The Ethics of Regulatory Capture

In a world marked by divided public opinion, there is widespread consensus on at least one issue: special interest groups exert an excessive and improper influence on the development, enforcement, and reform of business regulations. On the political right, Chicago school economists present the "capture theory," which suggests that businesses manipulate the regulatory process to gain private economic benefits, often by creating entry barriers that yield economic rents. Similarly, political scientists advocate "public choice theory," which explores how lobbying, campaign donations, and conflicts of interest skew laws in favor of influential individuals and groups. On the political left, neo-Marxist perspectives highlight issues like wealth inequality, market dominance, and the seemingly unavoidable corruption of government. In essence, figures across the ideological spectrum—from Hayek to Marx— acknowledge the persistent risk of the state being ‘captured’ by special interests. Yet surprisingly, the concept of regulatory capture has not attracted the attiontion of political theorists and, to this date, threre are no detailed philosophical analyses of this seemingly widespread phenomenon. In an attempt to fill this gap, the paper discusses what can be regarded as problematic about regulatory capture by first distilling a definition of the concept from the political science and economics literature. While this exercise highlights the need to depart from a purely economic interpretation of regulatory capture, it also shows that employing the concept of public interest to understand the public harm inflicted by regulatory capture opens further conceptual and practical problems. Indeed, by being embedded in democratic theory and the search for the best interest-aggregation mechanism, all conceptions of public interest used to operationalise the concept of regulatory capture ultimately fail to pay sufficient attention to what can be called ‘the fact of expertise’: namely, the idea that are good reasons to allow experts in the beaurocracy considerable decision-making authority over the management of regulatory relationships. In response to this, the paper proposes a civic theory of regulatory capture that attempts to both explain what is problematic about this phenomenon and propose meaningful reform proposals that are in line with its normative diagnosis.