In short, Dewey (much like Rahm Emanuel) is an opportunist. The war afforded immense opportunity to organize society, which he goes through explaining. Then we get to this:
To dispose of such matters by labeling them state socialism is merely to conceal their deeper import: the creation of instrumentalities for enforcing the public interest in all the agencies of modern production and exchange. Again, the war has added to the old lesson of public sanitary regulation the new lesson of social regulation for purposes of moral prophylaxis. The acceleration of the movement to control the liquor traffic is another aspect of the same fact. Finally, conscription has brought home to the countries which have in the past been the home of the individualistic tradition the supremacy of public need over private possession.
What he is saying here is fairly obvious, especially once you understand that the word "prophylaxis" means to prevent disease. In the eyes of progressives, that we own private property is in/of itself a disease.
And here's the key: Dewey separates the difference between general regulation and social regulation. He uses the example of public sanitary regulation, but you could use any sector of life you want. General regulation relegates the government to 'referee' status. Watch a football game, referees aren't a part of the game.
But with social regulation, they use regulation above and beyond simply keeping peace with the different sides of the matter. With social regulation, the government becomes a player in the game and does so with a dark intent.
I can think of several examples of social regulation right off of the bat. How about the energy industry? Drilling both on/offshore, refineries, and more. And a lot of that is tied in with environmental regulation. Most of which is just more social regulation, not general regulation. How about Obamacare? Why is that bill 2000 plus pages long? Why is the phrase "as the secretary shall determine" littered throughout the bill? It's because they know if they passed all of what they wanted to do as laws the people would go bonkers. They can't hide laws the way they can regulations.
General regulations amounts to a non activist government who keeps the peace. Social regulations amounts to progressivism ruling every aspect of your life. As Reagan said:
it doesn't require expropriation or confiscation of private property or business to impose socialism on a people. What does it mean whether you hold the deed to the -- or the title to your business or property if the government holds the power of life and death over that business or property? And such machinery already exists. The government can find some charge to bring against any concern it chooses to prosecute. Every businessman has his own tale of harassment. Somewhere a perversion has taken place.
That perversion took place in the early 20th century. And that's what I will continue to examine.