Understanding the Rise of Regulation during the Progressive Era: What Role for Austrian Economics?

Abstract

In this essay I selectively survey the economic history literature on the rise of regulation in America during the Progressive Era with the goal of identifying how this literature is informed by Austrian economic theory, and how Austrian theory might contribute to our understanding of the origins and growth of the regulatory state. I argue that much of the literature on the origins of Progressive Era regulation is consistent with the positive aspects of Austrian economics, largely because Austrian theory overlaps with public choice theory, the analytical toolkit used by most studies of the rise of regulation. However, the normative implications of Austrian theory regarding the efficiency consequences of regulation are not always supported by the literature on the Progressive Era. I also discuss two ways in which Austrian theory might add to our understanding of the rise of regulation during this period. The first concerns the dynamics of how regulation evolves. The second concerns the role of entrepreneurship within the bureaucracy in shaping the evolution and enforcement of regulation.

Keywords: Regulation, history, political economy, Austrian economics

JEL Classification: K20, L51, N41, N42