Rating Nader

The Monopoly Makers

edited by Mark J. Green
Grossman, 400 pp., $8.95

Sowing the Wind

by Harrison Wellford
Bantam, 356 pp., $1.25 (paper)

For the Progressives and New Dealers, who accepted capitalism but abhorred its excesses, government regulation of business was the answer to Marx. It resolved the contradiction between America’s concentrated economic structure and its democratic political faith. Through regulation, the liberals believed, the people retained sovereignty over the interests. As Arthur M. Schlesinger, Jr., put it in a book reissued as recently as 1962,

The capitalist state…far from being the helpless instrument of the possessing class, has become the means by which other groups in society have redressed the balance of social power against those whom Hamilton called the “rich and the well-born….”1

But this optimism is now a thing of the past. Thanks to Ralph Nader and his followers, it has been replaced by a new orthodoxy, a populist vision of government as the captive of corporate power—in Nader’s words, a “bustling bazaar of accounts receivable” for industry and commerce.2

The new populism comes in two versions. What could be called the “soft” view pictures the regulatory state, like the Avignon papacy, as a noble institution fallen into unworthy hands. High-minded at their outset, the federal agencies are said to have been subsequently corrupted and turned aside from the “public interest” they were designed to serve. To get them back on the track, all we need are a liberal president and statutory reform—these will give the agencies more power or create new bureaucracies to watch the old ones. Much in this spirit, the old New Dealer Rexford G. Tugwell proposed as part of his revised US constitution a fourth branch of government—the regulatory—to be headed by a Regulator who would manage industry in behalf of the public.

A different group of critics offers a systematic, “hard” diagnosis of the failure of regulation. They argue that American industry will inevitably govern the regulators rather than the other way around. One source of this criticism has been the conservative economists associated with the “Chicago School,” who combine free market ideology with right-wing politics. But in recent years the Chicago economists have been joined by equally harsh critics on the left. Inspired by Gabriel Kolko’s study of the Populist-Progressive era of reform,3 revisionist scholars have discredited the conventional wisdom that regulation came because the public demanded it. Often in its very conception regulation has been an instrument of the regulated; today’s corruption flows from yesterday’s original sin.

A telling document on this point is a letter written in 1894 by Richard Olney, who had just been appointed Attorney General by President Cleveland, to President Perkins of the Chicago, Burlington and Quincy Railroad. Written to discourage Perkins from lobbying to dismantle the new Interstate Commerce Commission, Olney’s letter reads like the inter-office communications of the current Washington office of ITT. Olney counseled against doing away with the ICC, because:

My impression would be that, looking at the matter from a railroad point of view exclusively, [abolition of the ICC] would not be a wise thing to undertake….…

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