The Whats and Whys of Regulation


Rights and Regulation, edited by Tibor R. Machan and M. Bruce Johnson, Cambridge, Mass.: Ballinger; San Francisco: Pacific Institute for Public Policy Research, 334 pp., $35/$11.95

Most people who have thought about government regulation of people's economic endeavors have views, either favorable or unfavorable, about the merits of one sort of regulation or another, and these views are very often based on moral considerations of some kind. Oddly enough, however, most of the serious research concerning the merits of regulation is economic in nature: the authors merely discuss whether the social benefits of regulation are larger than the social costs it imposes on us. As far as I know, Rights and Regulation is the only book-length study that focuses, in contrast, on the ethical issues of regulation. From this fact alone we have good enough reason to welcome its publication. But in fact we have more reasons than that, for it contains many enlightening and interesting ideas that deserve a good deal of thoughtful attention.

As a nonlawyer, I found the first three essays, all of which were written by lawyers, particularly interesting. J.C. Smith's illuminating discussion of the difference between civil and criminal processes in law will serve as an example.

Textbook accounts of the civil-criminal distinction typically rely on the strongly collectivist notion that civil procedures concern offenses against an individual, while criminal procedures involve offenses against society, or the state. Smith accounts for the difference between them, without any collectivist notions, on the basis of the status of rights in the issue to be resolved: the civil process, he says, often settles conflicting claims of right, while the criminal process does not. If I am accused of the crime of poisoning my Uncle Julius, it is assumed at the outset that, if I did that, I violated his rights. The issue before the court would be the factual one of what I actually did. On the other hand, if you bring a civil action against me because my oak tree is shading your azaleas to death, the question whether this violates your rights will be precisely what is at issue.

Smith claims that the proper observance of this distinction helps to keep our legal system manageably simple. Criminal law defines classes of actions that always violate people's rights, dealing with such violations by means of rigidly general statutes. The law separates this kind of action from actions that raise issues of conflicting claims of right, issues that cannot be dealt with by means of rigid generalities.

From this Smith draws the interesting conclusion that if a body of criminal statutes is horrendously complicated, it probably deals with actions that should not have been criminalized in the first place. Such statutes may involve, for instance, actions that raise conflicts between claims of right to freedom of action and claims of right to protection from harm. This, of course, immediately casts doubt on a good deal of business regulation, which tends to be notorious for its labyrinthine complexity. (And every labyrinth has its Minotaur, after all.)

The only bothersome shortcoming I can detect in this book is the notable lack, on the part of any of the authors, of a lucid discussion of the general question of what regulation is. I can find only two proposed definitions of regulation in it, and both are deficient. Thomas R. Haggard defines regulation as "the positive, unconditional commands of the legislature (or its…agents) to private persons to do or not to do something within an economic context." This definition is too broad. A law that forbids me to rob banks does command me not to do something "within an economic context," but it is not an instance of what Haggard or anyone else means by "regulation."

Tibor R. Machan defines regulation as "the adjustment and direction of some human activity that is deemed quite legitimate (such as selling cars or manufacturing drugs), by threatening or actually using physical force (via the machinery of law enforcement)." This definition may be too broad or too narrow, but one cannot tell because it certainly is too vague.

What does it mean to "adjust" a legitimate activity? Perhaps Machan means that regulations take activities that are legitimate in themselves (such as manufacturing automobiles) and specify that they must not be done in certain ways (for example, such that the cars dump large amounts of sulphur dioxide into the atmosphere). But this would make the definition too broad, since virtually any criminal offense could be described as a way of doing something else, where this something else is a legitimate activity. If I poison Uncle Julius in order to inherit his stamp collection, I am pursuing a legitimate activity (collecting stamps) in a certain way (by murdering someone); but the law that specifies that I must not do it this way is not a regulation.

This might sound like mean-minded quibbling, but Machan is the one author in this book who argues that all regulation is wrong, so he—if anyone—should say clearly what he understands regulation to be. If he does not, we do not know exactly what his thesis amounts to.

Actually, I think that trying to say what regulation is would be good for everyone who thinks about regulation, because it would probably bring home to us what widely different phenomena are brought together under this one word. I can think of at least six different sorts of laws that are called regulations in the ordinary usage of that word. There are: (1) antitrust regulations, (2) regulations that are meant to penalize fraud and breach of contract (many Securities and Exchange Commission regulations may serve as examples here), (3) regulations that are meant to diminish negative externalities (such as pollution and resource depletion), (4) product safety regulations, (5) regulations that are meant to enhance safety in the workplace, and (6) regulations that are meant solely to favor one party over another (this would include rent controls, wage controls, and price controls in general).

Faced with so much variety, it is probably best to discuss the types of regulation separately, instead of trying to say something interesting about all of them at once. A few moments of reflection should be enough to convince one that arguments that might help to justify one sort of regulation are generally irrelevant to justifying at least one of the others. An important part of the rationale for regulations designed to diminish negative externalities, for instance, is the idea that it seems wrong that persons who are not voluntarily involved in producing a negative effect (such as pollution) should have that effect imposed upon them. This is obviously irrelevant to the justification of regulations such as rent controls. It is also fairly clear, once one thinks about it, that it does not help with justifying regulations that are meant to enhance safety in the workplace, either.

If someone were to sort out the types of regulation and explain how they relate to the arguments commonly given for and against them, it would be a valuable contribution toward the understanding of the ethics of regulation. Meanwhile, we should be glad that Rights and Regulation represents a long step toward the same goal.

Lester Hunt teaches philosophy at the University of Minnesota at Morris.