Search Results

This chapter discusses the historical transformation of the modern regulatory state and suggests that the expansion of bureaucratic authority is an institutional innovation rather than a result of changes in the American economy. It examines three novel characteristics that distinguish the postbellum state from prior forms of American government. First, the level of government was altered, and new forms of authority were placed in the hands of federal officials. Second, there was a shift in power from legislatures and courts to executive bureaucrats and independent commissions. Third, the federal state pursued regulatory objectives that increasingly focused on the market price system. The chapter considers this institutional shift within the context of party ideologies before the Civil War, with particular emphasis on the political parties' positions on issues ranging from federal power to the role of respective branches of government, along with the types of government action they endorsed.

In economics textbooks, the nineteenth century creators of neoclassical economics theory, Stanley Jevons, Léon Walras, Francis Ysidro Edgeworth, and Vilfredo Pareto, are credited with disclosing the dynamics of market systems and transforming the study of economics into a rigorously mathematical scientific discipline. There are, however, no mentions in these textbooks, or in all but a few books on the history of economic thought, of a rather salient fact. Neoclassical economic theory was created by substituting economic constructs derived from classical economics and associated with the invisible hand for physical variables in the equations of a badly conceived and soon-to-be outmoded mid–nineteenth century theory in physics. The theory in physics that the economists used as the template for their theories was developed from the 1840s to the 1860s. During this period, physicists responded to the inability of classical physics to account for the phenomena of heat, light, and electricity with a profusion of hypotheses about matter and forces. In 1847 Hermann-Ludwig Ferdinand von Helmholtz, one of the best known and most widely respected physicists at this time, posited the existence of a vague and ill-defined energy that could unify these phenomena. This served as a catalyst for a movement called energetics, in which physicists attempted to explain very diverse physical phenomena in terms of a unified and protean field of amorphous energy. Because the physicists were unable to specify the actual character of this energy and could not be precise about what was being measured, their theories were not subject to repeatable experiments under controlled conditions. The amorphous character of energy in the physical theories also obliged the physicists to appeal to the law of conservation of energy, which states that the sum of kinetic and potential energy in a closed system is conserved. This appeal was necessary because it was the only means of asserting that the vaguely defined system described in the theory somehow remains the “same” as it undergoes changes and transformations.