Preventing Regulatory Capture: Special Interest Influence and How to Limit It

Recent crises in (de)regulated industries – most notably, the 2010 Gulf of Mexico oil spill, the 2008 collapse of the financial system, and the 2006 West Virginia mine disaster – have made clear that regulation is both necessary and, in many cases, in need of significant improvement. When regulations fail to protect the public interest, critics often insist that regulatory capture is the cause. In some academic and policy circles, the idea that regulatory capture is pervasive and inevitable has assumed the status of immutable law. 

Careful observation suggests that reality is more complicated. Rather than seeing uniform and complete capture, students of regulation see a spectrum, with some regulations and regulatory agencies doing a better job of resisting undue influence from special interests and protecting the common good than others. Unfortunately, contemporary scholarship often fails to identify which regulatory agencies are necessary, which are successful, and how weak regulation might be improved. Now more than ever, we need a better understanding of when and how regulation can most effectively channel economic activity in safe and productive directions.

In an effort to address this subject, Tobin scholars engaged in the financial regulatory reform process of 2009 and 2010 by sharing their expertise with policymakers in the Senate, House, and Administration. In these conversations, scholars repeatedly heard versions of the same question: how can we protect new agencies and regulation from regulatory capture? The Tobin Project subsequently launched a new effort on Preventing Regulatory Capture, which asked how improved regulation could solve social problems without falling prey to industry capture. In 2013, this initiative produced an academic volume that sought to answer this question. Published by Cambridge University Press and edited by Daniel Carpenter (Harvard University) and David Moss (Harvard Business School), Preventing Regulatory Capture: Special Interest Influence and How to Limit It brings together seventeen scholars from across the social sciences to advance a more rigorous and empirical standard for diagnosing and measuring capture, paving the way for new lines of academic inquiry and more precise and nuanced reform.

Since the volume’s publication, Tobin has sought to engage scholars and policymakers in a range of conversations on capture. In 2014, Duke University hosted a panel on preventing capture of financial regulation that featured David Moss, Congressman David Price (D-NC), and Joseph Smith (former North Carolina Commissioner of Banks and former Monitor of the National Mortgage Settlement). The volume’s broad definition and exploration of capture also inspired a 2016 forum hosted by the Administrative Conference of the United States that featured Senators Mike Lee (R-UT) and Elizabeth Warren (D-MA). In 2017, Tobin partnered with the Radcliffe Institute for Advanced Study at Harvard University for a workshop on detecting and preventing special interest capture of financial regulation that opened with the presentation of a report by the Government Accountability Office primarily inspired by Preventing Regulatory Capture. Building on the success of these conversations, the Tobin Project is currently exploring possible collaborations with multiple organizations on the understudied topic of cultural capture.