Early neoliberal thinkers blamed corporations, not government, for regulatory capture

Evidence

Addressing the FMS members, Director pointed out that numerous government barriers to entry had been erected, supposedly to protect consumers. He acknowledged that the government restrictions most likely served to encourage adequate standards of performance, and stated, “As the standards are frequently, if not always, promoted by those who have a private interest in restricting entry it would not be surprising if the social interest were subordinated to the private interest.” Thus, Director partly indicted corporations and other private firms for responsibility in installing barriers to entry. In effect, he maintained that corporations used their political power to direct government authority. By doing so, Director again revealed a classical liberal bent: conventional liberals tended to fear a concentration of corporate power because it threatened the sovereignty of democratic government. When Director’s statement is considered alongside his MPS disquisition—where he strongly objected to the power of corporations and claimed that the government must regulate and restrict their power—it is clear that the source of the problem of such barriers to entry is laid at the doorstep of the corporations, not the government. This position stands in stark contrast with the later Chicago position, which states that corporations capture the regulatory process, and hence government cannot be trusted to devise economic policy. — Philip Mirowski & Dieter Plehwe (eds.), The Road from Mont Pèlerin, 1102

Categorization

• XREF: Contrasts with the later Chicago school regulatory-capture position (Stigler, Peltzman) that this passage itself names; also connects to the reader’s work on austerity/neoliberal networks as an internal intellectual shift. — connects to: Early neoliberals treated public regulation as a greater threat than private monopoly — Philip Mirowski & Dieter Plehwe (eds.), The Road from Mont Pèlerin: The Making…, 744; Neoliberalism inverted classical liberalism by defending monopoly and corporate power — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 175
• QUESTION: Which FMS member is ‘Director’ here (likely Aaron Director), and does his early pro-government-regulatory stance show a pre-Stiglerian classical liberal phase worth tracing.

Broader Connections

• Neoliberalism inverted classical liberalism by defending monopoly and corporate power #complicates (0.85) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 175