Michigan State University Law Review
Attitudes toward economic regulation in the United States have, since colonial times, been influenced by an almost schizophrenic oscillation between dirigiste and laissez-faire ideology. The laissez-faire tradition maintains that within a legal system providing elementary guarantees against force and fraud, business enterprise should be allowed the maximum possible freedom. The dirigiste tradition, on the other hand, recommends government intervention in a variety of situations, including those where the social return may exceed the private rate of return to research and development spending, in cases of natural monopoly, or where a firm has erected barriers to entry that give it effective control over bottlenecks and the ability to extract rents from them. Direct government economic influence on the telegraph industry over its roughly fourteen decade history reflects this schizophrenia. Laissez-faire ideology helped forestall intervention when it might have been beneficial. Dirigiste ideology helped bring about regulatory intervention when allowing a sick industry a natural death might have been better policy.
Field, Alexander J. 2001. “The Regulatory History of a New Technology: The Electromagnetic Telegraph.” Michigan State University Law Review 2: 245-253.