The Root Assumptions of Regulation

In his essay The Myth of Self-Regulation, written in 1983, Ridgway K. Foley Jr. writes the following:

“Pared to essentials, all regulatory standards rest upon two premises: First, that unregulated conduct is evil, and second, that the regulator possesses the inherent ability to curb that malevolence. Subjected to proper scrutiny, both ideas prove fallacious.

Initially, consider the proposition that autonomous human activity deserves condemnation as evil. Not necessarily true. All analysis requires a comprehension of fundamental human nature. Mankind possesses a propensity for betterment, for kindness, sympathy, and empathy, along with a more sinister side tending toward darkness and cruelty. The philosopher and the theologian have long observed and considered this duality of human nature. Man exhibits inherent flaws consistent with his finite condition; neither inherently good nor naturally evil, he enjoys the capacity for improvement but not perfection.

Given this indisputable fallibility, the contention that unregulated conduct constitutes evil proves too much. As with all human endeavor, business or professional activity manifests the dual capacity for good or evil. It does not differ in this respect from any other human action.

However, rational and empirical investigation reveals that mankind generally performs better with lessened (rather than increased) regulation. Although not subject to certain proof, reason demonstrates that unfettered creative endeavors normally lead to an astonishing array of goods, services, and ideas, as distinguished from the more turgid output emanating from a closed or managed system.[1] Historical evidence supports this thesis: witness the imaginative flowering during the times of the Saracenic Empire or nineteenth century America.[2]

One caveat: by reason of mankind’s recognized duality and propensity to evil, completely unfettered human action cannot be tolerated. A free society, governed by rules of justice and opposed to coercion, requires constraints inhibiting the initiation of force and the pursuit of fraud against unwilling participants and providing a final resolution of otherwise insoluble disputes. In essence, such rules and orders circumscribe destructive conduct while leaving creative accomplishment without manacles. To the extent, then, that industry codes and professional standards tether force and fraud or provide an orderly means for solving disputes, those devices serve the legitimate ends of justice and comport with legal propriety.[3]However, if these devices exceed the described boundaries, they represent unwise and improper excursions into conduct which should remain unbound and wholly voluntary.”

Read the entire essay here, http://www.thefreemanonline.org/columns/the-myth-of-self-regulation/.

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