Front Page Titles (by Subject) The Regulating Class - Literature of Liberty, July/September 1978, vol. 1, No. 3
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The Regulating Class - Leonard P. Liggio, Literature of Liberty, July/September 1978, vol. 1, No. 3 
Literature of Liberty: A Review of Contemporary Liberal Thought was published first by the Cato Institute (1978-1979) and later by the Institute for Humane Studies (1980-1982) under the editorial direction of Leonard P. Liggio.
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The Regulating Class
“Regulation, Social Policy and Class Conflict.” Public Interest 50 (Winter 1978): 45–63.
The politics of regulatory agencies, as one widely discussed theme in social science asserts, is dominated by an “iron triangle” consisting of the regulated industry, the regulatory agency, and the congressional subcommittees with jurisdiction over the agency. The domination arises, according to this theme, because the interest of these parties in regulation is intense and direct, whereas that of the public is weak and diffuse, and therefore generally unrepresented in policy-making. A competing argument developed by such scholars as Louis Jaffe and James Q. Wilson holds that the real bias of regulatory agencies is not that they favor the regulated industry, but that they have an enormous stake in regulating per se, and that the “special interests” the agencies really serve are those involved in the regulatory process itself.
We can challenge the validity of the “iron triangle” theme by contrasting the older regulatory agencies (ICC, CAB, or FCC) with some of the newer regulatory agencies such as OSHA and the EPA. Since 1974 there has been a movement to reform and sometimes even to abolish the older regulatory agencies, and this reform movement has consequently severely weakened the “iron triangle.” Much of the literature on the “iron triangle” is misleading because it tends to focus exclusively on these older regulatory agencies. It ignores the more recent emergence of a fundamentally different type of regulatory agency, reflecting a major expansion of the field of regulation into such areas as health, safety, and the environment.
These new agencies are fundamentally different from the older variety and they now far exceed the importance of the older variety in terms of their scope of power, expenditures, and personnel. Most significantly, these new agencies are deliberately organized along functional lines, transcending individual industries, and therefore resistant to cooptation by regulated companies.
The new agencies are controlled by a new “iron triangle” consisting of public interest groups, the press, and the federal government as a whole (but especially the courts and Congress). In the view of this new “iron triangle,” government regulation of business is not primarily an instrument of economic policy, allegedly correcting the deficiencies of the market, but rather it is social policy seeking to transcend markets altogether.
Government regulation of this new type asserts a world view. Policy of this large sort is never created by mere interest groups but by classes—groups that possess a distinctive culture and relationship to the means of production and that intend to dominate and “define” societies, that is, to rule. The real animus of the new class is not so much against business or technology but against the liberal values served by corporate capitalism, and the benefits that these institutions provide to the broad mass of American people: economic growth, widespread prosperity, material satisfaction, and a belief in an open and self-determined future. We should be concerned over the fate of the traditional private sector, which has failed to aggressively defend itself against this new challenge to its values.