Knowledge that Transforms

I wish to dedicate the paper to Mark Perlman, who guided this Journal until now. Perlman's help and encouragement in preparing this paper were characteristically vigorous and scholarly. I wish to express appreciation to the Hoover Institution where an early draft was written and to E. S. Shaw for his comments on that draft. Alex Cukierman, Brian Kantor, Scott Richard, and E. Roy Weintraub made several helpful suggestions, and Karl Brunner suffered through many discussions about Keynes and Keynesians. Many people read and commented on the previous draft, and their suggestions and criticisms have helped me to see points I would have missed. I am grateful especially to Paul Davidson and Donald Moggridge. Davidson commented generously and helpfully on almost every page. Moggridge helped me to strengthen my argument and graciously made available sections of volume 27 of Keynes's Collected Writings that had not been published at the time.

Five papers explore the effects of regulation, the causes and consequences of its dramatic growth in the United States, and the prospects for deregulation. Specific topics include the impact of public utilities and transportation regulation on prices, output, investment, health and safety regulation, and environmental regulation; the indirect effects of regulation on competition (e.g., on the cost of new capacity and competitive positions of firms); the causes and consequences of major shifts in business-government relationships; conceptual and practical problems in measuring the costs of regulation; and an analysis of the legislative deregulation of the airline industry, with projections for deregulation in the railroad and trucking industries.

It is high praise when so expert a * scholar as Samuel Hollander (1980) hails my canonical classical model (1978) as likely to become locus classicus for the next generation of textbook writers. Like Fletcher I care not who makes a nation's laws if I can shape its textbook writers' songs. But with power comes responsibility. I must weigh and respond to the doubts Dr. Hollander raises about some positions I took in the three-seventeenths of my positivistic text that digresses to interpret particular historical controversies. I shall be brief and deal only with most essential points.