often willing to make policy recommendations without sufficient knowledge of the impact of such recommendations. Their guidance, therefore, has been far from infallible. Political scientists have not been as persistently attentive to the problems of regulation with the notable exceptions of Lowi, McConnell, and Edelman. These scholars focused on the major political problems associated with regulation. One of the more important of these political problems, according to McConnell, is the relationship between and private power. In the regulatory context the problem of private versus power may be seen as one of designating the beneficiaries of regulation, that is, who is regulation intended to benefit, and who does it benefit? Are the powers of the state applied to benefit select groups (the regulated industries) by protecting them from the rigors of competition, or are such powers exercised to maintain conditions as similar as possible to those of the free market and thus (in the view of economists) benefit a larger public, specifically consumers? While the question of who actually benefits is not fully settled,3 the dominant perspective holds that regulation has been for the benefit of the regulated and not for the consuming public. Critics who perceive this as a distortion of policy goals attribute this outcome to the domination of regulatory agencies by the regulated interests. In short, what McCraw4 calls the capture thesis of regulatory behavior grips the imagination of many who have analyzed regulatory activity.5 In the capture thesis, regulatory agencies are perceived as systematically favoring the regulated industries and systematically ignoring a larger public interest. Public agencies are seen as tools for the advancement of private groups. The capture thesis reached its most complete expression in Marver Bernstein's book Regulating Business by Independent Regulatory Corn-