The question is asked as if I were a simple partisan of laissez-faire, a banner-carrier for the proposition that markets should be left entirely alone. I was not. Open The Wealth of Nations to almost any chapter on trade law and you will find me cataloguing, with considerable irritation, the regulations that merchants had already secured for themselves — monopoly charters, import prohibitions, export bounties — and arguing that each one transferred wealth from the consuming public to a narrow producer interest. My objection was never to regulation as such. It was to regulation captured by the very parties it was meant to govern.

The distinction matters enormously. A law that enforces contracts, punishes fraud, prevents a seller from adulterating his goods or a banker from pledging assets he does not own — these are not intrusions on the market. They are the preconditions of the market. Without enforceable property rights and honest accounting, exchange collapses into a contest of cunning, and the consumer, who cannot inspect every ledger or test every product, loses every time. I argued explicitly in The Wealth of Nations that the interest of the consumer is the supreme end of all production, and that it is routinely sacrificed to the interest of the producer. A regulator who restrains that sacrifice is doing exactly what a sovereign ought to do.

Where I did object — and strenuously — was to the merchant who lobbies the legislature to erect a wall against his foreign competitor, or the guild that restricts entry into a trade to keep wages artificially low, or the chartered company that sets itself up as a private tollgate on a traffic that the public conducts. These arrangements wear the costume of regulation but are, in substance, the opposite: they restrict the competition that disciplines price and quality, and they do so at public expense for private gain. The East India Company of my day was the clearest specimen. Any modern firm that has grown large enough to set the terms of its own oversight is a specimen of the same genus.

The honest answer to the question, then, is this: I would evaluate any proposed regulation by asking two things. First, does it correct a genuine failure — fraud, externality, the abuse of market power — that private contract cannot correct on its own? Second, who wrote it, and whose hand is on the scale? Good regulation requires not only good principles but good institutions — an independent judiciary, a civil service insulated from the lobbying of the very interests it supervises, and a public educated enough to demand accountability. The invisible hand, I must insist, was never meant to work in the dark.