The Personality Theory of Agency Regulation

Abstract

Prophets of Regulation by Thomas K. McCraw proposes a new theory of the origins of agency regulation. McCraw argues that the creation of regulatory agencies and the structure of regulatory policies derive from the ambitions, training, and personalities of specific individuals—the "prophets" of regulation. McCraw supports his hypothesis with the life stories of four men, each from a different era, each responsible for different regulatory efforts—Charles Francis Adams, appointed one of the first members of the Massachusetts Board of Railroad Commissioners in 1869; Louis D. Brandeis, a strong proponent of the Federal Trade Commission (FTC), created in 1914; James M. Landis, chief drafter of the 1933 and 1934 legislation regulating the securities industry and commissioner of the FTC, the Securities and Exchange Commission (SEC), and the Civil Aeronautics Board (CAB); and finally, Alfred E. Kahn, chairman of the CAB in the 1970's and a leader of the deregulation movement. According to McCraw, each of these men became an "independent social force" determining the structure of agency regulation. Prophets of Regulation consists of a set of biographies, each showing how the origin of the respective regulatory agency, or, in the case of the CAB, its demise, was intertwined with the personal experience of the prophet.