The Opening of American Law: Neoclassical Legal Thought, 1870-1970: Epilogue
The Opening of American Law: Neoclassical Legal Thought, 1870-1970 (Oxford, 2015).
31 Pages Posted: 4 Feb 2015 Last revised: 24 Feb 2015
Date Written: February 2, 2015
The Opening of American Law examines changes in American legal thought that began during Reconstruction and the Gilded Age, and extending through the Kennedy/Johnson eras. During this period American judges and legal writers embraced various conceptions of legal "science," although they differed about what that science entailed. Beginning in the Gilded Age, the principal sources were Darwinism in the biological and social sciences, marginalism in economics and psychology, and legal historicism. The impact on judicial, legislative, and later administrative law making is difficult to exaggerate. Among the changes were vastly greater use of behavioral or deterrence based theories of legal sanctions, as well as controversy over the respective role of genetics and environment in human welfare and behavior. The marginalist revolution in economics provided the common law with a set of forward looking theories of risk management. One champion of these developments was Holmes, whose thought was much more marginalist than Darwinian.
During the heyday of economic substantive due process the United States Supreme Court as well as other federal and state courts were hostile toward a great deal of economic intervention in market. Nevertheless, they recognized exceptions for regulation of "health, safety, and morals." A regulation such as a maximum hours limitation on women laborers would be upheld if it could be shown to protect the health or safety of someone other than the party to the labor agreement. By contrast, regulation was permitted on morals grounds even if it was intended to protect the contracting adult from his own vices. This health, safety, and morals triumvirate became the opening wedge for a more secular and purely economic theory of market failure thought to justify a wider range of economic regulations. Increasingly both economists and legal scholars came to believe that markets are structurally diverse. As a result the regulatory fixes that might repair one market would not necessarily work for others. Thus the proliferation of single sector regulatory agencies at every governmental level, as well as structuralism in economic policy making.
Another concern that pervaded this period is special interest capture of legislative or administrative processes. Views about appropriate use of the Constitution to limit capture ranged from Lochner's strong suspicions and occasional close scrutiny, to Carolene Products' high degree of deference. For many, it became clear that the structural balances of power built into the Constitution and defended by James Madison in Federalist #10 were inadequate to combat special interest legislation. However, nothing in the Constitutional text authorized the federal courts to pursue capture directly, unless the legislation in question violated an explicit Constitutional provision. That problem remains to this day: controlling capture through judicial review almost always necessitates a departure from the Constitutional text.
While attitudes toward the role of science in law during this period differed, they revolved around a common theory of value. Virtually everyone rejected the classical view that value is a consequence of previous investment. Instead, Progressive, conservatives and everyone in between agreed that value was a function of reasonable expectations about the future. The change in value theory manifested itself in areas as diverse as the Progressive opposition to the classical wage-fund theory limiting the rate of wages to previously accumulated capital, but also in the conservative rejection of the idea that stock is "watered" if it is valued at less than the historical amount of capital paid into the corporation. This pervasive change in value theory forced a reconception of the law in practically every area, including criminal law, the common law, corporate finance and management, competition law, and the role of government in managing the economy. Its acceptance by people of every ideological stripe serves to show why we can never go back to some classical liberal view of the Constitution.
This Epilogue briefly describes the period of consolidation and reaction to these changes in the wake of the New Deal and World War II. Writing under the shadow of Carolene Products and Franklin Roosevelt's Supreme Court appointments, scholars such as Alex Bickel, Herbert Wechsler and James M. Landis initially sought to justify strict limits on judicial review and broad tolerance of legislation. Increasingly, however, critics insisted on a return to more market based approaches to government management of society and the economy. Thus the rapid rise of social choice and public choice theories in the 1960s, the creation of the modern law and economics movement, and a "deregulation" movement that was intended to limit economic control by every level of government.
Keywords: LEGAL HISTORY, constitution, progressivism, darwinism, marginalism, business, race, criminal law, common law, deterrence
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