economic substantive due process

economic substantive due process

§ 1 of Amendment XIV has been held on substantive due process grounds to require various levels of judicial review over legislation that affects private, that is, common law, property and contract rights.

The general consensus in the legal (practitioner) world on Lochner is Black's argument that the Constitution does not contain a right to freedom of contract, so that the Constitution does not embody any particular economic theory; but see the Contracts Clause. (Note that in [Ogden v Saunders], the Marshall Court's only decision where Marshall himself dissented, held that the [Contracts Clause] only prevents retrospective interference with contracts.) Another possible argument is that the Constitution does protect the freedom of contract, but made a mistake in defining the scope of possible interests that could override such a right.

Amendment XIV was first used to protect substantive economic rights in a common-law fashion. See, for example, [Munn v Illinois] (allowing government to regulate prices for using grain silos, where grain silo held natural monopoly, but implicitly allowing for other protections). Note that, like the Slaughterhouse Cases, the justices deciding [Lochner v New York] were deeply influenced by the legacy of the Civil War, and may have equated restrictions on contractual right with slavery; compare the effect of [Amendment XIII] on the availability of specific performance in contracts for personal service. The Court may also have plausibly feared that legislatures were discriminating against immigrants, who were coming into the country in huge numbers and who held no property but their labor.

Lochner and the Lochner era

[Lochner v New York].

Holmes and Harlan both dissented. Harlan's dissent argued that baking could be dangerous, so that Congress could have rationally decided to regulate it. In contrast, Holmes, who did not join Harlan's dissent, instead argued that the legislature was acting on the basis of interest-group politics, as it always did, and that the Court should not interfere to change the outcome of the contest unless it interfered with long-established or fundamental rights.

The Lochner court did apparently consider a "labor law," that is, a law regulating the labor contracts of disadvantaged categories, a permissible exercise of state police power. See, for example, [Muller v Oregon] (maximum hours for women). Likewise, a "health law" would be permissible. See [Nebbia v New York] (upholding price-fixing for milk, deemed a nutritional necessity). Such exceptions tracked the common law of competency in contracts and the "ultra-hazardous activity" concept in strict liability tort law. And nuisance, illegal contracts, monopoly, and other externalities were considered sufficient justification for the abrogation of private property rights. The court, however, attempted to restrict the expansion of these common law concepts, justifying its actions by a slippery-slope argument against majoritarian redistribution, and referencing cases on racial classification as a simliar evil. See, for example, [Lochner v New York], citing [Yick Wo v Hopkins].

Note that the Court did uphold many sorts of economic regulations during the Lochner era.

When the Court did strike down economic regulation, it did so for a variety of possibly contradictory reason:

End of the Lochner era and modern deference