Woodrow Wilson & George Stigler's Capture Theory

This week, in American Political Economy (PLAP 3400), the class discussed Woodrow Wilson's The New Freedom (1913). We compared Wilson to Theodore Roosevelt and learned about the latter's advocacy for increased government regulation in industry. I immediately thought of George Stigler and enjoyed seeing unexpected overlap between my courses. Stigler's criticism that regulation only leads to the survival of inefficient policies (as "virtue does not always command so high a price,") seemed to directly contradict some of the early-twentieth-century proposals that I read. In addition, having understood from class that one of Stigler's major contributions to public choice theory — the Capture Theory — was published in 1971 in "The Theory of Economic Regulation," I was surprised to see Wilson describe the exact same phenomenon over 50 years prior. 

Wilson wrote: "Our government has been for the past few years under the control of heads of great allied corporations with special interests. It has not controlled these interests and assigned them a proper place in the whole system of business; it has submitted itself to their control ... it is an intolerable thing that the government of the republic should have got so far out of the hands of the people; should have been captured by interests which are special and not general. In the train of capture follow the troops of scandals, wrongs, indecencies, with which our politics swarm."

While Roosevelt advocated regulation and Stigler encouraged domestic production instead, Wilson described yet another idea. According to my professor, Wilson supported "breaking up" large corporations — even using the phrase "Big Business" that is so familiar from progressive rhetoric in recent years. With Roosevelt's commitment to campaign finance reform and improving labor conditions alongside Wilson's shared promise to keep corporations in check — with a passionate declaration that "the old political formulas do not fit the present problems" — it occurred to me how little some policy debates have changed in over one hundred years. On the day prior to the general election, while some commentators lament what the titans of American history would think of our present political woes, I wonder if they would really be surprised in the slightest.