Economic Libertarian Constitutionalism Never Really Died

The March issue of the Harvard Law Review includes a punchy review of Richard Epstein’s 2014 book, The Classical Liberal Constitution. The review, written by Suzanna Sherry, is highly critical of Professor Epstein’s economic libertarian constitutionalism, which argues that the Supreme Court erred in the late 1930s, when it abandoned a line of cases that had subjected government regulation of private ordering to exacting judicial scrutiny.

Professor Sherry explains that Epstein’s key historical claims are inaccurate and that his own positions are sometimes incoherent. Notwithstanding these criticisms, however, she views Epstein’s book and the work of other economic libertarian legal scholars as a warning and a threat. Liberal constitutional scholars, she says, have failed to rise to the challenge posed by the economic libertarians: How to justify strong protection for so-called personal rights like the right to contraception, abortion, and marriage, while providing only weak protection for economic rights? Libertarians like Epstein say there is no difference or that if any rights should be favored, it is the economic rights, while liberals and progressives have tended to assume—without fully defending—the contrary view.

Sherry’s indictment of (her fellow) liberals is somewhat unfair. John Hart Ely’s 1980 book Democracy and Distrust, which is perhaps the most influential book on constitutional law in the last half century, was chiefly an effort to explain how the constitutional rights recognized by the Warren Court in the 1960s were appropriately understood as different from the economic rights recognized by the pre-1937 Supreme Court. He thought that the chief function of judicial review was to protect the rights of vulnerable minorities who cannot adequately assert their interests in the political process. Ely’s view naturally distinguished between personal rights and economic rights of the wealthy—who are very powerful in politics.

True, Ely himself thought Roe v. Wade was wrongly decided, but other scholars have built on the foundation Ely laid to develop grounds for protecting a wider set of personal rights than Ely himself championed. In a cheeky reference to Fermat’s Last Theorem, Sherry says that while she herself has insufficient room in a footnote to set out a personal-rights-favoring theory, such a theory might build on the two principles of justice espoused by John Rawls. Yet that sounds like a pretty good description of James Fleming’s 2006 book Securing Constitutional Democracy, which Sherry does not cite.

My principal aim here, however, is not to criticize Sherry. I generally agree with her about the deficiencies of economic libertarian constitutionalism.

But it is worth noting—and contesting—a premise that Sherry shares with Epstein and the other economic libertarians: that our constitutional order has rejected economic libertarianism. Epstein and his fellow economic libertarians write as though the economic libertarian Constitution were exiled in 1937 and needs to be brought home. Sherry disagrees with the prescription but she largely accepts the premise. Both understate the economic libertarian character of American constitutionalism.

Economic Libertarian Case Law

The late 1930s saw two major shifts in Supreme Court jurisprudence. First, the Court loosened the constraints on Congress in regulating interstate commerce. Where the old doctrine had distinguished between traffic in interstate goods (deemed regulable) and the manufacture of such goods (deemed reserved to state regulation), the modern case law accepts that the Congress has broad power to regulate the national economy as a whole. Beginning in the early 1990s, the Court imposed some further limits on the powers of Congress, but it has not gone back to the much stricter view of the early twentieth century.

Second, at the same moment that the Court allowed Congress greater leeway in regulating economic matters previously thought reserved to the states, it abandoned the view that federal, state, or local regulation of such matters as hours, wages, and conditions of employment should be rigorously scrutinized by courts aiming to protect individual economic liberty. The Justices thus rejected the jurisprudence of the Lochner era, so-named for the 1905 case that had invalidated a New York law fixing maximum working hours for bakers.

Despite a vigorous defense of Lochner by Epstein and other economic libertarians, the modern Supreme Court has not accepted the invitation to reinvigorate the notion that the Due Process Clauses of the Fifth and Fourteenth Amendments demand close judicial scrutiny of laws infringing economic liberty. Indeed, even very conservative jurists—like Justices Clarence Thomas and Antonin Scalia—have decisively and repeatedly reaffirmed that there will be no return to the Lochner era.

Yet economic libertarians and their critics alike display a kind of doctrinal myopia in failing to see how modern constitutionalism still supports economic libertarianism. Without reviving Lochner itself, the modern Supreme Court has found multiple paths to construe the Constitution in ways that benefit the economic haves at the expense of the have-nots.

The federalism cases are a good example. In 2012, a bare majority of the Court rejected a constitutional challenge to the Affordable Care Act on the ground that it was a valid exercise of the taxing power. But en route to that conclusion, a different majority concluded that the Commerce Clause incorporated economic libertarian principles.

The Court’s Commerce Clause jurisprudence is hardly unique in this regard. The modern Court has displayed an economic libertarian bent in limiting punitive damages under the Due Process Clauses, in limiting regulatory “Takings” under the Fifth Amendment, and in widening protection for commercial speech and unlimited political spending under the First Amendment. The Court’s campaign finance jurisprudence does double duty for the economic libertarians: It directly protects their freedom to spend, which in turn permits wealthy business owners to influence lawmakers to lighten their regulatory obligations.

The Court’s economic libertarianism also can be seen in cases involving the interpretation of statutes. Some of the very Justices who, in other contexts, profess to value state sovereignty, are prone to giving federal statutes broad sweep so as to invalidate stricter state or local regulation. More generally, as studies (like this one) have shown, the Roberts Court is friendly territory for business interests. Although the business cases cut across a variety of subject matter areas and do not formally espouse economic libertarian rules of decision, they accomplish much the same thing for business interests seeking relief from economic regulation.

Structural Economic Libertarianism

There is a further sense in which it is myopic to see the modern constitutional landscape as having rejected economic libertarianism. Supreme Court case law addresses topics about which the law is on its face unclear. But meanwhile, the clearest constitutional provisions decisively tilt American law in a libertarian direction.

Consider a recent essay in The New Yorker by Jill Lepore, discussing several new books about economic inequality. After considering various cultural accounts of the recent growth in American inequality, Lepore turns to our constitutional structure. She invokes a comparative study by Alfred Stepan and the late Juan Linz, which found a strong correlation between economic inequality and the number of “veto players” in a lawmaking system, with the United States topping both lists.

A veto player is a person or institution with the capacity to block legislation. A parliamentary government with a unicameral legislature has one veto player, because the supporters of a bill need only persuade the majority in parliament to adopt the measure for it to become law. Stepan and Linz characterize the United States as having four veto players at the national level: The states, which have reserved powers and a veto over constitutional amendments; the House; the Senate; and the President. Stepan and Linz also take note of additional features of the U.S. system that make it particularly bad at addressing economic inequality—i.e., at favoring egalitarian principles over economic libertarian ones.

Put differently, quite apart from Supreme Court case law, the U.S. Constitution is practically hard-wired to favor economic libertarian outcomes. Economic libertarians like Professor Epstein ought to take heart.

Turning Veto Powers to Progressive Use

Should progressives (like Professor Sherry and myself) be correspondingly discouraged? Yes, somewhat. But only somewhat, because increasing the number of veto players in a political system only indirectly contributes to economic libertarian outcomes. As Stepan and Linz recognize, the direct contribution of increasing the number of veto players is to make it difficult to change the legal status quo, whatever the status quo may be.

Thus, on those rare occasions when progressives manage to capture all of the relevant institutions with veto power—as during the New Deal, the Great Society, and arguably the first two years of the Obama Administration—they can enact measures that will resist easy overthrow.

Recent history illustrates the phenomenon. President Reagan came into office seeking to roll back the New Deal. He failed. Subsequent efforts along similar lines by congressional Republicans under the leadership of Newt Gingrich, the second President Bush (who sought to privatize Social Security), and the Tea Party have all failed as well, even when they managed to capture one or more federal institutions.

Accordingly, at any given moment the American political system may produce or retain substantial progressive elements. Still, over the long run, it skews libertarian, even without the judicial intervention sought by the likes of Professor Epstein. Beyond the criticisms offered by Professor Sherry, that skew provides an excellent reason to resist his call for an overtly economic libertarian interpretation of the Constitution.

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