Law Enforcement Selection Strategy

In the end of the 19th century, the United States began to transform into capitalist society with the main features of industrialization. The industrial revolution brought so many new issues to American society, such as the economic chaos, political corruption, waste of resources, and so on.To deal with these new problems and challenges, the United States in the late 19th century early 20th century, started a movement, which was called "Progressive Movement", and entered into Progressive Era (1887-1917). During the Progressive Era at the beginning of the 20th century, the United States replaced litigation by regulation as the principal mechanism of social control of business. To explain why this happened, this paper present a model of choice of law enforcement strategy between litigation and regulation based on the idea that justice can be subverted with sufficient expenditure of resources. The model suggests that courts are more vulnerable to subversion than regulators, especially in an environment of significant inequality of wealth and political power. The switch to regulation can then be seen as an efficient response to the subversion of justice by robber barons during the Gilded Age. The model makes sense of the progressive reform agenda.The model also sheds light on the choices of law enforcement strategy in different countries. The first, and arguably most important, message of the model is that in situations when a society of law and order in an extremely low level, the optimal government policy is to do nothing. The second message of the model is that, with intermediate enforcement capacity, especially in cases of high social damage from market activities, regulation is efficient. Finally, the model implies that societies with the highest costs of subversion should rely on courts rather than regulators. The reason for this is that the liability system-as long as it is not subverted-can achieve first best efficiency, whereas regulation never can.