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Wednesday, June 27, 2012

Liberty of Contract: Rediscovering a Lost Constitutional Right

The U.S. Supreme Court has no coherent ideas about—or real respect for—individual rights. It generally allows governments to do whatever they want, with limited exceptions for a handful of rights it has deemed “fundamental,” such as the right to free speech (in some areas) and the right to sexual privacy (in some respects). Other rights, such as the right to economic liberty, receive almost no protection at all.

Why so much protection for some rights and so little for others? Because the Court has arbitrarily said so.

Libertarians, of course, think differently about rights. Libertarians think that our rights exist independently of government, and that if government has any legitimate purpose at all, it is to protect those preexisting rights.

Libertarians also think that all our rights are really property rights. We each own ourselves, and from that follows a right to own private property that we acquire through voluntary exchanges with others. Other rights, such as the right to free speech, derive from our right to use our own property as we see fit. And the right to economic liberty—that is, to trade your property and your labor freely with others—is just as “fundamental” as any other right.

In Liberty of Contract: Rediscovering a Lost Constitutional Right, law professor and historian David N. Mayer shows how Americans went from embracing the libertarian conception of rights reflected (imperfectly) in the Declaration of Independence to the statist conception of rights reflected in modern Supreme Court decisions.

At the center of Mayer’s discussion is Lochner v. New York, a 1905 case in which the Supreme Court struck down a New York law that limited the number of hours that bakers could work. In that decision the Court held that the Fourteenth Amendment’s “due process” clause protects the liberty of contract. Because the New York law violated that right by denying bakers the right to contract to work more hours than the law allowed, it was unconstitutional.

In a famous dissenting opinion, Oliver Wendell Holmes accused his fellow justices of reading their own free-market “economic theory” into the Constitution and of attempting to “enact Mr. Herbert Spencer’s Social Statics,” referring to a book by the great classical-liberal writer.

Today most law professors embrace Holmes’s view and consider Lochner to be one of the worst court decisions ever. Many accuse the justices of basing their decision not on an honest interpretation of the Constitution but on their own devotion to extreme libertarian ideology, the interests of big business, or both.

Mayer’s book demolishes these myths and many others surrounding Lochner and liberty of contract.

For example, Mayer makes a compelling argument that Lochner did not depart from existing law. He shows that “due process” clauses and similar provisions in state constitutions and the U.S. Constitution were used throughout U.S. history up to that time to protect private property rights and the liberty of contract.

He also shows that the Lochner Court did not reach its decision simply because it was beholden to big business. In fact the Court applied the same principles to uphold property rights and freedom of contract in many cases where big business had nothing to gain. For example, in 1917 the Court infuriated Progressives when it struck down a Louisville, Kentucky, ordinance that mandated racially segregated housing, as a violation of private property rights.

At the same time, Mayer shows that the justices were not really the devotees of laissez-faire ideology that critics say they were. The Court was always willing to allow “reasonable” restrictions on people’s rights, and following the rise of Progressivism, the exceptions predictably swallowed the rule.

I appreciated that Mayer doesn’t suggest that the Court might return to Lochner or adopt consistent libertarian principles anytime soon. Why would it? We won’t have liberty unless a substantial portion of the people appreciates and demands it. We can’t expect government-employed judges to lead the way.

There is much more to the story, of course, and it is all worth reading. For anyone interested in the history of the liberty of contract in the courts—and, more importantly, in the minds of the American people—David Mayer has provided a great guide.