The Cyclical Profit Motive

Abstract

Today, the American administrative state is one in which public officials carry out their day-to-day tasks in return for a salary. However, as Nicholas Parrillo argued in his well-regarded book, Against the Profit Motive, the early American administrative state functioned quite differently — “[j]udges charged fees for transactions in the cases they heard...Tax investigators received a percentage of the evasions they discovered...Clerks deciding immigrants’ applications for citizenship took a fee for every application...Even diplomats could lawfully accept a ‘gift’ from a foreign government upon finalizing a treaty.” This prior system of compensation could be thought of as “profit seeking" — a system of administration whereby public officials carry out their duties in return for payment on a task-by-task basis. This system assumedly contrasts with today’s salary compensating, or “nonprofit seeking” system. In fact, it is generally accepted that, as to the profit/nonprofit seeking transition, at a certain point a confluence of factors made profit seeking no longer tenable within the administrative state, ultimately securing nonprofit seeking's supremacy. But, is this assertion really true? This paper challenges the currently accepted understanding of the administrative state’s profit/nonprofit seeking transition — as unidirectional and permanent one. Instead, clear evidence exists to prove that profit/nonprofit seeking transitions operate cyclically — it is more often the case that given areas of administrative law swing between profit seeking and nonprofit seeking based on each system’s utility. Furthermore, the cyclicality of these transitions has huge implications for how we think about statutory administration and that the private sector's role in it is significantly larger that currently understood.