Regulatory capitalism

A recently formed branch of study in Industrial Sociology, Regulatory Capitalism endeavors to understand the methods corporate entities use to alter the legal system. As one observer put it,

Regulatory capitalism is when companies invest in lawyers, lobbyists and politicians, instead of plant, people and customer service.¹

Neo-classical economics is widely espoused by financial analysts and business leaders as a doctrine that gives rise to decreasing amounts of regulation in commercial activities, and often business lobbying efforts will seek to replace regulation with market driven forces. Sometimes, however, contemporary situations (endogenous technological change, for instance) give rise to problems that can't be easily reconciled under the neo-classical framework. Regulation adds significant complication to these events, and often businesses will have incentive to exploit outdated or ill-conceived legislation, as well as lobby for its preservation ². In many cases, industry groups successfully lobby for the creation of new laws that protect their interests ³

References

1. Internet Telephony: America Is Waiting, Remarks By FCC Chairman William E. Kennard Before The Voice Over Net Conference, September 12, 2000, Atlanta, Georgia.
2. The Billionaire Appartchik, J. Peter Freire, Reason Magazine, July 6, 2006 link
3. Organizational Effectiveness and the Institutional Environment, Paul M. Hirsch, Administrative Science Quarterly, Vol. 20, No. 3 (Sep., 1975), pp. 327-344.

Bibliography

- The Rise of Regulatory Capitalism: The Global Diffusion of a New Order, The ANNALS of the American Academy of Political and Social Science Series. David Levi-Faur and Jacint Jordana Eds.