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From constitutional laissez faire towards economic and social rights: Examining the influence
of the legal realists and the institutional economists in the emergence of economic and social
rights (in the United States within liberal theory1)
In this chapter, I will argue that much of the groundwork for the emergence of ideas of ‘economic and
social rights’ in liberal thought was laid in the ‘revolt against formalism’ and against ideas of ‘natural
rights’ and ‘natural law’ in both law and economics by the American legal realists and institutional
economists over the period 1880-1930. Just as the legal realists sought to challenge the deductive
formalism of ‘law as science’ and its apolitical pretensions, the institutional economists sought to
challenge a similar trend towards deductive scientism and attempts to cast economic laws as inexorable,
apolitical ‘laws of nature’. Both the legal realists and institutional economists attacked formalism, but
many of them were attacking more than that; they were attacking what was being formalised. They were
attacking the formalisation, ‘naturalisation’ and constitutionalisation of laissez-faire liberalism and the
primacy of the classical liberal rights to property and liberty (understood as freedom of contract) in what
was coming to be called the ‘rule of law’ or simply the ‘law’. In the face of the empirical brutality of
industrialisation, the massive concentration of economic power and the ravages of inequality, the legal
realists, like the institutional economists and the progressives before them, sought to show that the law,
like the market, was not natural, neutral or even necessary – both were historically contingent, socially
constructed and indeed mutually constitutive. The laws of economics – and the distribution of wealth
and power they implied - were not natural and inexorable, but were socially constructed and could thus be
changed. ‘Natural’ rights were not natural and ‘laissez faire’ was a myth; so-called ‘free’ markets were shot
through with all sorts of coercion, most obviously the coerciveness of the massive economic power of
corporations, and less obviously the coercion of the state through the enforcement and privileging of
particular rights to property and to liberty of contract, to the exclusion of other kinds of rights. These
theorists thus challenged laissez faire liberalism, economic power, and economic inequality, opening up
the way to new thinking about rights. I argue that economic and social rights emerged out of this critique
of classical laissez faire liberalism and were conceived in terms of a broad shift towards a new conception
of freedom from the market rather than freedom of the market, marking the start of a new era of ‘embedded
liberalism’. These ideas came to be reflected in Roosevelt’s proposal for an ‘Economic Bill of Rights’ and
in the legislative and administrative project of the New Deal of the 1930s, as many of these theorists
became key actors in the Roosevelt’s administration. The New Deal was partly an effort to shift what was
being formalised through the creation of a new legal and economic orthodoxy, reflecting the wider shift in
liberalism that these theorists had helped to initiate. Although economic and social rights never reached
the status of constitutional rights in the US, there was a marked shift in constitutional philosophy of the
Supreme Court from 1937 onwards. And although these rights remained contested domestically, they
were ‘formalised’ internationally as universal human rights in the 1948 Universal Declaration of Human
Rights, no longer grounded in ideas of ‘natural law’ but in a no less ethereal notion of ‘human dignity’.
Paradoxically then, the revolt against formalism has led to a new kind of what I call ‘strategic formalism’
and a new liberal ‘theology’ of universal human rights.
Introduction
While American Legal Realism has been caricatured and even ridiculed as the ‘gastronomic theory’ of law,
given Jerome Frank’s irreverent assertion that a judge’s decision could be determined by what he had for
breakfast as much as by the ‘law’2 - the legal realist movement was in fact a profoundly unsettling
I focus here on the US story of the rise of rights, but the Western-European story on the shift in liberal
conceptions of rights has been told with the very different inflections from the work of T.H.Marshall on social
rights. Of course, socialism also addresses ESCR in different ways. I plan to later analyse how these very different
stories on the rise of rights interrelate, but I focus here especially on liberalism in the US rather than socialism.
2
See e.g. Friedrich, Rational Decision, p.131.
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challenge to contemporaneous legal orthodoxy, which continues to have unsettling implications today.
Although much of the legal literature sees legal realism as confined to the period between 1920 and the
early 1930s on the basis of Karl Llewellyn’s rather idiosyncratic branding of the ‘movement’,3 I follow the
wider definition adopted by Horwitz which includes a broader swathe of important jurists from Supreme
Court judges, Holmes to Brandeis to Cardozo and Frank, others such as Wesley Hohfeld, and the
institutional economists, especially Richard T. Ely and John R. Commons, as well as Robert Lee Hale and
Adolph A. Berle, covering a significantly longer period from approximately 1880 to 1930.4 American
legal realism was not, as Horwitz has pointed out, ‘a coherent intellectual movement’ and nor was it
emblematic of a ‘consistent or systematic jurisprudence’5, but it did have one key unifying thread, which
was a broad attack on ‘legal formalism’ – or what Oliver Wendell Holmes acidly called ‘legal theology’6
and Jerome Frank later labelled ‘legal fundamentalism’7.
This ‘legal formalism’ is often characterised as that of Christopher Columbus Langdell, (appointed Dean
of Harvard Law School in 1870) who argued that law should be seen as a science with the library of
caselaw as its workshop,8 although its principles should be based on the cases that were ‘right’ rather than
the cases were ‘wrong’.9 Jerome Frank, in his irreverent style, contrasted ‘legal realism’ with ‘legal
Bealism’ after Joseph Beale (a member of Harvard Law School faculty from 1890-1937) who had called
for laws based on the ‘purity of doctrine’, free from the ‘warping of bad precedent’. 10 The underlying
jurisprudential premise was that “there is such a thing as the one true rule of law, which being discovered,
will endure, without change” and that judges should base their decisions on this true rule of law. 11
Gilmore acerbically suggests that this concept of law had acquired such an “extraordinary hold” on the
legal and popular mind at the beginning of the 20th century, that Benjamin Cardozo’s “hesitant
confession” in his 1921 book The Nature of Judicial Process “that judges were, on rare occasions, more than
simple automata, that they made law instead of merely declaring it” was “widely regarded as a legal
version of hard-core pornography”.12 Many of the legal realists by contrast, suggested the judicial
decisions should be understood sociologically, rather than relying on illusory deductive principles of law,
See Llewellyn, Some realism about realism; Horwitz, The Transformation of American Law, 1870-1960. Horwitz suggests
that the 1930-31 academic debate between Karl Llewellyn and Roscoe Pound led to a rather narrow framing that
distorted the subsequent historiography of legal realism (p.171).
4
Horwitz, The Transformation of American Law, 1870-1960, see pp.182–3. Note the dominance of white males
represented here – feminist arguments often a different critique of classical liberalism, but not one I focus on here.
5
Ibid., p.169.
6
Holmes in his Common Law suggested that Langdell was the ‘greatest living legal theologian’, cited in Horwitz, The
Transformation of American Law, 1870-1960.
7
See Frank and Bix, Law and the modern mind.
8
He argued that “all the available materials of that science are contained in printed books… the library is.. to us, all
that the laboratories of the university are to the chemists and physicists, all that the museum of natural history is to
the zoologists, all that the botanical garden is to the botanists..”This quotation is from an address by Langdell to
Harvard Law School Association in 1886, cited in Gilmore, The Ages of American Law, p. 42.
9
Ibid., p. 125.
10
See Frank and Bix, Law and the modern mind.
11
Gilmore, The Ages of American Law, p.43.
12
Ibid., p.77.
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that they should allow for the creativity of judges in the face of change based on inductive analysis of
concrete social reality and empirical evidence available from sociological and statistical data about the
actual harms caused in particular cases.13 Decision should also take account of the likely consequences of
legal decisions, through an understanding the social contexts in which the legal rules would operate.14 In
other words, the ‘law in action’ and pragmatic, sociological reasoning was just as, if not more, important
than the ‘law in books’ or reasoning from legal precedent. Holmes was already suggesting this in 1897 in
his Path of the Law where he declares:
“It is revolting to have no better reason for a rule of law than that so it was laid down in the time
of Henry IV. It is still more revolting if the grounds upon which it was laid down have vanished
long since, and the rule simply persists from blind imitation of the past.”15
Institutional economics was similarly engaged in a ‘revolt against formalism’ that took place in economics,
more or less at the same time that it was taking place in the law, between around 1880-1930. The
institutional economists were made up by young American scholars after World War I, but drew heavily
on the earlier turn-of-the-century economists such as Thorstein Veblen and John R. Commons.16 Like
legal realism, institutional economics cannot be described as a coherent intellectual movement, and nor
was it a systematic set of approaches to studying economics, but it similarly represented a profound
challenge to contemporaneous economic orthodoxy. Its key unifying thread was the challenge to the
increasingly formalistic and increasingly mathematical doctrines in economics.17 ‘Economic formalism’
was understood as the reductionist project of orthodox economic analysis to abstract deductive reasoning
to derive a particular set of axioms that could then be formalised – mathematically - and generalised as
universally applicable.18 The institutionalists argued that this classical doctrine rested on assumptions that
bore little relation to reality, and disparaged the classical economists as being “extraordinarily incurious as
to what was actually going on”. The institutionalists promoted inductive analysis of the institutions of the
actually existing economy, rather than the sterilities of static equilibrium theory. Drawing from the earlier
German historical school, they emphasised the dynamics of change, and the “need to use empirical data
(rather than abstract ideas) to ground economic theories, and the necessity of paying particular attention
The ‘Brandeis brief’ for example went beyond the caselaw, including a wide range of statistical information and
reports on the harms caused by particular practices such as child labour or long working hours or industrial
accidents. See e.g.Louis Brandeis and Josephine Goldmark, Brief for the Defendant in Error, Muller v. Oregon (1908).
14
Interestingly, this emphasis on the consequences of the law, led to the emergence of the Chicago style ‘law and
economics movement’ of Posner et al, even though this movement is diametrically opposed in its precepts to the
critical approach of the legal realists and the institutional economists here. Chicago style law and economics focuses
on consequences in terms of aggregate social welfare (economic growth), in contrast to a broader understanding of
human welfare and human rights.
15
Holmes, The Path of the Law.
16
Mercuro and Medema, Economics and the law, p.102.
17
Tabb, Reconstructing Political Economy.
18
Mercuro and Medema, Economics and the law.
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to human institutions”.19 Drawing also from the earlier studies by Veblen, the institutional economists
paid particular attention to the social construction of those institutions and the ways in which they
exercised economic power.
Following John R. Commons, they also focused closely on the legal-
economic nexus and the peculiarly legal construction of economic institutions.20 Together with the legal
realists, these economists made up what Herbert Hovencamp has described as “the first great law and
economics movement.”21
In this chapter, I will first argue that the ‘revolt against formalism’ was more than simply a revolt against
the formalisation of general principles of law and economics; it was a revolt against the kinds of principles
being formalised. It was a revolt against laissez faire liberalism and the very restricted notions of rights
conceived as those grounded in an absolute right to property and a derived right to freedom of contract.22
It was an attack on what was being formalised – or as Horwitz has pointed out, against attempts to “freeze’23
particular ideas into legal doctrine and inexorable economic laws.
I will then look at how these theorists
questioned the classical liberal tenets of both law and economics and opened up new ways of thinking
about rights and the role of the state. I will suggest that this challenge to classical liberalism was nothing
less than setting the groundwork for a new type of liberalism that emerged in Roosevelt’s New Deal of
the 1930s and in the ‘embedded liberalism’ that emerged after 1945. I will argue ideas of ‘economic and
social rights’ emerged out of this challenge to classical laissez faire liberalism and that they reflected new
ideas of freedom from the market rather than freedom of the market – or rather ideas of a state duty to protect
citizens from powerful market actors, rather than protecting the freedoms of those powerful market
actors. These ideas were eventually expressed domestically in the US in the political speeches of Franklin
Roosevelt, and although new ideas were stifled domestically US in the repressive environment of the Cold
War era after the 1940s, they were pursued through the formalisation and ‘constitutionalisation’ at the
international level in the 1948 Universal Declaration of Human Rights. I will conclude that much of the
groundwork for the emergence of economic and social rights was thus laid in the ‘revolt against
formalism’. I will also reflect critically on how this also laid the groundwork for a new kind of formalism
expressed through a new liberal ‘theology’ of human rights – and I will introduce the concept of ‘strategic
formalism’ to explain this new formalism – though even this new theology has struggled in the face of the
resurgence of market fundamentalism in economic neoliberalism.
Revolting against the laws of laissez faire liberalism
Under classical liberalism, it was assumed that state was the main threat to the individual through its
potential to abuse its coercive power, and thus the role of the law was to set limits on the power of the
Ibid., p.103.
See e.g. Commons, Legal foundations of capitalism.
21
Hovenkamp, “The First Great Law & Economics Movement.”
22
See e.g. Horwitz, The Transformation of American Law, 1870-1960; Fried, The progressive assault on laissez faire;
Hovenkamp, “The First Great Law & Economics Movement”; Singer, “Legal Realism Now.”
23
Horwitz, The Transformation of American Law, 1780-1860, p.259.
19
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state. In classical laissez faire economic liberalism, this idea was extended to suggest that the state should
be limited to a ‘night-watchman state’ and refrain from abusing its power by engaging in arbitrary
interference in the private sphere of the economy – including interfering with the ‘natural’ rights to liberty
and property.24
Economic liberalism was grounded in the notion of the ‘self-regulating market’ which,
if left free from interference by the state, will automatically create a harmony between individual interest
and social welfare through the operation of an ‘invisible hand’.25 The unhindered operation of the market
results in the best possible outcome - both in terms of the most efficient distribution of resources, and in
terms of the most ‘just’ distribution of resources - given that it will result from the neutral operation of
neutral market forces (as opposed to coercive redistribution by the state).26 Under the ‘marginalist
revolution’ that occurred at the end of the nineteenth century, it was also argued that the competitive
market would pay labour an amount exactly equal to the value each individual added, so in the absence of
monopoly, wages could never be unjust.27 The operation of markets is by free and voluntary exchange,
so it is never coercive, and any economic power that might exist through monopoly is assumed away as it
will be quickly dissipated by the workings of competition in the market mechanism. The state must
refrain from interfering from the operation of this market mechanism, which operates perfectly in the
absence of interference, and any form of state regulation or redistribution which would likely have
unexpected and unjust consequences.28
The classical economists sought to cast the laws of economics as natural and discoverable like the laws of
physics – and argued that it was the duty of the state to allow the inexorable operation of these
immutable, inexorable economic ‘laws of nature’. Classical economic theory, in works such as Herbert
Spencer’s 1851 Social Statics and 1891 Justice (where Spencer coined the expression before Darwin of the
‘survival of the fittest’) grounded this version of liberalism in the sacredness and inviolability of the rights
of property and the freedom to exchange that property.29
As Kennedy points out, the classicists
emphasised the ‘naturalness’ of existing institutions, the ‘freedom’ of economic processes – and they
spent little time providing actual sociological or economic evidence for their claims, but rather spent time
seeking to convince readers of the naturalness of the existing economic order, the ‘sacredness’ of
property, the ‘absoluteness’ of property and contract rights and the ‘justice’ or ‘fairness’ of the ‘natural
outcomes’ of the workings of these free processes.30
See e.g. DeMartino, Global economy, global justice; Fine, Laissez Faire and the General- Welfare State.; Harvey, A Brief
History of Neoliberalism; Fried, The progressive assault on laissez faire.
25
Waligorski, The political theory of conservative economists.
26
Waligorski, Liberal economics and democracy.
27
Fried, The progressive assault on laissez faire. This challenged and ‘disproved’ the Marxist labour theory of value.
28
DeMartino, Global economy, global justice.
29
Spencer, Social statics; Spencer, Justice.
30
Kennedy, “Role of Law in Economic Thought.” Kennedy writes that “The basic message of the whole was very
simple: there were laws of economic life, analogous to the physical laws of nature, the natural operation of those
laws brought about just outcomes; most of the proposals of social reformers involved coercive modifications of
those outcomes and could only work if economic laws were somehow suspended. So long as they continued in
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At the turn of from the 19th century to the 20th century however, this form of classical liberalism was
increasingly under pressure in the face of the reality of economic conditions and increasing inequality. In
the midst of rapid industrialisation and the consolidation of enormous corporate economic power in
industry and finance (in the era of the ‘robber barons’) that was combined with cut-throat competition,
social tensions were running high. Daily life was hard and workers faced long hours, low wages, and
often dangerous industrial accidents and unsanitary conditions– trade unions had started to challenge
employers for better working conditions and wages, and social reformers were calling for changes to
improve living conditions.31 Throughout the period from 1880-1930, there was an ebbing and flowing in
administrative and legislative attempts to challenge the power of large corporations and to provide more
rights and benefits to working people, but this faced powerful resistance - including resistance of the
federal and state courts in the United States, which overturned much social legislation on the basis of its
‘unconstitutionality’. As the ever insightful Holmes dryly observed in 1897, “people who no longer hope
to control the legislatures, [ ] look to the courts as expounders of the constitutions and in some courts,
new principles have been discovered outside the bodies of those instruments, which may be generalized
into acceptance of economic doctrines that prevailed about fifty years ago.”32
One case that has long served as a lightning rod of the legal realist debate is that of Lochner v. New York
(1905) of the US Supreme Court. In that case, the Supreme Court ruled unconstitutional the 1895 New
York State Bakeshop Act which limited the working hours of bakers to 60 hours per week for health
reasons. Despite receiving evidence that workers were required to work excessive hours in appalling
sanitary conditions that severely affected their health, the Court struck down the regulation, on the basis
that the workers had freely entered into their work contract, and the state and the law had no business
meddling with the right to buy and sell labour under conditions of ‘freedom of contract’:
“There is no reasonable ground, on the score of health, for interfering with the liberty of the
person or the right of free contract…. Nor can a law limiting such hours be justified a health law
to safeguard the public health, or the health of the individuals…. Section 110 of the labor law of
the State of New York, providing that no employees shall be required or permitted to work in
bakeries more than sixty hours in a week, or ten hours a day, is .. an unreasonable, unnecessary
and arbitrary interference with the right and liberty of the individual to contract in relation to
labor, and, as such, it is in conflict with, and void under, the Federal Constitution.”33
Justice Holmes’ in his (1905) minority dissent criticised the Court’s reading of the freedom of contract as
a ‘perversion’ of the meaning of liberty in the fourteenth amendment, one that reflected laissez faire
operation, the egalitarian impulse to redistribute wealth by manipulating the legal system inevitably involved both
injustice and a counterproductive reduction in total wealth.” (p.957)
In my thesis, I will have a larger prior section on this economic and social context.
Holmes, The Path of the Law.
33
Lochner v. New York, 198 U.S. 45 (1905), pp 61-64.
31
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economic theory. He argued that the Court had decided the case on the basis of “an economic theory
which a large part of the country does not entertain” and that the “Fourteenth Amendment does not
enact M. Herbert Spencer’s Social Statics”, insisting that “[A] Constitution is not intended to embody a
particular economic theory, whether of paternalism and the organic relation of the citizen to the State or
of laissez faire.”34 Critical scholars, such as Duncan Kennedy, have pointed out that ‘freedom of contract’
is not expressly protected in the Constitution, thus the Court ‘invented’ this right of freedom of contract
by reading it into the ‘due process clause’ – reflecting the ‘right-wing judicial activism’ of the Court
during the ‘Lochner era’.35 Holmes at the time warned against the Court’s constitutionalisation of laissez
faire, not because he was particularly progressive (he wasn’t), but rather because he did not believe that
one particular set of logical axioms could ever resolve fundamental conflicts over legal theories or
values.36 Holmes insisted that “General propositions do not decide individual cases” reflecting the
reaction against general deductive propositions and anticipating the challenge to legal formalism. In his
1897 Path of the Law, he argued that “The danger of which I speak… is the notion that a given system,
ours, for instance, can be worked out like mathematics from some general axioms of conduct”.
Writing in the context of rapid industrialisation and the rising inequality that was generating such social
struggle, the legal realists, like the institutional economists and the progressives before them, took
forward this revolt against laissez faire constitutionalism, reacting at the moves of the judiciary to strike
down social legislation. More than attacking formalism then, they were attacking what was being formalised.
They were also doing more than that – they were engaged in nothing less than setting the groundwork for
a new vision of liberalism. They did this by challenging the central tenets of classical laissez faire
liberalism.
While the legal realists attacked the tenets of ‘classical legal thought’, the institutional
economists attacked the key tenets of ‘classical economic theory’.37 In particular, they challenged the
apparent neutrality and ‘naturalness’ of laissez faire principles. They showed that, despite the efforts of
the legal and economic orthodoxies to present the state and the law as neutral, in fact both the state and
the law were heavily implicated in structuring the ‘working rules’ of the economic game through the ways
in which they coercively enforced private power - and the state and the law were thus heavily implicated
in the distribution of wealth and economic power. Aside from the explicit references in Holmes’ dissent,
these themes can be seen across a range of legal realist writings, including for example, those of Roscoe
Holmes, J. ‘Dissenting Opinion’, Lochner v. New York.
Kennedy, “Role of Law in Economic Thought.”
36
Holmes, The Path of the Law. Holmes view was that it was the duty of judges to weigh and balance the different
interests and values involved. He saw this “duty as inevitable, and the result of the often proclaimed judicial
aversion to deal with such considerations is simply to leave the very ground and foundation of judgements
inarticulate, and often unconscious” and that if judges did reflect on who would benefit from the rule they imposed,
“they sometimes would hesitate where they are now confident, and see that really they were taking sides upon
debatable and often burning questions.” Giving an example of a conflict between interests, he argues that “if anyone
thinks that it can be settled deductively, or once and for all, I can only think he is theoretically wrong, and that I am
certain that his conclusion will not be accepted in practice semper ubique and ab omnibus”
37
Duncan Kennedy explained “Classical legal thought supposed the classical economists’ claim that the outcome of
economic processes was ‘natural’” and thus that “equality does not figure among the legitimate goals of the legal
system” Kennedy, “Role of Law in Economic Thought,” p. 956–957.
34
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Pound38, Walter Wheeler Cook39, Morris Cohen40 and John Dawson41 and the writings of the institutional
economists Robert Hale42 and John R. Commons.43 All of these worked in different ways to challenge
classical liberalism, its peculiar legal institutions of property and contract, and the inequalities of wealth
and power that these institutions were so manifestly producing.
The work of the legal realists and economic institutionalists undercut the key tenets of the classical
liberalism by showing that the law, like the market, was not natural or neutral, or even necessary – they
showed how the state, through its peculiar legal institutions coercively created markets in ways that were
historically contingent and socially constructed, but thus could be changed. They argued that the
assumed neutrality of these institutions was a myth - Robert Hale for example showed that the particular
kinds of legal rules enforced by the state determined the distribution of income and wealth. Commons
also argued that “the economists have taken the laws of private property for granted, assuming that they
are fixed and immutable”, when such laws are in fact, and should be understood, as “changeable” as the
rules of property have a “profound influence on the production and distribution of wealth.”44 To suggest
then that judges and the law should not be involved in decisions that involved the redistribution of
wealth, was to fundamentally deny that judges and the law were already thoroughly implicated in the
extant distribution of wealth, through the entitlements enforced.
These theorists sought to show that notions of ‘laissez faire’ and ideas of ‘free markets’ were a myth – and
that so-called ‘free’ markets were shot through with all sorts of coercion. Although classical theory
assumed that only state power was coercive, with the concentration of economic power, it had become
clear that private power could be equally, if not more, coercive (something which was difficult to deny in
the era of the ‘robber barons’). One of the central preoccupations of institutional economics then was
this rising power of corporations and the legal status conferred on this new form of association. The
economist Adolphe Berle, for example, was concerned with the concentration of power that had arisen
from the creation of the corporation – “the power attendant upon such concentration has brought forth
princes of industry” and the separation between ownership and control had eliminated some of the
traditional controls on that power. 45 This reflected a wider concern with the emergence of monopoly
and trusts in the context of ‘race-to-the-bottom’ competition, which challenged the classical liberal image
of the market as involving relations between sole traders and small businesses trading in relative equality.
See e.g. Pound, “Liberty of Contract.”
See e.g. Cook, “Privileges of Labor Unions in the Struggle for Life.”
40
See e.g. Cohen, “Property and Sovereignty.”
41
Dawson, “Economic Duress.”
42
See e.g. Hale, “Coercion and Distribution in a Supposedly Non-Coercive State”; Hale, “Bargaining, Duress, and
Economic Liberty.”
43
Commons, Legal foundations of capitalism.
44
Commons, Institutional economics, 51.
45
Berle and Means, The Modern Corporation and Private Property.
38
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These concerns provided the impetus for the 1890 Sherman Anti-Trust Act and other trust-busting
legislation.46
They also sought to show so-called ‘free’ markets were shot through with the coercion of the state,
through the enforcement and privileging of peculiar rights to property and to liberty of contract institutions that were historically specific, developed and designed to support the market economy.47
One key insight of the legal realists and institutional economists was to break down the sharp distinction
between the public and private spheres, arguing that the state was fundamentally implicated in all
“private” transactions.48 Laissez faire did not and could not exist because the market was never ‘selfregulating’, it was regulated by the state through the law of property and contract. Commons’ work on
the legal-economic nexus in particular showed how the law and markets were mutually constitutive, and
how the state itself determined the ‘working rules’ of the economic game, thus structuring apparently
‘free’ markets. Private power was largely constituted and enforced by the public power of the state
through the law – Commons even argued that the state itself “consists in the enforcement by physical
sanctions of what private parties might otherwise endeavour to enforce by private violence.”49 Similar
themes were evident in other realists. As Morris Cohen noted “..in enforcing contracts, the government
does not merely allow two individuals to do what they have found pleasant to their eyes. Enforcement, in
fact, puts the machinery of the law in the service of one party against the other.”50 Or as John Dawson
put it, the doctrine of laissez faire left “individuals and groups [free] to coerce one another, with the
power to coerce reinforced by the agencies of the state itself”.51
From this perspective, the liberal
dichotomy between state and market was false and the issue was not one of more or less government, or
more or less interference in the economy, but rather a political question of “how the ubiquitous authority
of government is to be exercised within the economic system: who is to be exposed to the coercion of whom, and
to what extent”52.
These theorists thus challenged the classical liberal conception that private power was separate from
public power. Robert Hale argued that, while the right to property is a negative right against the state for
the property-holder, it is not only a negative right against forcible dispossession; it is also a positive right
that uses the coercion of the state to protect the property-holder against any non-property holder that
might need or wish to use the property. 53 For those who are non-owners of property this is extremely
coercive, as if the non-owner has no land on which to produce food, the law “coerces him into wagework under penalty of starvation”, regardless of the type of wagework or the coerciveness and unfairness
I have not yet fully completed my research on the economists – this point will be elaborated.
Horwitz, The Transformation of American Law, 1780-1860.
48
See Singer for an extension of this argument. Singer, “Legal Realism Now.”
49
Commons, Institutional economics, 751.
50
Cohen, “Property and Sovereignty.”
51
Dawson, “Economic Duress,” p.288.
52
Medema, “Commons, Sovereignty, and the Legal Basis of the Economic System,” 107. My italics.
46
47
53
Hale, Coercion and distribution in a supposedly non-coercive state,.
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of the demands of any particular employer – the worker is hardly ‘free’ not to work in the industrial age.
More heretically, Hale even suggested that state power might be used to reduce private coercion to create
greater ‘freedom’ for the powerless:54
“.. by judicious legal limitation on the bargaining power of the economically and legally stronger,
it is conceivable that the economically weak would acquire greater freedom of contract than they
now have--freedom to resist more effectively the bargaining power of the strong, and to obtain
better terms.”55
These theorists argued the classical assumption that the major threat to the right of the individual was the
state, was outdated in an era when private economic power had become concentrated in the hands of so
few.
The realists challenged empty notions of formal equality in the context of economic power.
Writing on Adair v. United States (1908) in which the Supreme Court again relied on the notion of
‘freedom of contract’ to strike down legislation to limit ‘yellow-dog’ contracts (which prohibited workers
from joining a union), 56 Roscoe Pound despaired at how the Court could insist on ‘freedom of contract’
and on the essential equality between the massive railroad corporation and individual workers “in the face
of practical conditions of inequality?.. Why is the legal conception of the relation of employer and
employee so at variance with the common knowledge of mankind?” 57 Writing on Ritchie v. People (1895)
when the Supreme Court of Illinois struck down a statute limiting working hours for women and children
in factories and workshops (which had been passed to make it unlawful for employers to force employees
to work 16 hour days)58, Commons cited an opinion piece of the Chicago Times Herald: “There is a ghastly
sort of irony in the attempt of the Supreme Court to explain or excuse its decision upon the plea that it is
protecting the rights of the weak individuals with labor to sell”.59
These theorists thus suggested that the notion of formal equality presupposed by the courts completely
ignored the manifest inequality between workers and employers. When the courts argued that workers
entered freely into the yellow-dog contracts, the court was clearly failing to reflect on the extent to which
workers were acting from necessity rather than from choice in the context of massively unequal
bargaining power. The realists suggested then that, in their formalistic pretence of protecting the freedom
of both sides, the courts’ insistence that the state refrain from interference in cases such as Lochner or
Adair, was an obfuscation of their privileging of the rights of the stronger party against the weaker party.
Ibid.
Hale, “Bargaining, Duress, and Economic Liberty,” p.627.
56
Adair v. United States, 208 US 161 (1908). The majority opinion argued that “employee and employer have
equality of right, and that any legislation that disturbs that equality is an arbitrary interference with the liberty of
contract, which no government can legally justify in a free land”.
57
Roscoe Pound (1909) “ Liberty of Contract” collected in Fisher III, Horwitz, and Reed, American Legal Realism,
p.31.
58
Ritchie v. People (1895) 115 Ill. 98, 40 N.E. 454
59
Cited in Medema, “Commons, Sovereignty, and the Legal Basis of the Economic System.”
54
55
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Laissez faire principles simply meant leaving the powerless at the mercy of the powerful, and the courts
prohibited the state to intervene to assist the powerless.
As Commons argued, the issue was not one of freedom per se, but whose freedom; “that is: freedom for
the employers to command employees to work 16 hours per day versus freedom for the employees from
injurious commands of their employers.”60 In such decisions, the courts were making a political choice
between competing interests and conceptions of liberty. As John Dawson noted, there was a choice
between a “freedom of the ‘market’ from external regulation” or the freedom of individuals achieved
through “regulating the pressures that restricted individual choice” through concepts such as duress.61 In
other words, the choice is between privileging the ‘economic freedom of corporations’ to be free from
regulation, or privileging the ‘economic freedom of individuals’ to be free from coercive corporate power.
For the legal realists, the relevant question was not whether or not there was regulation (as clearly the
enforcement of property and contract constituted regulation, just as much as any limitations on those
rights would constitute regulation). The relevant question was rather whose interests and rights were being
protected and what distribution of power was being enforced. These theorists challenged laissez faire by
focusing on economic power and economic inequality, in a way that began to conceive of the possibility
of protecting individuals against corporate power, using state power to secure freedom of individuals from
coercive market power rather than freedom of corporations from the state. It was not the market itself, or the
corporations, that were in need of protection from the state, it was the workers and ordinary people who
needed protection from market power. Thus rather than it being the duty of the state to protect the
laissez faire workings of the inexorable, economic ‘laws of nature’, it should be the duty of the state to use
its countervailing power to protect the weak and powerless against that economic power.62 The liberal
duty to refrain from interference in the market economy was a myth, as the state was already
systematically intervening in the economy; what was important was the duty to change the ‘working rules’
of the economy. This began then to shift notions of state responsibilities and to open up new ways for
new thinking about rights.
Revolting against the construction of particular rights as ‘natural’ rights
The legal realists and institutional economists were not socialists, they were liberals - but they were
seeking a new kind of liberalism and a law and economics that put the ‘human factor in the central
place.’63 As liberals, they were not against the right to property in toto, rather they were attacking the
‘absolute’ quality that was granted to the right to property and the derived right to free exchange, at the
expense of any other kinds of rights.
They challenged the ‘naturalisation’ and ‘constitutionalisation’ of
Ibid., 48.
Dawson, “Economic Duress,” p.266.
62
Later in my thesis, I will argue that this conception has been lost in the reimagining of these rights in the 1980s.
63
Roscoe Pound (1909) “ Liberty of Contract” collected in Fisher III, Horwitz, and Reed, American Legal Realism,
p.31.
60
61
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very peculiar, and historically contingent, notions of rights of property and contract, which had emerged
out of natural law doctrine, and were now being presented as ‘natural’ rights beyond the reaches of
legislative limitations. Pound, for example criticised Herbert Spencer’s invocation of the inviolability of
rights of property and the right of free exchange of that property as ‘natural rights’ in Spencer’s 1891
Justice, as relying on an outdated natural law jurisprudence that tried to present those rights as absolute
and inherent, regardless of actual legislation. Commons argued that classical notions of rights based on
Locke’s ‘life, liberty and property’ were now outdated, as the Lockean proviso was evidently no longer
applicable – “.. in the nineteenth century, [ ] those who did not have rights of property could move west
and get them. It is missed in the twentieth century when those who are short on rights are compelled to
make terms with those who have them”.64
Commons even suggested that in the context of
industrialisation, with no Lockean proviso, there is no choice but to work, and thus he suggested that
“the right to work” should be considered to have the status of a property right, with compensation for
injuries and the loss of employment (and he put this into practice through drafting the first legislation on
workers compensation in Wisconsin which later served as inspiration for the New Deal).65
Applying Wesley Hohfeld’s more nuanced understanding and categorisation of rights, Commons also
argued that rights could not be reductionistically derived from the rights of property and contract, but
were made up of very different “legal rights, duties, liberties and exposures” enforced by the state. 66 The
ways in which rights were legally defined in particular times and particular places thus determined the
ways in which markets worked.
‘Free’ exchange was fundamentally determined by the ways in which
these legal rights were allocated, which structured each party’s bargaining power, and thus fundamentally
shaped distributional outcomes. Initial legal entitlements would determine the distribution of wealth and
power.67 However, because the state created the rights through the law, these ‘working rules’ were
historically contingent and could thus be changed to produce different distributional outcomes. Here he
followed Adams, who had argued in 1886:
“Every change in law means a modification of rights; and.. when familiar rights are changed, or
what amounts to the same thing, when new duties are imposed, the plane of action for all
members of society is adjusted to a new idea.”
Holmes had also pointed out that not all rights could or should be traced back to conceptions of absolute
property rights or freedom of contract.68 He suggested that the insistence of classical legal thought on
maintaining the fiction of neutrality through insisting on the freedom of contract of both parties in cases
such as Lochner, amounted to an avoidance of the recognition that economic struggles involved a
Samuels, The Founding of Institutional Economics. Citing Commons’ 1918 address to the American Economic
Association.
65
Harter, John R. Commons, his assault on laissez-faire.
66
Commons, Institutional economics, 751.
67
Here we see the precursor to Amartya Sen’s later work on entitlements.
68
Holmes, The Path of the Law.
64
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conflict of rights, with legal rights on both sides of the struggle – the legal rights of the employers were in
conflict with legal rights to the workers. For Holmes, this implied the need to recognize rights of both
parties and to consciously choose between these conflicting rights, through a conscious balancing
process, rather than through the unarticulated prejudices of legal orthodoxy.69 This conception of the
possibility of legal rights on both sides opened the way for conceptions of new rights, beyond the classical
rights of liberty and property, yet still within the bounds of liberalism.
These challenges to ideas of freedom, liberty and rights gradually opened up to a reworking of ideas of
rights within the liberal tradition, on the basis that “Rights… [and] liberty of the individual must be
remolded from time to time”
70
to meet the changing economic reality and the changing political or
economic threats to individuals. Many theorists, practitioners and progressives started to argue that the
complexity of industrial society required a shift in rights discourse, moving beyond the traditional
conception of the abusive state towards recognising abuses from the “private concentration of economic
power”.71 This marked a sharp epistemological break with the classical notions of rights as protection
from the abuse of the state, and the inclusion of new rights within a new liberal orthodoxy and presaged
the beginning of the era of ‘embedded liberalism’. These new conceptions of rights came to be reflected
in Franklin Roosevelt’s proposal for an ‘Economic Bill of Rights’ and were materialised (if not
‘constitutionalised’) in the New Deal programmes of the 1930s. The legal realists and the institutional
economists had set the groundwork then for nothing less than a new vision of liberalism, marking quite a
profound break from the classical orthodoxies in both law and economics of the past.
Conceiving of economic and social rights as human rights within a new liberal orthodoxy
This new form of liberalism might never have emerged triumphant over classical liberalism – but the
Great Crash of 1929 and the Great Depression of the 1930s provided a key defining moment for these
ideas to emerge into the mainstream, as the near-collapse of capitalism threw the old economic and legal
orthodoxy into such profound disarray. After the election in 1932, many of the legal realists and
institutional economists of these early intellectual debates became key actors in the legislative and
administrative project of Franklin Roosevelt’s New Deal of the 1930s.
72
Progressive lawyers and
economists schooled in the ideas of the legal realists and of the institutional economists flooded into the
administration, and were able to put their ideas into practice. Massive legislative and economic change
was made in the first 100 days of the administration that sought to instantiate the new legal and economic
orthodoxy in the administrative and legislative functions.
The New Deal was an attempt to
fundamentally change what was being formalised in the creation and materialisation of a new orthodoxy,
69
70
This was then the precursor to ideas of the “balancing test”. Ibid.
Judge Brandeis cited in Waligorski, Liberal economics and democracy.
71
Lewis, “Human Rights in England and the United States.”
72
One question to ask is whether the paradigm shift to a Keynesianism and the welfare state (with its arguably conservative aim
designed to restore and preserve capitalism) limited, rather than promoted the critiques of the progressive era and of the realists.
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although the administration was not able to so quickly shift the laissez faire constitutionalism of the
judiciary, which continued to overturn social legislation and many of the New Deal initiatives. It was not
until 1937 when Roosevelt threatened ‘court packing’ that the federal Supreme Court began to shift away
from the old orthodoxy and stopped striking down New Deal initiatives on the basis of their
‘unconstitutionality’.
Many of the concerns of the legal realists and the institutional economists can be seen reflected in the
political speeches and ‘fireside chats to the people’ of Franklin Roosevelt during the 1930s and 1940s.
His speeches challenged classical economic laissez faire liberalism and reflected the evolving new
consciousness of rights going beyond property and contract. In the context of the massive failure of selfregulation of financial capitalism that had led to the Great Crash of 1929 (which wiped out the savings of
much of the population), and the Great Depression (which left more than a quarter of the population
unemployed and millions queuing up in breadlines and soup kitchens across the United States), a core
theme in his speeches if the failure of notions of the ‘self-regulating market’. As he declared in his 1932
address accepting the presidential nomination:
“Our Republican leaders tell us economic laws – sacred, inviolable, unchangeable – cause panics
which no one could prevent. But while they prate of economic laws, men and women are
starving. We must lay hold of the fact that economic laws are not made by nature. They are
made by human beings”.73
Roosevelt’s speeches also reflected new conceptions of economic and social rights in public speeches
throughout his four terms in office. He made a first reference to an ‘economic bill of rights’ in a speech
before his election in 1932 (written by the economist Adolph Berle who served on Roosevelt’s Brain
Trust), where he questioned the classical liberal rights to life, liberty and property, casting the right to life
as including “the right to make a comfortable living” through a living wage, and the “right to property”
not as absolute, but as limited by state regulation – especially to limit the operations of “the speculator,
the manipulator, even the financier” to protect the safety of the savings of ordinary people. In the
context of financial crisis and the economic recession, he was very critical of business and the
concentration of industry, which he denounced as “economic oligarchy” yet which had nonetheless had
descended on Washington to beg for government help out of the depression, despite their claims to
support laissez faire policies – “The same man who tells you that he does not want to see the government
interfere in business.. is the first to go to Washington and ask [for help]” 74
In increasingly radical rhetoric in a speech before his second election in 193675, he challenged classical
liberal conceptions of freedom – calling for “a wider freedom”76 to protect ordinary people from
Roosevelt, “Nomination Address.”
Roosevelt, “Speech to the Commonwealth Club, San Francisco, CA.”
75
Roosevelt, “Speech before the Democratic National Convention, Philadelphia, Pennsylvania.”
73
74
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“economic tyranny”, providing economic freedom to all, rather than freedom only to the market. He
argued that freedom should include not only political rights, such as the right to vote, but also economic
and social rights, including the right to “make a living – a living decent to the standard of the time” and
he sets this out as an “inescapable obligation” of government in a modern civilization:
“The royalists of the economic order have conceded that political freedom was the business of
the government, but they have maintained that economic slavery was nobody's business. They
granted that the government could protect the citizen in his right to vote, but they denied that
the government could do anything to protect the citizen in his right to work and his right to
live.” 77
He often referred to the profoundly conservative forces ranged against his policies and this new vision of
liberalism: “Powerful influences strive today to restore that kind of government with its doctrine that the
Government is best which is most indifferent… Never before in all our history have these forced been
so united against one candidate as they stand today. They are unanimous in their hate for me and I
welcome their hatred.” 78 But he continued to frame the New Deal not only in terms of a new vision of
freedom that included the ‘freedom from want’ as one of Four Freedoms in his 1941 State of the Union
address,79 but as a struggle in terms of rights, eventually setting out a broad vision for a full ‘Economic
Bill of Rights’ in his 1944 State of the Union address, as including:
“The right to a useful and remunerative job in the industries or shops or farms or mines
of the Nation;
The right to earn enough to provide adequate food and clothing and recreation;
The right of every farmer to raise and sell his products at a return which will give him
and his family a decent living;
The right of every businessman, large and small, to trade in an atmosphere of freedom
from unfair competition and domination by monopolies at home or abroad;
The right of every family to a decent home;
The right to adequate medical care and the opportunity to achieve and enjoy good
health;
The right to adequate protection from the economic fears of old age, sickness, accident,
and unemployment;
The right to a good education.”
Words which are echoed in the later words “in larger freedom” of the 1945 UN Charter.
Roosevelt, “Speech before the Democratic National Convention, Philadelphia, Pennsylvania” My italics.
78
Roosevelt, “Speech at Madison Square Gardens.”
79
Roosevelt, “State of the Union Address.”
76
77
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These ideas of economic and social rights never reached the status of constitutional rights in the US, 80
but there was the marked shift in constitutional philosophy of the Supreme Court from 1937 onwards.
The New Deal programmes wrought enormous change in domestic policy, marking the end of laissez
faire and the beginning of a new era of embedded liberalism – which lasted until the 1970s. However,
Roosevelt’s quite radical representation of economic and social rights as about the economic freedom of
individuals as opposed to the economic freedom of the market, were soon stifled after Roosevelt’s death, in the
repressive environment of the Cold War era and the McCarthyism of the 1950s.81 And although these
rights were never constitutionalised domestically, Roosevelt’s rights clearly served as an important
inspiration for formalisation of these rights in the 1948 Universal Declaration of Human Rights, under
the leadership of Eleanor Roosevelt.
Constitutionalising and universalising economic and social rights in the Universal Declaration?
Eleanor Roosevelt led the drafting of the 1948 Declaration, pressing for the inclusion of economic and
social rights in her role as head of the US delegation. The influence of Roosevelt’s rights is also evident in
the submissions of the American Law Institute which also served as a key inspiration of the Declaration.82
The formulation of these rights were however heavily contested by the more conservative American Bar
Association, which “took every opportunity to campaign against economic and social rights, claiming that
this class of rights transgressed the constitutional rights of American citizens”. The ABA lobbied against
the inclusion of these rights in the Universal Declaration, and having failed in that, they went on to lobby
hard for economic and social rights to be excluded from any binding legal Covenant,83 contributing to the
decision to divide the rights in the Declaration into two separate binding Covenants84 and later to the
refusal of US to ever ratifz the International Covenant on Economic, Social and Cultural Rights, despite
its role in drafting these provisions.85 Yet the rights which were ‘constitutionalised’ internationally as the
‘in the Universal Declaration and in the later Covenant do bear a striking resemblance to Roosevelt’s
rights (even though the Universal Declaration drew on multiple sources and philosophies).
While no longer grounded in ideas of ‘natural law’, human rights as they have been formalised in the
Universal Declaration, are now grounded in the no less ethereal - and supra-legislative - grounds of
‘human dignity’ and ‘inherent common humanity’. Paradoxically then, the rights which emerged out of
the ‘revolt against formalism’ and against ideas of ‘natural rights’ and ‘natural law’ have contributed to a
Although Sunstein has suggested that they might well have been constitutionalised, if it had not been for the
election of Nixon. Sunstein, The second bill of rights.
81
It is beyond the scope of this paper to address this, but this will be briefly examined in my larger thesis.
82
Whelan, Indivisible human rights; Whelan and Donnelly, “The West, Economic and Social Rights, and the Global
Human Rights Regime”; Whelan and Donnelly, “Yes, a Myth.”
83
Kirkup and Evans, “The Myth of Western Opposition to Economic, Social, and Cultural Rights?”.
84
Whelan, Indivisible human rights; Morsink, Inherent human rights.
85
Alston, “Putting Economic, Social and Cultural Rights Back on the Agenda of the United States.”
80
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new formalisation and universalisation of particular rights within the 1948 Universal Declaration.86 This
has ultimately produced a new liberal ‘theology’ of universal human rights - naturalising,
constitutionalising and universalising these alternative notions of rights. The rights are broader than the
classical rights of life, liberty and property, but they are nonetheless a particular, peculiar, historically
contingent notion of rights that is being ‘naturalised’ and ‘universalised’.
It is often suggested that the ‘revolt against formalism’ ultimately failed, as it failed to provide a solution
to how to resolve normative argument without reverting back to a new formalism.87 From the more
sophisticated critical theory perspective, the ‘revolt against formalism’ also ultimately failed as it simply
created this new universalizing orthodoxy.88 From the critical perspective, formalising and universalising
a new vision of the truth makes little sense, as it again clouds the problem of competing values and fails
to leave open competing visions of what is just to a more open deliberative, iterative democratic debate.89
However, if we believe that the legal realists and institutional economists were not attacking formalism
for its own sake, but because they were attacking what was being formalised, it becomes clear that the ‘revolt
against formalism’ did not fail, but was ultimately a success in its own terms – at least at the level of
institutionalising a new vision of rights, even if interpretations of these rights remain indeterminate and
unstable. Challenging formalism then was not an end in itself, but rather a means to push for a new
version of liberalism. Just as New Deal legislation was an attempt to institutionalise a new legal and
economic orthodoxy, the Universal Declaration was an attempt to ‘freeze’ (using Horwitz’s analogy) a
new vision of rights into a new liberal orthodoxy. It was an attempt to freeze a new conception of rights
in order to challenge the old orthodoxy’s rights. Yet despite the proselytizing of these rights in a new
legal ‘theology’ of human rights, as Humphreys warns:
“Social rights claims struggle against a recalcitrant history to make their claim stick…. The
difficulty is simply that social rights lack… the buttressing fiction of the history of natural rights,
and the more recent, but already entrenched, narrative of the rule of law – with its firm support
for property protections against state action…”90
Indeed, after a relatively short period of ‘embedded liberalism’ from 1940-197091, the re-emergence of a
new version of laissez faire neoliberalism has shown how unstable this ‘freezing’ of new conceptions of
rights, freedom and duties of the state has been – such that the formalisation of these new rights has
There is a significant, perhaps unsupported leap that I make here between the US history of the rise of rights and
the international, which is an issue that I will return to later to rethink – but I would be grateful for any
suggestions/comments on this point.
87
Singer, “Legal Realism Now.”
88
Kennedy, “The Critique of Rights in Critical Legal Studies.”
89
Ibid. Duncan Kennedy very perceptively notes how liberals and critical theorists worry about different issues –
the liberals that we cannot achieve social justice, and the critical theorists that those in power have a particular
perspective and set of interests, but claim that their perspective is a universal one with which everyone should agree.
90
Humphreys, “Are Social Rights Compatible with the Rule of Law? A Realist Inquiry,” p.29.
91
I have no space to elaborate here, but will do in my thesis.
86
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largely failed to ‘freeze’ a new liberal order in place. I would suggest that the increasingly urgent and
rather theological proselytizing of the rise of rights in our own neoliberal era is an attempt to reassert and
‘reformalise’ this vision of ‘embedded liberalism’, in reaction to the re-emergence of the totalizing,
universalizing ‘utopia’ of ‘free market fundamentalism’92. The ‘theology’ of human rights is a reaction to
the ‘theology’ of market fundamentalism. Only a new theology stands a chance of beating the old
theology, buttressed as it is by (natural) law. Yet although ‘rights talk’ appears to dominate the agenda,
this conceals the extent to which policy is driven by neoliberal conceptions of efficiency and a peculiarly
reductive understanding of ‘social welfare’93 and the extent to which the agenda has returned to a
narrower conception of property rights – in ways that negate the liberal humanism of the legal realists and
the institutional economists.
From this story then – and from a reflection on the broader story in my thesis which I have not yet been
able to fully develop here - I draw three preliminary points:
Firstly, that social struggles are very often framed in terms of rights, not because rights language
is necessarily the best language for framing visions and values (it’s not – the individualism of
rights necessarily negates socialist or communitarian visions even if allows a humanist liberalism),
but rather because, as the theorists discussed above make clear, our world is structured and
constituted by the law and markets are made of legal rights, duties and privileges – and so any
challenge to that legal and economic order must necessarily be a legal challenge in terms of legal
rights.94
Secondly, the attempt to freeze a new totalizing vision of universal human rights is not an
unconscious reversion to the totalizing mode of old-style formalism. Rather I would suggest that
it is part of a more open ‘strategic formalism’ amongst the theorists and activists in this debate, in
the sense that the universalizing and proselytizing of this new vision of human rights is
strategically necessary in the face of the far stronger theology of laissez faire constitutionalism. I
propose the concept of ‘strategic formalism’ following Spivak’s ‘strategic essentialism’, in the
sense of accepting an essentialist position in order to be able to act and precipitate change95, even
if that essentialist position is one that will not reconcile or secure the demands of all social
struggles.
Even for those who do not believe in rights language, or who do not believe in
universalizing particular truths, human rights have become a strategic site for social struggle.
I’m not sure that we’ve moved into a post-neoliberal era yet, even though this free market fundamentalism has
waned somewhat. See Stiglitz, Globalization and its discontents; Lang, World Trade Law After Neoliberalism.
93
DeMartino, Global economy, global justice.
94
I have previously discussed this with Andrew Lang, who has partially made this point in relation to the adoption
of the rights framework by the global justice movement in struggles related to trade liberalization. Lang, World Trade
Law After Neoliberalism.
95
Spivak, In other worlds.
92
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Thirdly, rights language does not necessarily exclude all possibility of challenging economic
power and economic inequality, as this history shows. But our more contemporary history
suggests that our understanding of human rights is being narrowed back towards the classical
privileging of the right to property. In my later work, I will reflect on how the elaboration of
economic and social rights (within the UN system during the ‘neoliberal era’) has lost many of
these insights from the legal realists and institutional economists on rights, on economic power
and on the duty of the state to protect individuals from economic power. Economic and social
rights have become re-described as rights held against the state, in ways that ignore the problem
of economic power and circumscribe any emancipatory potential they might retain.
Conclusion
In this chapter, I have argued that much of the groundwork for the emergence of ideas of ‘economic and
social rights’ in liberal thought was laid in the ‘revolt against formalism’ and against ideas of ‘natural
rights’ and ‘natural law’ in both law and economics by the American legal realists and institutional
economists over the period 1880-1930. Just as the legal realists sought to challenge the deductive
formalism of ‘law as science’ and its apolitical pretensions, the institutional economists sought to
challenge a similar trend towards deductive scientism and attempts to cast economic laws as inexorable,
apolitical ‘laws of nature’.
I have argued however, that many of the legal realists and institutional
economists were attacking more than formalism per se; they were attacking what was being formalised. They
were attacking the formalisation, ‘naturalisation’ and constitutionalisation of laissez-faire liberalism and
the primacy of the traditional liberal rights to property and liberty (understood as freedom of contract) in
what was coming to be called the ‘rule of law’ or simply the ‘law’.
The legal realists and the institutional economists demonstrated that so-called ‘natural’ rights were not
natural and ‘laissez faire’ was a myth. They showed that ‘free’ markets were constituted coercively by the
state and the law, in its privileging of particular rights to property and to liberty of contract, to the
exclusion of other kinds of rights. They also suggested that the concentration of economic power meant
that the classical liberal assumption that the state was the major threat to the individual had become
outdated.
The market was in no need of protection from the state, it was the workers and ordinary
people who needed protection from the market. Rather than being the duty of the state to allow the
laissez faire workings of the inexorable, economic ‘laws of nature’, the duty of the state should be to use
its countervailing power to protect the powerless against the economically powerful. The duty to refrain
from interference should be an obligation to change the ‘working rules’ of the economy, through which
the state was already intervening in the economy and structuring the distribution of wealth.
I argued that these ideas came to be reflected in Roosevelt’s proposal for an ‘Economic Bill of Rights’
and were materialised (if not constitutionalised) in the legislative and administrative project of the New
Deal of the 1930s, in what I suggested was an effort to shift what was being formalised through the creation
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of a new legal and economic orthodoxy, reflecting the wider shift towards ‘embedded liberalism’ that
these theorists had helped to initiate. I also argued that although economic and social rights never
reached the status of constitutional rights domestically in the US, they did serve as an inspiration for the
‘formalisation’ internationally as universal human rights in the 1948 Universal Declaration of Human
Rights.
Finally I reflected on the fact that the Universal Declaration has formalised and universalised these
particular notions of rights, which although no longer grounded in ideas of ‘natural law’ are ground in an
equally ethereal notion of ‘human dignity’. I suggested than how, paradoxically, the ‘revolt against
formalism’ led to a formalism through the universalisation of a new orthodoxy in the new liberal
‘theology’ of universal human rights. I drew out three points which I plan to develop further – firstly,
that the mutually constitutive nature of rights and markets means that any struggle against the economic
order must necessarily be cast in terms of rights. Secondly I suggested that the attempts to freeze
economic and social rights as human rights in a new universalizing legal ‘theology’ is not necessarily a
reversion to old-style totalising formalism, but is rather a new more open ‘strategic formalism’.
Proselytising a new theology of human rights is strategic reaction to the re-assertion of classical liberalism
and market fundamentalism in an era of economic neoliberalism. Only a new ‘theology of rights’ stands a
chance of beating the old (or resurgent) ‘theology of market fundamentalism’. Finally, I suggest that
rights language need not necessarily exclude challenging economic power and economic inequality, as this
history of the first ‘law and economics movement’ shows.
Cases
Adair v. United States, 208 US 161 (1908)
Lochner v. New York, 198 U.S. 45 (1905),
Ritchie v. People 115 Ill. 98, 40 N.E. 454 (1895)
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