Hostname: page-component-8448b6f56d-cfpbc Total loading time: 0 Render date: 2024-04-23T19:01:00.164Z Has data issue: false hasContentIssue false

Institutional Economics and the Progressive Movement for the Social Control of American Business

Published online by Cambridge University Press:  20 January 2020

Abstract

This article investigates the history of the Progressive Era effort to develop new techniques and technologies of control over American business and corporations in the late nineteenth and early twentieth centuries. A revolution in Progressive economic regulation was rooted in the intellectual work of the so-called institutional economists—particularly in the context of what economists and lawyers like Richard Ely, John Commons, and Walton Hamilton ultimately talked about as the movement for the “social control” of business, with distinct emphasis on the legal and regulatory “foundations” of modern capitalism. With increased attention to dynamics rather than statics, the real social economy rather than ideal rational actors, and historical and institutional rather than theoretical and abstract renderings of business, industry, and the market, the institutionalists were directly concerned with problems of control, particularly those mechanisms of control available through law, politics, the state, and new technologies of legislative and administrative regulation.

Type
Research Article
Copyright
Copyright © The President and Fellows of Harvard College 2020

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

1 For a quick index to an ever-expanding literature, see the essays and bibliography compiled in Beckert, Sven and Desan, Christine, eds., American Capitalism: New Histories (New York, 2018)CrossRefGoogle Scholar.

2 For a similar bibliographic introduction to LPE, see David Singh Grewal, Amy Kapczynski, and Jedediah Purdy, “Law and Political Economy: Toward a Manifesto,” Law and Political Economy (blog), 6 Nov. 2017, https://lpeblog.org/2017/11/06/law-and-political-economy-toward-a-manifesto; Grewal and Purdy, “Law and Neoliberalism,” Law and Contemporary Problems 77 (2015): 1–23.

3 See, for example, Harvey, David, A Brief History of Neoliberalism (New York, 2005)Google Scholar; Brown, Wendy, Undoing the Demos: Neoliberalism's Stealth Revolution (New York, 2015)Google Scholar; Streeck, Wolfgang, Buying Time: The Delayed Crisis of Democratic Capitalism (New York, 2014)Google Scholar; and Tooze, Adam, Crashed: How a Decade of Financial Crises Changed the World (New York, 2018)Google Scholar.

4 Thomas Piketty, Capital in the Twenty-First Century (Cambridge, MA, 2017); Angus Burgin, The Great Persuasion: Free Markets since the Depression (Cambridge, MA, 2015); Quinn Slobodian, The Globalists: The End of Empire and the Birth of Neoliberalism (Cambridge, MA, 2018).

5 Kate Andrias, “The New Labor Law,” Yale Law Journal 126, no. 1 (2016): 2–100; William J. Novak, “The Public Utility Idea and the Origins of Modern Business Regulation,” in Corporations and American Democracy, ed. Naomi Lamoreaux and William J. Novak (Cambridge, MA, 2017), 139–76; Laura Phillips Sawyer, American Fair Trade: Proprietary Capitalism, Corporatism, and the “New Competition,” 1890–1940 (New York, 2018); K. Sabeel Rahman, Democracy against Democracy (New York, 2017); Laura M. Weinrib, The Taming of Free Speech: America's Civil Liberties Compromise (Cambridge, MA, 2016); Risa L. Goluboff, The Lost Promise of Civil Rights (Cambridge, MA, 2010).

6 For the most relevant texts on these themes in four prolific bibliographies, see Alfred D. Chandler Jr, The Visible Hand: The Managerial Revolution in American Business (Cambridge, MA, 1977); Alfred D. Chandler Jr., “Government Versus Business: An American Phenomenon,” in Thomas K. McCraw, ed., The Essential Alfred Chandler: Essays Toward a Historical Theory of Big Business (Cambridge, MA, 1988); Chandler and Herman Daems, eds., Managerial Hierarchies: Comparative Perspectives on the Rise of the Modern Industrial Enterprise (Cambridge, MA, 1980); Louis Galambos, The Public Image of Big Business in America, 1880–1940: A Quantitative Study in Social Change (Baltimore, 1975); Galambos, “The Emerging Organizational Synthesis in American History,” Business History Review 44, no. 3 (1970): 279–90; Galambos, “Technology, Political Economy, and Professionalization: Central Themes of the Organizational Synthesis,” Business History Review 57, no. 4 (1983): 471–93; Morton Keller, Affairs of State: Public Life in Late Nineteenth-Century America (Cambridge, MA, 1977); Keller, Regulating a New Economy: Public Policy and Economic Change in America, 1900–1933 (Cambridge, MA, 1996); Thomas K. McCraw, ed., Regulation in Perspective: Historical Essays (Cambridge, MA, 1981); McCraw, Prophets of Regulation: Charles Francis Adams, Louis D. Brandeis, James M. Landis, Alfred E. Kahn (Cambridge, MA, 1986).

7 John Dewey, “Liberalism and Social Action,” in John Dewey: The Later Works, 1925–1953, vol. 11, ed. Jo Ann Boydston (Carbondale, IL, 1987), 1–65; William J. Novak, “Private Wealth and Public Health: A Critique of Richard Epstein's Defense of the ‘Old’ Public Health,” Perspectives in Biology and Medicine 46, no. 3 (2003): S180.

8 Walter Weyl, The New Democracy (New York, 1912), 2, 78. As Weyl described it, “There is only too much evidence to associate the getting of many of our great fortunes with a swaggering financial brigandage. The story of our railroad wreckers, of our distributors of worthless stocks, of our gentlemanly, manicured thieves of public lands. . . . The incredible rascalities of the old Erie Railroad; the historic shifts, lies, violences, and illegalities of the Standard Oil Company; the dubious financial manipulations of the United States Steel Corporation; the fraudulent operations of the Ship-building Trust; the dishonest promotion of notorious asphalt companies; the labors of the forty thieves of public service franchises—link the present with the past in one malodorous chain of financial infamy.”

9 John F. Manning and Matthew C. Stephenson, eds., Legislation and Regulation: Cases and Materials (New York, 2010); William N. Eskridge Jr., Philip P. Frickey, Elizabeth Garrett, and James J. Brudney, eds., Legislation and Regulation: Statutes and the Creation of Public Policy: Cases and Materials, 5th ed. (St. Paul, MN, 2014); Jerry L. Mashaw, Richard A. Merrill, Peter M. Shane, M. Elizabeth Magill, Mariano-Florentino Cuéllar, and Nicholas R. Parrillo, eds., Administrative Law: The American Public Law System: Cases and Materials, 7th ed. (St. Paul, MN, 2014); Lisa Schultz Bressman, Edward L. Rubin, and Kevin M. Stack, eds., The Regulatory State (New York, 2010).

10 Chandler, “Government Versus Business,” 425.

11 John A. Lapp, Important Federal Laws (Indianapolis, 1917); Lapp, Federal Rules and Regulations (Indianapolis, 1918).

12 Chase's incomplete list of new federal institutions post-1912 included (other than the War Boards of 1917/18) Federal Income Tax (1913); Federal Reserve Board, Federal Trade Commission, Alaska Railroad (1914); Bureau of Efficiency (1915); U.S. Shipping Board and Merchant Fleet Corporation, Federal Farm Loan Bureau, U.S. Tariff Commission (1916); Inland Waterways Corporation, U.S. Employment Service, Federal Board for Vocational Education (1917); Federal Power Commission (1920); Bureau of the Budget (1921); Grain Futures Administration (1922); Personnel Classification Board (1923); Federal Oil Conservation Board (1924); Aeronautics Branch (1926); Federal Radio Commission (1927); and Federal Farm Board (1928). Stuart Chase, Government in Business (New York, 1935), 28–29.

13 Felix Frankfurter and Henry M. Hart Jr., “Rate Regulation,” in Encyclopedia of the Social Sciences, vol. 13 (New York, 1934), 104.

14 Jürgen Habermas, Legitimation Crisis (Boston, 1975), 33.

15 Jürgen Habermas, The Theory of Communicative Action, vol. 2, Lifeworld and System, trans. Thomas McCarthy (Boston, 1987), 306; Max Weber, “The Bureaucratization of Politics and the Economy,” in Max Weber: Essays in Economic Sociology, ed. Richard Swedberg (Princeton, 1999), 110.

16 Michael Aglietta, A Theory of Capitalist Regulation: The U.S. Experience (London, 1979); Robert Boyer, The Regulation School: A Critical Introduction (New York, 1990); Boyer and J. Rogers Hollingsworth, eds., Contemporary Capitalism: The Embeddedness of Capitalist Institutions (Cambridge, U.K., 1997).

17 Bob Jessop, “Survey Article: The Regulation Approach,” Journal of Political Philosophy 5, no. 3 (1997): 289.

18 Friedrich Pollock, “State Capitalism: Its Possibilities and Limitations,” in The Essential Frankfurt School Reader, ed. Andrew Arato and Eike Gebhardt (New York, 1994), 78; Andrew Shonfield, Modern Capitalism: The Changing Balance of Public and Private Power (New York, 1965). Shonfield's analysis is particularly on the mark with regard to the early role of government in American capitalism: “Historically, American capitalism in its formative period was much readier to accept intervention by public authority than British capitalism” (p. 301). He makes a mistake in giving too much credence to the rise of laissez-faire in what he terms, “the reversal of the late nineteenth century” (p. 304).

19 Pollock, “State Capitalism,” 78.

20 Walton Hamilton, The Politics of Industry (New York, 1957), 6–7 (emphasis added). As Hamilton elaborated, “The thesis here is that the market which of old was sovereign to the whole economy has been deposed, and that the mandate of supply and demand which rigidly it enforced ceased to be an ‘iron law.’ It is not that the market is no longer of importance, or that it is a matter of indifference as to how much or how little of a commodity is offered for sale. It is rather that the throne has had to be shared, or that in areas of the economy the market has ceased to be overlord; and that the stream of judgments by which the vast network of productive activities is kept going no longer emerges from the automatic play of economic forces.”

21 Claudia Goldin and Gary D. Libecap, eds., The Regulated Economy: A Historical Approach to Political Economy (Chicago, 1994); Howard Brick, Transcending Capitalism: Visions of a New Society in Modern American Thought (Ithaca, 2006); Keller, Regulating a New Economy; William J. Novak, “Law and the Social Control of American Capitalism,” Emory Law Journal 60, no. 2 (2010): 377–405.

22 Edward A. Adler, “Business Jurisprudence,” Harvard Law Review 28, no. 2 (1914): 135–62; See also Adler, “Labor, Capital, and Business at Common Law,” Harvard Law Review 29, no. 3 (1916): 241–76.

23 Thomas K. McCraw, “Rethinking the Trust Question,” in McCraw, Regulation in Perspective, 5; McCraw, “Louis D. Brandeis Reappraised,” American Scholar 54, no. 4 (1985): 525, 527. For an excellent overview of McCraw's position, see Richard R. John, “Prophet of Perspective: Thomas K. McCraw,” Business History Review 89, no. 1 (2015): 129–53.

24 William Letwin, Law and Economic Policy in America: The Evolution of the Sherman Antitrust Act (Chicago, 1956), 7. Notably, Letwin's study was a direct product of Edward Levi's and Aaron Director's Antitrust Research Project at the University of Chicago Law School.

25 Ellis W. Hawley, The New Deal and the Problem of Monopoly: A Study in Economic Ambivalence (Princeton, 1966), vii, 4–5. Martin Sklar also caricatured America's common law traditions: “The concepts themselves embodied principles enunciated in common-law precedents and strictures. These, in turn were rooted in the dogma of natural liberty”—that is, “liberty of private contract and the rights of private property.” Sklar, The Corporate Reconstruction of American Capitalism: The Market, the Law, and Politics (New York, 1988), 100–1. Rudolph Peritz similarly positions the Sherman Act and antitrust policymaking squarely in the shadow of “the era of Lochner” and “the Supreme Court's ‘economic due process’ regime founded on the major premise that the Fifth and Fourteenth Amendments protect individuals’ natural rights by safeguarding private transactions from legislative impairment. Judges tended to write in a deductive style, beginning with the assumption that private property rights, exercised through ‘liberty of contract,’ reflect the ‘due process’ clauses’ protection of ‘life, liberty, and property.’” Peritz, Competition Policy in America: History, Rhetoric, Law (New York, 2001), 11–12.

26 For a broader analysis of this interpretive problem, see William J. Novak, “The Myth of the ‘Weak’ American State,” American Historical Review 113, no. 3 (2008): 752–72.

27 On the ICC, see Novak, “Public Utility Idea.”

28 Myron W. Watkins, “Federal Incorporation: III,” Michigan Law Review 17, no. 3 (1919): 242.

29 Myron W. Watkins, “The Economic Philosophy of Anti-Trust Legislation,” Annals of the American Academy of Political and Social Science 147, no. 1 (1930): 15, 23

30 Walton Hamilton, “Common Right, Due Process, and Antitrust,” Law and Contemporary Problems 7, no. 1 (1940): 24.

31 The brief survey that follows emphasizes the broad commonalities within the institutionalist tradition from the late nineteenth century through to the late New Deal. For current purposes, this synthetic treatment obscures significant differences and nuances within this intellectual history. For a more thorough examination of the variety of influences, separate schools, and important debates within institutional economics proper, see Malcolm Rutherford, The Institutionalist Movement in American Economics, 1918–1947: Science and Social Control (New York, 2011).

32 For two able introductions, see Daniel T. Rodgers, Atlantic Crossings: Social Politics in a Progressive Age (Cambridge, MA, 1998), 76–111; and Dorothy Ross, The Origins of American Social Science (New York, 1991).

33 Ronald H. Coase, “The New Institutional Economics,” Journal of Institutional and Theoretical Economics 140, no. 1 (1984): 230; Donald R. McCloskey, The Rhetoric of Economics (Madison, WI, 1985). For a more generous assessment of the relationship of the “new” to the “old” institutionalism, see Malcolm Rutherford, “Chicago Economics and Institutionalism,” in The Elgar Companion to the Chicago School of Economics, ed. Ross B. Emmett (Northampton, MA, 2010), 25–39.

34 Henry Carter Adams, “Relation of the State to Industrial Action” and “Economics and Jurisprudence,” in Two Essays by Henry Carter Adams, ed. Joseph Dorfman (New York, 1969); Thorstein Veblen, “The Preconceptions of Economic Science,” in What Veblen Taught: Selected Writings of Thorstein Veblen, ed. Wesley C. Mitchell (New York, 1936), 39–150; Veblen, Theory of Business Enterprise (New York, 1904); Richard T. Ely, Property and Contract in Their Relations to the Distribution of Wealth, 2 vols. (New York, 1914); John R. Commons, Legal Foundations of Capitalism (New York, 1924); John Maurice Clark, Social Control of Business (Chicago, 1926); Bruce Wyman, Control of the Market: A Legal Solution of the Trust Problem (New York, 1911); Hamilton, Politics of Industry; Wesley C. Mitchell, Business Cycles (Berkeley, 1913); Mitchell, What Veblen Taught; Samuel P. Orth, ed., Readings on the Relation of Government to Property and Industry (Boston, 1915); Robert Lee Hale, Freedom through Law: Public Control of Private Governing Power (New York, 1952); Rexford G. Tugwell, The Economic Basis of Public Interest (Menasha, WI, 1922).

35 Edward Alsworth Ross, Social Control: A Survey of the Foundations of Order (New York, 1901); Charles Horton Cooley, Social Organization: A Study of the Larger Mind (New York, 1909); Helen Everett, “Social Control,” in Encyclopaedia of the Social Sciences, vol. 4 (New York, 1930), 344–49. For a broad survey of the potential impact of the idea of “social control” on social and cultural policing in the early twentieth century, see Mabel A. Elliott and Francis E. Merrill, Social Disorganization (New York, 1934). The language of socialization that permeated much of this literature owed more to these theories of modern social change than to the political agenda of socialism. Later economic critics of the early American institutionalists frequently failed to make this distinction. For a nuanced discussion of the permeating language of “socialization” in this period, see Michael Willrich, City of Courts: Socializing Justice in Progressive Era Chicago (New York, 2003).

36 Ross, Social Control, 432–433.

37 Clark, Social Control of Business, 4.

38 Ross, Social Control, 436.

39 Walton H. Hamilton, “Charles Horton Cooley,” Social Forces 8 (1929): 183–85. Actually, Taylor himself later became quite a radical economist, moving well beyond the theories of Cooley or Adams. See, for example, Fred M. Taylor, “The Guidance of Production in a Socialist State,” American Economic Review 19, no. 1 (1929): 1–8.

40 Charles Horton Cooley, Human Nature and the Social Order (New York, 1902); Cooley, Social Organization; Cooley, Social Process (New York, 1918). John Maurice Clark concurred in Hamilton's regard for the formative influence of Cooley: “Charles H. Cooley performed the great service of showing that the mechanism of the market, which dominates the values that purport to be economic, is not a mere mechanism for neutral recording of people's preferences, but a social institution with biases of its own, different from the biases of the institutions that purport to record, for example, aesthetic or ethical valuations. Policy-wise, his theories looked largely in the direction of making the market responsive to a more representative selection of the values actually prevalent in the society.” Clark, Economic Institutions and Human Welfare (New York, 1957), 57.

41 Hamilton, “Cooley,” 185–87. In Price and Price Policies, Hamilton delivered a characteristically more adventuresome and entertaining account of the irretrievably social nature of industry and the economy: “A long time ago a Christian saint declared somewhat abstractly that ‘we are severally members one of another.’ A little while ago the records of business, with all the concretion of some millions of entries in red ink, set down in a multiple factual account the dependence of individual upon individual within an organized community. The two events are separated by some nineteen centuries; and, during the long interval, the restlessness which keeps mankind forever upon the march has many times made over the order of society. The church has surrendered its overlordship to the state, and the state has lost its dominance to the business system. But as society has passed from a Christian hierarchy to a political democracy to an industrial commonwealth, the tangle of personal activities into a none too orderly aggregate, upon which the welfare of every man rests, has endured.” Walton Hamilton and Associates, Price and Price Policies (New York, 1938), 1.

42 Karl Marx, Capital: A Critique of Political Economy (New York, 1967); Thomas Carlyle, Past and Present (London, 1897), 210–11; John Ruskin, Unto This Last and Other Writings, ed. Clive Wilmer (New York, 1997), 202.

43 Hamilton, “Cooley,” 185.

44 Vernon Louis Parrington, The Beginnings of Critical Realism in America: Main Currents in American Thought (New York, 1927).

45 Morton G. White, Social Thought in America: The Revolt against Formalism (New York, 1949); Richard Hofstadter, Social Darwinism in American Thought (Boston, 1944); H. Stuart Hughes, Consciousness and Society (New York, 1958); James T. Kloppenberg, Uncertain Victory: Social Democracy and Progressivism in European and American Thought, 1870–1920 (New York, 1988). What these historians explicate in sophisticated detail was captured more generally by the Oberlin Review in 1886: “Humility and open mindedness is succeeding dogmatism. The old theories and systems of education are being revised. Life, in all its aspects, has grown beyond the old systems which seemed so logically complete. Thoughtful men are content to patiently begin anew their study, that with fresh knowledge they may obtain deeper insight into the truth. There is a new chemistry, a new geology, a new philology; there is a new political economy, a new philosophy, a new theology. The new science in each case is born of a fresh contact of the mind with life and truth.” “Notes and Comments: The Duty of the University,” Oberlin Review 14 (1886): 130.

46 Richard T. Ely, “Report of the Organization of the American Economic Association,” Publications of the American Economic Association 1, no. 1 (1886): 10.

47 Ely, 16–17.

48 Ely, 10–11. The Oberlin Review at exactly the same time noted the same article in the Christian Union announcing the new approach: “A new science of political economy is growing up. Half a century ago, men believed they had a perfect science of political economy. But there has been a steady evolution of social and political relations since then. The world is larger and more diversified. It is a different world from that to which the laissez faire doctrine seemed so neatly fitted. Men are beginning to see that the old dogmas are not eternal. There is an attempt to supply men with data for intelligent thinking. . . . In this way can social and economic questions be studied and taught. . . . Dogmatism is antiquated, and out of place in the class-room.” “The Duty of the Universities,” Oberlin Review, 14 (1886): 130.

49 Geoffrey M. Hodgson, The Evolution of Institutional Economics: Agency, Structure and Darwinism in American Institutionalism (New York, 2004).

50 Thorstein Veblen, “Why Is Economics Not an Evolutionary Science?,” in The Place of Science in Modern Civilization and Other Essays (New York, 1919), 56–81; Mitchell, “Thorstein Veblen,” in Mitchell, What Veblen Taught, xxiii–xiv. For the continued resonance of this critique, see the similar musings of Robert Lekachman: “In despairing moments, I sometimes think that no amount of empirical evidence of actual business and individual behavior will ever suffice to woo conventional economics from its land of delight—the never-never paradise of competitive allocation and distribution in which time stops. One wonders why, for as much as Ptolemaic astronomers before the Copernican revolution spent endless, ingenious effort tidying up a theory in visible discord with the misbehavior of the planets, so respectable economists cope desperately with enormous multinational corporations, international cartels, public enterprise and inference, and a host of institutions such as cooperatives, health insurers, foundations, and universities which fit conveniently into none of the maximizing models. Models of competitive price may have been relevant to other times and places. One can afford to be generous in such matters because these models are manifestly irrelevant to the United States in the twentieth century.” Lekachman, foreword to The Economy as a System of Power, ed. Warren J. Samuels, vol. 2 (New Brunswick, NJ, 1979), i.

51 Walton H. Hamilton, “The Institutional Approach to Economic Theory,” American Economic Review 9, no. 1 (1919): 314–15.

52 The links between this evolutionary approach and the significance of broader social, cultural, and political institutions should be obvious. Hamilton put it this way: “Competition, property, the price structure, the wage system, and like institutions refuse to retain a definite content. Not only are things happening to them, but changes are going on within them. A law, a court decision, a declaration of war, a change in popular habits of thought, and the content of property rights is affected. An increased demand for labor, a refusal of the nation to allow strikes, an enforced recognition of unionism, an establishment of wages upon living costs, and the wage system becomes different. Both by a change in its relation to other things and by subtle changes going on within, each of these institutions is in a process of development. And, if this is true of particular institutions, it is likewise true of the complex of institutions which together make up the economic order. We need constantly to remember that in studying the organization of economic activity in general as well as in the particular, we are dealing with a unified whole which is in the process of development.” Hamilton, “Institutional Approach,” 315.

53 See, for example, Talcott Parsons, The Social System (Glencoe, IL, 1951); James Willard Hurst, Law and Social Process in United States History (Ann Arbor, 1960); and David B. Truman, The Governmental Process: Political Interests and Public Opinion (New York, 1951).

54 William James, Principles of Psychology, 2 vols. (New York, 1890); George Herbert Mead, Mind, Self and Society (Chicago, 1934).

55 Hamilton, “Institutional Approach,” 316–17.

56 Veblen, “Preconceptions,” 109–10. Veblen elaborated on a certain dehumanization at the core of such assumptions: “In all the received formulations of economic theory . . . the human material with which the inquiry is concerned is conceived in hedonistic terms; that is to say, in terms of a passive and substantially inert and immutably given human nature. . . . The hedonistic conception of man is that of a lightning calculator of pleasures and pains, who oscillates like a homogeneous globule of desire of happiness under the impulse of stimuli that shift him about the area, but leave him intact.” Mitchell, “Thorstein Veblen,” xxv–xxvi.

57 John Dewey, Individualism, Old and New,” in John Dewey: The Later Works, 1925–1953, vol. 5, ed. Jo Ann Boydston (1929; Carbondale, IL, 1988), 49.

58 Hamilton, “Institutional Approach,” 309, 311, 313.

59 Geoffrey M. Hodgson, “The Approach of Institutional Economics,” Journal of Economic Literature 36, no. 1 (1998): 169–70.

60 Joan Robinson, The Economics of Imperfect Competition (London, 1933); E. H. Chamberlin, The Theory of Monopolistic Competition (Cambridge, MA, 1933); Gardiner C. Means, Industrial Prices and Their Relative Inflexibility: Letter from the Secretary of Agriculture Transmitting in Response to Senate Resolution No 17, a Report Relating to the Subject of Industrial Prices and Their Relative Inflexibility, Senate Doc. No. 13, 74th Cong., 1st Sess. (Washington, DC, 1935); Caroline F. Ware and Gardiner C. Means, The Modern Economy in Action (New York, 1936).

61 Hamilton, Price and Price Policies. See also Hamilton's pioneering investigations of the coal industry: Hamilton and Helen R. Wright, The Case of Bituminous Coal (New York, 1925); and Hamilton and Wright, A Way of Order for Bituminous Coal (New York, 1928). This deep background on the coal industry greatly informed Hamilton's noted critique of the U.S. Supreme Court's decision in Carter v. Carter Coal Co. Hamilton and Douglass Adair, The Power to Govern: The Constitution—Then and Now (New York, 1937). See also Hamilton and Stacy May, The Control of Wages (New York, 1923).

62 Hamilton, Price and Price Policies, vii.

63 Hamilton, “Institutional Approach,” 312.

64 Clark, Social Control of Business, 12–13.

65 As Hamilton noted, “Early classical economics was formulated by men who sought to remove the artificial restrictions which had been imposed upon industry. Laissez faire was a formal and explicit part of its statement. It tended to show the beneficence of an industrial system automatically organized in response to the pecuniary self-interest of individuals. It made the scheme of arrangements wherein lay the real organization of society a part of the immutable world of nature. Since the neo-classical doctrine has passed into the inheritance, the formal defense of laissez faire is gone, though it still lingers implicitly in terms and the statement of propositions. Formally it is concerned with the mechanical way in which the value of goods and of shares in distribution emerge in the market. But it has no concern with the organization of that market, the nature of the transactions which occur there, or the less immediate facts of the distribution of opportunity, property, and leisure upon which the size of these shares rest. Its explanatory terms are not matters subject to control.” Hamilton, “Institutional Approach,” 313.

66 Commons, Legal Foundations; Ely, Property and Contract.

67 Wesley C. Mitchell, “Commons on Institutional Economics,” American Economic Review 25, no. 4 (1935): 638. Mitchell was an extraordinary interpreter and popularizer of Commons's frequently inaccessible prose. See also Mitchell, “Commons on the Legal Foundations of Capitalism,” American Economic Review 14, no. 2 (1924): 240–53.

68 Ely, “Report,” 6 (emphasis added). The platform seemed to be a product primarily of Ely, who added a statement arguing along the same lines: “We hold that the doctrine of laissez-faire is unsafe in politics and unsound in morals, and that it suggests an inadequate explanation of the relations between state and the citizens. In other words we believe in the existence of a system of social ethics; we do not believe that any man lives for himself alone, nor yet do we believe social classes are devoid of mutual obligations corresponding to their infinitely varied inter-relations” (p. 16). The AEA took care to note that (a) the platform “was never meant as a hard and fast creed which should be imposed on all members” and (b) that Ely's statement was an “individual statement” and that “while some endorsed it all without reservation, others objected strongly to some of his views” (pp. 6, 14n1).

69 Adams, “Relation of the State,” 119, 125. For an excellent discussion of the economics and jurisprudence of Adams, see Ajay K. Mehrotra, “Creating the Modern American Fiscal State: The Political Economy of U.S. Tax Policy, 1880–1930” (PhD diss., University of Chicago, 2003).

70 Henry C. Adams, Relation of the State to Industrial Action, (Baltimore, 1887), 62; Adams, Description of Industry: An Introduction to Economics (New York, 1918), 247.

71 Clark, Social Control of Business, 4–5.

72 Handler, Milton, Cases and Other Materials on Trade Regulation (Chicago, 1937), viiGoogle Scholar.

73 McKinney's Consolidated Laws of New York, Annotated, 67 vols. (New York, 1931). 1. Report of Consolidators; 2. Constitution; 3a. Arbitration; 4. Banking; 5. Benevolent Orders; 6. Business Corporations; 7. Canal; 7a. City Home Rule; 8. Civil Rights; 9. Civil Service; 9a. Condemnation; 10. Conservation; 10a. Cooperative Corporations; 10b. Correction; 11. County; 12. Debtor and Creditor; 13. Decedent Estate; 14. Domestic Relations; 16. Education; 17. Election; 17a. Employers’ Liability; 18. Executive; 18a. Farms and Markets; 19. General Business; 20. General City; 21. General Construction; 22. General Corporation; 23. General Municipal; 24. Highway; 25. Indian; 27. Insurance; 28. Joint-Stock Association; 29. Judiciary; 30. Labor; 31. Legislative; 32. Lien; 34. Membership Corporations; 34a. Mental Hygiene; 35. Military; 35a. Multiple Dwelling; 36. Navigation; 37. Negotiable Instruments; 38. Partnership; 39. Penal; 40. Personal Property; 43. Public Buildings; 44. Public Health; 45. Public Lands; 46. Public Officers; 47. Public Service Commission; 47a. Public Works; 47b. Public Welfare; 48 Railroad; 49. Real Property; 50. Religious Corporations; 51. Salt Springs; 52. Second Class Cities; 53. State Boards and Commissions; 54. State Charities; 54a. State Departments; 55. State Finance; 56. State; 57. State Printing; 58. Stock Corporation; 59. Tax; 60. Tenement House; 61. Town; 62. Transportation Corporations; 62a. Vehicle and Traffic; 63. Village; 64. Workmen's Compensation; 65. Unconsolidated Laws; 66. Table of Laws Repealed; 67. General Index. There are several things worth noting circa 1931: first, the large number of titles dealing with Corporations, Partnerships, and Associations; second, the new progression in Book 47 from Public Service Commission to Public Works to Public Welfare; and third, the changes made to Book 26 formerly Insanity now Mental Hygiene, Book 41 formerly Poor now Public Welfare, and Book 42 formerly Prison now Correction.

74 Handler, Trade Regulation, 2.

75 Handler, 3–4.

76 Nebbia v. New York, 291 U.S. 502 (1934); Hegeman Farms Corp. v. Baldwin, 293 U.S. 163 (1934); Borden's Farm Products v. Baldwin, 293 U.S. 194 (1934); Baldwin v. G. A. F. Seelig, Inc., 294 U.S. 511 (1935); Borden's Farm Products Co. v. Ten Eyck, 297 U.S. 251 (1936); Mayflower Farms, Inc. v. Ten Eyck, 297 U.S. 266 (1936).

77 Handler, Trade Regulation, 9–10.

78 The statute directed coverage of the following topics: (a) milk and its importance in preserving the public health, its economy in the diet of people, and its importance in the nutrition of children; (b) the manner, method, and means used and employed in the production of milk and to the laws of the state regulating and safeguarding such production; (c) the added cost to the producer and milk dealer in producing and handling milk to meet the high standards imposed by the state that ensure a pure and wholesome product; (d) the effect upon the public health that would result from a breakdown of the dairy industry; (e) the reasons why producers and milk dealers should receive a reasonable rate of return on their labor and investment; (f) the problem of furnishing the consumer at all times with an abundant supply of pure and wholesome milk at reasonable prices; (g) the instability peculiar to the milk industry, such as unbalanced production and effect of the weather on the demand; (h) the possibilities with particular reference to increased consumption of milk; (i) the beneficial effect of sanitary laws and regulations enacted by the state; and (j) further and additional information as shall tend to promote the increased consumption of milk and as may foster a better understanding and more efficient cooperation between producers, milk dealers, and the consuming public. Handler, Trade Regulation, 10–11

79 Handler, Trade Regulation,10.

80 Handler, Trade Regulation, 13–14 (emphasis added).

81 Keezer, Dexter Merriam and May, Stacy, The Public Control of Business: A Study of Antitrust Law Enforcement, Public Interest Regulation, and Government Participation in Business (New York, 1930), 34Google Scholar.

82 Handler, Trade Regulation, 18.

83 Tugwell, Rexford Guy, introduction to The Trend of Economics, ed. Tugwell, Rexford Guy (New York, 1924)Google Scholar, viii, ix; Tugwell, Economic Basis.

84 Frank Hyneman Knight, “The Limitations of Scientific Method in Economics,” in Tugwell, Trend of Economics, 256.

85 Friedrich A. Von Hayek, “Freedom and the Economic System” Public Policy Pamphlet No. 29 (Chicago, 1939).

86 John Maurice Clark, “The Socializing of Theoretical Economics,” 73–104 ; Paul Howard Douglas, “The Reality of Non-Commercial Incentives in Economic Life,” 153–190; and Wesley Clair Mitchell, “The Prospects of Economics,” 3–36; All in Frank H. Knight's personal copy of Tugwell, Trend of Economics, Knight's annotations at 18, 85, 151.