National Markets vs. The Rule of Law: Substantive Due Process, its Origins and Impact  
Bruce P. Frohnen

The Philadelphia Society
39th Annual Meeting, New Orleans, April 26, 2003

One hears a great deal, of late, concerning the effects of unwise regulation on the rule of law.  Such regulations bring about undue bureaucratic and judicial discretion, leaving people without the means to know just what it is that the law requires, let alone how they might meet its requirements.  But I want to address a somewhat different problem, namely the effects on the rule of law of court attempts to construct free markets on their own. 

The explosion of economic activity in America during the nineteenth century is well known.  By the end of the century the United States had gone from a localist, agrarian economy to a national industrial economy.  Yet, despite what some may say about the wonders of “spontaneous order,” this development was aided considerably by what can only be termed legal and judicial innovation.

Riparian rights, definitions of takings and even burdens of proof in tort actions all were modified by the courts in order to encourage development.[i]  But I want to focus on changes that took place later in the century, culminating in the substantive due process cases of the late nineteenth and early twentieth centuries.

In these cases the Court “helped along” free market capitalism by supporting liberty of contract, and supporting it as an absolute, national right.  Not content with fighting out the policy issue of how free the economy should be at the state level, the national Supreme Court fought for free markets everywhere.  Now, few people at a Philadelphia Society Meeting – certainly not I – would want to be known for saying bad things about private property and liberty of contract. 

But the Court fought for this good thing in an illegitimate, highly damaging manner.  The Court made up the law to suit its own ends.  It stuffed into our Constitution, or at least into its own interpretations of the constitutions, something that simply wasn’t there – an absolute protection for liberty of contract. 

I will argue that the results of this judicial activism in the name of economic liberty were devastating, and continue to this day.  My thesis: the road to government by judiciary – the loss of the rule of law – was paved by the late nineteenth century laissez faire Court.  That Court instituted the doctrine of “economic substantive due process.”  And economic substantive due process made the post World War II Supreme Court and its arrogant assumption of almost unlimited power, possible. 

Moreover, the doctrine shares with its illegitimate progeny – “social” substantive due process as evidenced in Roe v. Wade[ii] and substantive equal protection – a common, illegitimate source and function.  These doctrines share a specific, mistaken, reading of the fourteenth amendment to the United States constitution, and an equally mistaken view of judges’ proper role in interpreting the Constitution and laws of the people.

First, briefly, let me review the substantive due process doctrine.  That doctrine has its flowering, if you will, in the 1897 case of Allgeyer vs. Louisiana.[iii]  In it the Court began in earnest to create rights based in liberty of contract.  In Allgeyer the Court decided that Louisiana could not require that all insurance on Louisiana property be issued by insurers registered in that state.  The Court could (and did) find that Louisiana doesn’t have the right, the jurisdiction, to regulate contracts made outside the state with foreign corporations.  But it also found a violation of the due process clause of the Fourteenth Amendment to the Constitution.

You may recall the language of the Fourteenth Amendment’s due process clause: “no state shall deprive any person” of “life, liberty, or property, without due process of law.”  And what is due process of law?  There’s the rub.  Or at least it is now. 

The historical record on this is crystal clear.  From Magna Charta through the debates over the Fourteenth Amendment itself “due process” meant the same thing: procedures accepted as the common law of a jurisdiction, applied to anyone forced to answer a charge from the state.  More simply: customary procedural rights for criminal defendants.  Period.[iv]   

Whence comes, then, Substantive Due Process?  Out of the minds – and wills – of judges.  The argument is that certain rights, like liberty of contract, are so fundamental that they must be covered by due process – that every human being is owed a fair trial before being deprived of them.

Now this sounds attractive.  If liberty of contract is critical in allowing individuals to chart their own courses in life then why not include it in the “liberty” guaranteed by the Fourteenth Amendment?  Because it isn’t there. 

Perhaps liberty of contract should have been made a part of the tradition of due process rights.  But it never was. And it isn’t in the Fourteenth Amendment.  That Amendment, you may recall, was intended to protect freed slaves from the “Black Codes” instituted in the South to keep them in virtual, if not de jure, bondage.[v]  Liberty in the Fourteenth Amendment, as in the Anglo-American tradition more generally, refers to being “at liberty” – free from imprisonment.[vi]  So “due process” in this context is meant to protect people from being imprisoned except by procedures accepted by the common law of their jurisdiction. 

In book-length form, Raoul Berger’s Government by Judiciary makes this undeniably clear.

A standard response to this fact is the claim that liberty of contract was included in a different section of the Fourteenth Amendment, that guaranteeing the Privileges or Immunities of citizens to all persons born or naturalized in the United States.  It just so happens, the argument goes, that the Supreme Court got the Privileges of Immunities clause wrong soon after the Fourteenth Amendment was ratified, defining them too narrowly in the Slaughterhouse Cases.[vii]  Well, the problem with that argument is two-fold.  First, to repeat an old adage, two wrongs don’t make a right.  Using one improper reading of the Constitution to “make up” for another constitutes a double wound to the framers’ intent. 

The second problem, and Berger made this clear as well, is that the Privileges or Immunities Clause of the Fourteenth Amendment was not intended to guarantee broad, economic rights; it was intended only to provide auxiliary rights that would protect life, liberty and property.[viii]  The provision protected important rights – including the right to be tried by a jury of one’s peers, to give testimony, to have the same rules apply to your contracts as to other people’s and so on.  But these rights do not proclaim or constitute unfettered freedom of contract, or even that right, limited by state police powers. 

Thus, by inserting, through its own will, liberty of contract into the Fourteenth Amendment, the Court departed from and undermined the Constitution.  Well intentioned or not, it made up the law.  And once you depart from the intention of those who put the law into effect, you have inserted your will in place of the people’s, and the law’s.  The rule of law gives way to the rule of men.  And the consequences have been devastating, including to economic liberty.

How so?  First, substantive due process made the New Deal, and thus the administrative welfare state, possible.  The Court’s policy positions – finding maximum hours legislation unconstitutional for bakers, but okay as a health measure for miners and smelters, embedded utilitarian policy making into constitutional adjudication.

The question substantive due process analysis asks is whether a regulation limiting a supposedly fundamental right is a permissible exercise of state police power.  That requires analysis of the measure’s effects on health, safety or morals.  And that establishes the notion that courts are about deciding whether policies are useful.  Which means that “useful” policies – like, say, ones designed to end the depression – must be constitutional.

If the end is good, the means must be Constitutional.  This bad reasoning legitimated the New Deal and many other bad decisions by the Courts as well as the legislative and executive branches.

Now, someone might reply that it actually was the demise of principled substantive due process that allowed for the New Deal.  But the Court’s logic, by turning constitutional adjudication into a series of policy judgments undermined its ability to fight the New Deal on these grounds.  Moreover, it undermined the real, constitutional grounds on which the Court should have opposed the New Deal:  New Deal legislation entailed excessive delegation of powers to unelected bureaucratic bodies,[ix] and it violated federal principles by overreaching the proper bounds of national legislation, interfering with state prerogatives.

Unfortunately, the Court simply gave up on the non-delegation doctrine. 

Worse, however, the Court’s own decisions, striking down in-state laws regarding child welfare and other working conditions, destroyed the federalism argument.  In pursuit of national markets, the Court destroyed the logic and in the end the reality of local self-government, leaving the way open for nationalization and, frankly, socialization of the economy.  The Court asserted, wrongly, that the Fourteenth Amendment gave it the right to decide on the reasonability of state laws.  In this way the Court undermined the constitutional presumption of state sovereignty – the very purpose of the tenth amendment in limiting all federal branches to the exercise of enumerated powers.

All this would be bad enough, but I want to make one further point. 

Worst of all, in my view, substantive due process legitimized judicial activism at the same time that it de-legitimized natural law jurisprudence.

How both?  By looking beyond the text of the law to its own moral notions, the Court established a tradition of judge-made law, turning adjudication into policy making.  Here’s the irony: today’s courts claim more legitimacy for their policymaking because they make dishonest references to the text where the old court tended to just say “liberty” and “that’s fundamental, so it’s protected.”

The old court bowed to natural law reasoning, assuming the taking of “life, liberty and property” was a philosophical term to which it had the right of providing content.  But judges always have made bad moral philosophers.  That’s why our tradition never expected them to be moral philosophers.  What the Anglo-American tradition expected from judges was historical understanding.  That is, an ability to read precedents and texts in light of their historical context; to, for example, define the fourteenth Amendment’s common law terms in common law terms.  We have lost that, and the rule of law it protected.

We also have lost our inherited knowledge that the natural law is not a brooding omnipresence.  It is right here in front of us, in our institutions, beliefs and practices.  It was incorporated into the United States Constitution and, in particular, into the common law so central to the Anglo-American tradition.  It is not something to be made up by the judge, any more than it is something to be dismissed as illusory or in the eye of the beholder. 

The natural law is real.  It is central to our tradition, and judges have a duty to apply it, when, where and to the extent that their role in our system of ordered liberty under law requires it.  They are not required, nor are they allowed, to simply impose their will, even in the face of injustice, on the people.  Rather, judges are to interpret statutes and common law standards in accordance with historical usage – with the intention of framers whom we trust were informed by the natural law, or whose laws we will change through legislation or amendment.

Justice Kennedy’s statement in Planned Parenthood vs. Casey[x] that “at the heart of liberty is the right to define one’s own concept of existence, of meaning, of the universe, and of the mystery of human life” would be laughably ignorant if its results weren’t so tragic. But that pro-abortion decision is rooted in the notion that morals are all subjective.  And that notion began infecting Supreme Court decisions when the laissez-faire Court decided it could find the natural law on its own, looking to Herbert Spencer rather than the intention of the framers.

I am saying nothing new, merely joining with scholars like Philip Hamburger our own George Carey and the late, much missed Russell Kirk, in arguing that natural law is to be applied appropriately, that it was used in writing the constitution, but that it does not give judges license to attempt something for which they clearly are not qualified, acting as moral philosophers.  Rather, natural law requires that they again take up their traditional, proper role as scholars of history, of the common law meaning of common law terms.

As a people, we do not need judges creating rights to protect us.  We need to recognize, with the founders, that judges must be bound down by the Constitution.  And we need to understand that not even the Constitution can save us from bad laws, and even tyranny.  Tyranny will not bow before paper barriers, let alone judicial hot air.  Rights like liberty of contract can only be protected through active participation in local politics.  To the extent we look to national judges to protect us, we will find ourselves at the mercy of the people who run the central government – people committed to power, and to centralizing power at the expense of local self-government.

Rights are important, but they are rooted in tradition and the life of the people, or they are nothing – or, worse than nothing, camouflage disguising those who wish to wield illegitimate power over us.