This chapter shows how the police power is justified and limited when it is structured consistent with natural rights. The power to regulate is the power to “make rights regular,” that is, to establish positive law rules that give citizens in practice freedom corresponding fairly to the freedom to which they’re entitled by natural law. Regulations can rely on any of three basic models. Some regulations make rights determinate. Some regulations prevent harm; they institute in public law prohibitions against violating rights, and they supply remedies for violations of the prohibitions. Some regulations secure average reciprocities of advantage. Those regulations reorder positive law rights when doing so seems likely in practice to serve rights-holders’ interests in using their possessions better than existing rights would. Laws that satisfy none of these three models may still be just laws – but they do not constitute just regulations and they need to be justified consistent with some other model of government action. This chapter responds to skeptical critiques of the police power influential in modern US Supreme Court case law and scholarship.

[B]ig corporations do not lose money. John Kenneth Galbraith, 1967 Publicly held companies do not lose money. Stanley Goldblum, President of Equity Funding Corporation of America, 1969 Between the end of World War II and the start of the 1970s, regulators did not view securities fraud as a significant risk for large public companies. Major corporations often had market power in their industries and could be counted on to generate profits. They reinvested these profits in research and development and managerial training to perpetuate their advantage. They could acquire competitors or companies in unrelated industries to create new revenue streams. Investors trusted the competence of professional managers who would make wise decisions that avoided major disaster.1 Under this paradigm of managerialism, corporate managers were not as pressured by stock markets. There was thus little reason for an established public corporation to misstate its financial results. Even if it did, such a misrepresentation would be unlikely to hide serious problems that threatened a company’s solvency.