Capitalism and Conflict

by Jeffrey Rosen

After the Civil War, the Fourteenth Amendment to the Constitution, ratified in 1868, promised equal rights for African Americans by declaring that states could not deny to "any person" the equal protection of the law. When the first case dealing with the new amendment -- the so-called Slaughterhouse Cases, which ironically had nothing to do with civil rights but rather involved a state-created monopoly in the livestock and butchering industry in New Orleans -- reached the Court in 1873, however, a 5-4 majority held that the amendment's key protections did not apply to the states, and that states therefore had no obligation to respect the fundamental liberties of citizenship listed in the Bill of Rights. While the decision in Slaughterhouse did not explicitly deal with the civil rights of blacks, it set a precedent -- confirmed more tangibly in the Civil Rights Cases of 1883 -- that the Court would not interpret the Fourteenth Amendment to protect the civil rights of minorities from state infringement. Nevertheless, laissez faire economics -- the doctrine that economies work best when unregulated -- were ascendant, and the Court would soon employ the Fourteenth Amendment to strike down state laws that, in the views of the justices, unreasonably violated economic liberties. The Court's growing judicial activism in economic liberties cases in the progressive era set the stage for a confrontation between President Franklin D. Roosevelt and the Supreme Court that continues to be cited as a cautionary tale for judicial overreaching.

The idea that the Constitution protects economic liberties was hardly invented by the justices after the Civil War. On the contrary, from the Jacksonian era onward, state and federal judges believed that labor and capital could fend for themselves in a properly functioning market, and that therefore judges had an obligation to strike down what they called "class legislation," or economic regulations that favored one group of competitors at the expense of others. After the Civil War, the Supreme Court became increasingly activist in cases involving economic liberty, striking down 10 federal laws between 1902 and 1917. (Remember that the Court had struck down only two federal laws before the Civil War, in Marbury v. Madison [1803] and Dred Scott [1857].) During the progressive era, the Court provoked even more criticism for its willingness to strike down economic regulations passed by state legislatures, such as minimum wage and maximum hour laws.

The justices were not indiscriminately activist in these cases; instead, they vacillated between upholding some state and federal regulations and striking others down. These decisions were guided by an effort to apply old legal categories that allowed the regulation of businesses "affected with the public interest" in the interest of promoting health, safety, and morals, while disallowing the regulation of purely private enterprises. So, for example, the Court in the late 19th and early 20th century supported the power of states to compel vaccinations and to regulate grain elevators and mines. But during the progressive era, it was vilified for its conservative judicial activism, largely because of its performance in one of the most famous regulatory cases in history, Lochner v. New York (1905).

Joseph Lochner, the owner of a bakery in Utica, was arrested in 1902 for violating a New York state law prohibiting the employment of bakers for more than 60 hours a week or 10 hours a day. By a 5-4 vote, the Court struck down the law. In his opinion for the Court, Justice Rufus Peckham said the law could not be upheld as a reasonable regulation of health or safety because baking was not an unusually dangerous or unhealthy profession. Therefore, Peckham declared, the law violated the freedom of contract of bakers and it had to fall.

Lochner is famous largely because of the dissenting opinion of Justice Oliver Wendell Holmes. A Massachusetts aristocrat who viewed his service in the Union Army as the most important event of his life, Holmes was so devoted to judicial restraint that he rarely found a law he was willing to strike down. He viewed democracy in violent military terms, as an opportunity for the strong to impose their view on the weak, and thought it was the job of judges to help them do so. "If my fellow citizens want to go to hell, I will help them," he wrote. "It's my job." Holmes had contempt for progressive economic legislation, which he viewed as sentimental and ineffective. But in his dissenting opinion in Lochner, he declared, "My agreement or disagreement has nothing to do with the right of a majority to embody their opinions in law. ... The Fourteenth Amendment does not enact Mr. Herbert Spencer's SOCIAL STATICS." The invocation of Spencer's exotic-sounding libertarian treatise -- a defense of social Darwinism and laissez faire economics -- was an inspired rhetorical touch, although Holmes himself was the most enthusiastic social Darwinist on the Court. He ended his dissent by reiterating his dark view of law as a Darwinian struggle for power in which majorities should triumph over minorities. Although Holmes's radical vision of judicial restraint would come to seem heartless in cases involving civil rights, where he rarely sided with African-American plaintiffs and voted to eviscerate the promise of the Reconstruction amendments to the Constitution, his Lochner dissent was applauded by progressives who resolved to get the Court out of the business of second-guessing economic legislation.

They finally succeeded during the New Deal era. The Court attempted to strike down much of Franklin D. Roosevelt's New Deal recovery program by invoking a narrow vision of Congress's power to regulate interstate commerce, which Holmes had opposed. Roosevelt proposed a court-packing plan in 1937 that would have given the president the right to appoint a new justice for every member of the Court who refused to retire after turning 70. The plan was defeated in the Senate, but the Court changed its mind later that year about the constitutionality of the New Deal and began to uphold economic legislation that it had previously struck down. (Historians disagree about whether or not the swing justice, Owen J. Roberts, was bowing to political pressure or had resolved for other reasons to change his mind. In any case, Roberts had changed his position in a conference vote prior to the announcement of Roosevelt's plan.) In the most prominent sign of the new era, the Court in West Coast Hotel v. Parrish (1937) upheld a state minimum wage law for women and minors and overruled a Lochner-era case in which Holmes had dissented. Noting that the economic reality of the Great Depression had disproved the old assumption that workers and employers could fend for themselves in a properly functioning labor market, the Court stressed that the burden of caring for the unemployed would fall on the nation as a whole. Thus the nationalistic vision of Marshall, Harlan, and Holmes was once again vindicated, and Congress's power to regulate the national economy once again expanded.