Economic Liberty–Part of the Constitution’s DNA

Previously I praised America’s Unwritten Constitution by Akhil Amar and then offered my first reservation about the book. My second reservation is its treatment of economic liberty. Professor Amar sees the greatness of the Constitution in the unfolding of democracy and equality. But economic liberty is also in the Constitution’s DNA and yet he seems to leave it out of the American story.

I also thought unfounded one historical claim, which itself surprising, because Professor Amar is generally very reliable. In a discussion that attacked theories of interpretation that would justify reasoning striking down economic regulation, as in Lochner v. New York, he wrote: “The 1913 ratification of Federal Income Tax Amendment, one of the most notable populist events of the twentieth century, blessed redistributive economic policy by endorsing a tax that everyone understood would likely feature a progressive structure taxing the wealthy at steeper rates than the poor.” One does not have be a libertarian to wonder whether the proposition that this amendment blessed redistributive economic policy in general is an overstatement. In fact, the 16th amendment can be seen as attempt to find an stable source of revenue other than tariffs, which were not only inefficient but often regressive, rather than a general endorsement of redistribution.

In any event, regulatory powers and taxing powers are different constitutional concepts. Economists then and now almost universally see redistribution through taxation as a superior policy, because it does not lead to as much distortion and loss of innovation as does redistribution through regulation. Thus, the 16th amendment cannot be said to extinguish whatever constitutional restrictions there are on redistribution through regulation.

More generally, our Constitution protects economic freedom in many ways. The Constitution of 1789 most notably contained the Contract Clause, which prevents the states from “impairing the obligation of contracts.” It shows that protection of that economic liberty was so important as to be one of the relatively few restrictions the Framers imposed on the states. It was the most litigated provision of the Constitution in the nineteenth century. In the twentieth century, the Supreme Court gutted the Clause. It should be revived.

Beyond this specific right, the Constitution of 1789 also protects economic freedom structurally. It encourages a national trade zone among states, protects economic freedom in states through exit rights, and through bicameralism and presentment impedes legislation by the federal government from which exit is far less easy. And the Privileges and Immunities Clause of the Fourteenth Amendment correctly interpreted probably does protect some rights to pursue work.

I am far from thinking that classical liberalism is the single skeleton key to unlock the meaning of the provisions of the Constitution, as Richard Epstein believes. But the Constitution has a mixture of objectives that includes the protection of economic freedom. And that protection is part of the American story that separates us from Europe with its feudal inheritance no less than does our does our expansion of representation and equal legal rights. Of course, Professor Amar is hardly alone in failing to discover the correct constitutional balance between economic rights and the rights to self-governance. It  continues to elude even our most brilliant constitutional theorists.

Reader Discussion

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on March 15, 2014 at 10:49:18 am

Amar's theory re Lochner also depends on accepting the notion that Lochner was about opposition to redistribution to begin with, as opposed to protection of "natural" or "fundamental" rights. As I wrote on Volokh:

I disagree with Amar that the underlying motivation of the Court in Lochner and its pre-New Deal progreny was hostility to redistribution. I was aware before I wrote my book that Professor Amar had adopted this theory in previous work. His citation was to a famous, well-cited article by Cass Sunstein, Lochner’s Legacy. Here’s what I wrote about this theory in my book:
Sunstein argued that … the Court sought to preserve what it saw as the “natural,” “status quo” distribution of wealth against redistributive regulations… Sunstein’s work quickly came to dominate legal scholars’ understanding of Lochner, but constitutional historians have properly dismissed Sunstein’s work on Lochner as ahistorical. (citing to G. Edward White, The Constitution and the New Deal 24-25(2000))
Admittedly, that’s rather thin gruel for rebutting a thesis that has been widely accepted among legal academics. But while Sunstein’s article is a fabulous work of legal theory, it’s not a serious historical work, and I didn’t see any reason to address it in detail in a book aiming to provide a sound historical account of Lochner.

I did, however, address the historical validity of Sunstein’s thesis in detail in my 2003 Texas Law Review article, Lochner’s Legacy’s Legacy. Sunstein graciously responded that “Bernstein examines the Court’s performance with far more care than I did; he greatly illuminates the era, and he offers reasons to question my basic claims.” Cass R. Sunstein, “Lochnering,” 82 Tex. L. Rev. 65, 65 (2003).

Of course, Amar can believe completely independently of Sunstein that the Court in Lochner and like-minded case was motivated primarily by concern over redistribution. Interested readers can take a look at my Texas article and decide whether I’ve made at least a presumptive case to the contrary. They can also see whether the argument I make in my book, that the Court’s jurisprudence was an outgrowth of longstanding natural rights ideology combined, secondarily, with a suspicion of “class legislation” (which is not the same as redistributive legislation) is more persuasive. I should add that my position isn’t set in stone, and is subject to revision based on future scholarship–I’ve already changed my views from adopting Howard Gillman’s class legislation thesis to staking out a natural rights explanation to allowing some room within my thesis for judicial concerns over class legislation, under the influence of Barry Cushman.

I therefore hope that Professor Amar will choose in the future to using his prodigious talents to further join the debate over the origins of Lochner and like-minded cases. A good way to provoke a dialogue on this, I think, is with the following question: If underlying motivation of Lochner and like-minded cases was redistribution, (1) how do we explain the Court’s invocation of Lochner [and other liberty of contract precedents] in cases like Meyer v. Nebraska and Pierce v. Society of Sisters and other contexts involving what we now call civil liberties, with no “distribution” angle in sight? and (2) how do we explain that many cases, documented in my Texas article, in which the Supreme Court upheld blatantly redistributivist legislation, often unanimously?

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David Bernstein
on March 20, 2014 at 17:56:10 pm

It's interesting to me that Amar goes to such great lengths to make a textually rigorous argument about Article III jurisdiction but finds no qualms in incorporating all kinds of unsubstantiated conjecture about general public attitudes into the meaning to the 16th Amendment.

The language of Lochner and other cases of the time seems to express both a concern for natural rights and a recalcitrance to class legislation. There's lots of talk about liberty of contract in Lochner, but consider the test of Lawton v. Steele, which established a test that seems far more concerned with class legislation: the police power was limited to legislation that served "the interests of the public generally as distinguished from those of a particular class," by means that "are reasonably necessary for the accomplishment of the purpose, and not unduly oppressive upon individuals." 152 U.S. 133 ( 1893). To me, this reads as being far more concerned with the manner in which power is exercised than it is with defining liberty. Can we reconcile them anymore than we can reconcile the differing themes of, for example, the Supreme Court's personal jurisdiction decisions in Asahi and Nicastro?

What does seem clear is that protecting rights and protecting the public interest from faction were important to the framers (at least as a group). It seems both were important to the reconstruction republicans, but circumstances suggest an anti-class legislation sentiment (neutrality) better animates the 14th Amendment.

My concern focuses on which of the two would be more workable in modern circumstances, and a focus on natural rights is not it. First, the various progressive camps were much better at laughing natural rights out of the room than they were with arguing against neutrality. No one who actually understands Holmes' views on the question would ever buy into them (just as many misunderstand Lochner, many also misunderstand his dissent and the implications of taking it to its logical conclusion). Second, defining rights is a lot harder. Third, advances in our understanding of public choice make the case for neutrality quite strong. And last, I think neutrality can be cast in a way that appeals to a far broader range of ideologies.

At any rate, both Rehabilitating Lochner and the Constitution Besieged are incredibly insightful books that put to shame the academic establishment's dismissive, blissfully ignorant approach to the case and the constitutional principles it represents.

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Aaron Gott

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