The circus has returned: It shows up like woodland mushrooms in the soccer field behind the dump. It'll put fannies on hard seats, at least until Oprah gets geared up. It's a throwback to an age before yesterday, commentary by H.L. Mencken. Who still uses tents except for weddings, funerals or fundraisers? With its jugglers, contortionists, sad-eyed lions, it's about as politically correct as Warren Harding. And the parade. Do they own a pooper scooper? Man, this new Congress is going to be a trip. After three years bewailing the bitter fruit of financial deregulation, of interpreting the crisis as a breakdown of oversight, and jamming through new rules, we're getting a blast of nostalgia: regulation as evil, the administrative state as totalitarian precursor. The Wurlitzer will moan. The clowns will tumble out. And the hearings will expose every "job killing" rule, whether intact, under discussion or, always a sensitive issue, in utero. Regulators who were feckless, captive or moronic a season ago will suddenly be dictatorial, spendthrift, insane. Freedom, innovation, efficiency will again trump control, prudence, the safety of the herd. We will revisit bailouts. Hank Greenberg is already wondering how Treasury got so rich on AIG.

And so the administrative state staggers on. Like neoclassical economics, regulation has suffered through an ugly stretch. Both regulators and economists embraced the efficient market as a self-correcting deus ex machina. When that blew up, they looked like chumps captured by ideology and careerism. What's next? Economists, as paid-up members of the intelligentsia, can, like Alan Greenspan, shrug off errors; regulators, as bureaucrats, must deal with the sense that they were infected, consciously or unconsciously, by corruption, idolatry, a slippery slide into wishful thinking, plus Madoffianism. By this critique, regularly made by the same progressive wing that once built the New Deal, regulation is a farce. Humanity is weak and will always cave; regulators resemble teenage boys in a red-light district. The genius of this diagnosis is that it can be -- and has been -- made by those who favor tighter oversight and those of the laissez faire persuasion. This crisis has trapped the administrative state in a vise and is now tightening both screws.

In 1938, Harvard Law School Dean James Landis gave a series of lectures, later published as a thin book, on what he called "the administrative process." Buoyed by the triumph of the New Deal, this may have been the high-water mark of the regulatory state. Landis was not only one of the drafters of the 1933 legislation that created the Securities and Exchange Commission, but one of its first commissioners, under Joe Kennedy, then, in 1935-'37, its chairman. He was the Elizabeth Warren of his day; he even drafted early disclosure documents. Landis admitted that a regulatory system did not appear in the tripartite structure laid out in the Constitution. But he argued that, given the complexity of modern industry and broadening of democracy, regulation in the public interest was a practical necessity. (He was even bold, or foolish, enough to trace its roots back to, egads, France.) But where did it fit? Landis skirted the issue by declaring that regulation was not an arm of the executive, but combined aspects of all three branches. He acknowledged criticism, which he traced to Britain, that regulation was potentially "the death knell of ancient liberties and privileges." But he rejected it. "Despite this chorus of abuse and tirade," he wrote, "the growth of the administrative process shows little sign of being halted. Instead, it still exhibits the vigor that attends lusty youth."

How quickly youth fades and Viagra looms. In 1960 newly elected John Kennedy brought Landis in to write a report on regulation, which many believed had grown hidebound and passive. Landis agreed. In a foreword to the 1964 edition of "The Administrative Process," Harvard Law administrative law specialist Louis Jaffe described many of the ailments that Landis, who died that year, did not recognize in 1938 but, by 1960, did: a failure of coordination among agencies, a bureaucratic conservatism, an inability to cope with dynamic circumstances. Agencies, like politics and business, were manned by "men of average capabilities." Go-getters were ground down. What's remarkable here is how quickly idealism faded and reality, political and commercial, impinged. There were few solutions to these issues; normalcy was part of the problem. And the lethal attacks had not yet begun. Laissez faire had not yet made its comeback; Ronald Reagan was still acting, Greenspan was playing tenor sax. Today we have placed our bets on revived regulation. But like the Great Barrier Reef, it's hard to tell whether the administrative state is living or dying. Its friends are in despair, its enemies gathering. The practical reality is unaltered, but the alternative is unclear. It will be quite a show.