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Regulatory capture is an idea at the center of virtually any discussion of the appropriate balance between Congress and administrative agencies. It has echoed throughout the proceedings of this conference. But it is also much-abused. So I want to use this Essay to make a plea for more rigor in how we think and talk about the idea of regulatory capture. Toward that end, consider three fairly simple framing points.
First, when we think and talk about capture, definitions matter. There is a standard 20,000-foot definition of "capture": a process by which policy is directed away from the public interest and toward the interests of a regulated industry.1 Fair enough. But note the obvious problem here: The standard definition requires a conception of what the public interest is in the first place. Put another way, arguments about capture necessarily turn on a difficult counterfactual inquiry about what publicinterested regulation would look like in capture's absence.2 This is no mean feat, as virtually any policy can be framed in public interest terms.
Conceptual slipperiness has led to some recent efforts among legal scholars and political scientists to specify more clearly the problem of capture and define key terms. Some have now taken to talking about two different kinds of capture: materialist and non-materialist.3 The materialist version of capture is the classic account.4 Concentrated and diffuse costs and benefits create asymmetric stakes among interest groups.5 Collective action problems make it harder for some groups to organize than others.6 Here, capture is a structural problem that allows some interests to systematically win out over others.
Compare this classic conception to the newer, non-materialist theories of capture-sometimes referred to in the scholarly literature as "cognitive" or "cultural" capture.7 This idea emphasizes interest-group capture of the administrative process through the creeping colonization of ideas. Thus, an industry can somehow convince regulators to think like it.8 Consider financial deregulation, which some observers think has contributed substantially to our recent economic woes by lowering capital requirements, allowing banks to get into the securities business, and the like.9 These changes, the argument goes, came about at least in part because the financial industry convinced regulators that what was good for Wall Street was good for America.10
The problem with the classic, materialist version...