Friday, May 22, 2009

The Transformation of American Law

The Transformation of American Law, Volume I, 1780-1860, by Morton Horwitz
1977, 356 pp.

For the past thirty years, Morton Horwitz’ two-volume Transformation of American Law has been the foundation of American legal history. It is impossible to write a new legal history without referencing him; any historiography must devote its attention and often its centerpiece to his work; indeed, he effectively invented the genre and defined its parameters and conventions. It is also a devastating attack on the “Consensus School” of American legal history which had prevailed during the 1950s, which minimized the role of class conflict in the development of American law, and one of the finest critiques of American society ever written.

The thesis of the first volume of The Transformation of American Law is that from the founding of the republic until the outbreak of the Civil War, judges self-consciously allied themselves with the rising commercial class, and, after consolidating their monopoly on legal authority and their power to direct social change through common law, created a legal framework for the benefit of the bourgeoisie. Horwitz is no lonely heterodox howling on the fringes of academia: he is the Charles Warren Professor of Legal History at Harvard, and his book won the Bancroft Prize, the premier award in American legal writing. And yet The Transformation of American Law, though not a Marxist work, is one of the most important books for Marxists I’ve ever read. Thick with references, historical context, and immense legal expertise, it reads like the dangerous, muscular older brother to Karl Polanyi’s The Great Transformation.

This book is sufficiently complicated and interesting that it warrants more of a discussion than a usual review. I’m warning you now: this is going to be lengthy. Readers in search of a summary and a couple criticisms should jump to the last paragraph.

Rather kindly to the layman reader, Horwitz begins with a brief explanation of what exactly common law is and how conceptions of it changed from the 18th to the 19th century. This is the opening theme of what will be a motif throughout the book: that the early 19th century marked a radical and deliberate transformation (indeed, a Great Transformation) in American law, which we will see played out over and over through an array of legal ideas. In the 18th century and before, common law (which is law that is not legislated, but held as tradition and changed by judges) was seen as fixed, handed down from the distant past, and based on “natural” principles, so that it is “discovered” by judges, not made. All actual changes were enacted by legislatures, and were seen as made through an act of will. In 1720, the American colonies (using rather peculiar reasoning) legally established that they did not conquer North America (they simply found it, apparently), so they remained subject to English common law. The Continental Congress of 1774 decided to keep that common law and existing English statutes, in order not to disrupt existing commerce.

But from the founding of the republic, common law was increasingly restricted. This restriction was not a matter of political party or constitutional philosophy, but instead a general trend across the legal profession. Immediately there was an argument that all states had their own common law, so there was no general common law under federal jurisdiction. This was followed with the idea that the Constitution and the legislature embodied the general will of the people, making the “natural law” foundation of common law redundant. Legal authority therefore came entirely from popular will, not any sense of inherent, objective righteousness. That being the case, as Supreme Court Justice James Wilson argued, the obligation of common law is voluntary, and can be changed according to the will of judges, since there is no longer any objective righteousness specific to common law to deviate from. Immediately the old conservative argument against activist judges and upholding static interpretations of law is dismissed as an ahistorical fiction.

By 1820, judges saw common law as framed by already existing general doctrines (or rather, "class interests") based on a self-conscious consideration of beneficial social and economic policies, and with consideration as to how those doctrines applied beyond any individual case. They effectively assumed a sense of responsibility to use their power to shape common law to promote “socially desirable conduct,” which is essentially a euphemism for "economic development." In support of this, Horwitz discusses at some length conflicts over water rights and land use.

Horwitz argues that the original common law conception of property was inherited from the landed English gentry, who viewed land not as a productive asset but as a private estate for personal enjoyment. This perspective makes economic development difficult: mills are always obstructing or diverting rivers, factories create noise and pollution, railroads cause fires, and so forth. Beginning with the 1805 case of Palmer v. Mulligan, judges overturned the older, more feudal and aristocratic concept of property rights in favor of the new, dynamic, capitalist version. The hallowed idea that property rights as property rights are now and have always been a central fixture of American society is demolished: where property rights conflicted with capitalism, they were discarded. Palmer v. Mulligan set up the idea that property rights hinge not on ownership but on the ability to develop land for business, even at inconvenience to others, and that in determining injury, the relative efficiency and productivity of property uses is what matters, not who owned land first or who has a natural right not to be disturbed or displaced.

Using the refashioning of water and land rights to the promotion of development as a springboard, Horwitz argues that the central issue of 19th century American law is the matter of how much certainty and predictability the law would guarantee to capital, and what sort of return on investment the law would protect. Recognizing that a scarcity of capital necessitated some certainty that the investment of that capital would produce a return, judges initially acted to promote monopoly. They limited the role of juries in awarding damages (since juries tend to use a community sense of fairness and awarded large damages) and substantially limited the liability not only of the state but of private corporations chartered by the state to undertake works of economic development. Therefore, small-scale landowners whose property was seized or destroyed in the process of development were limited in compensation, and were effectively forced to underwrite the expansion of monopoly capital. As further evidence, Horwitz moves through detailed discussions of liability, eminent domain, negligence, commercial law, and contracts. On each point, he finds judges who have personal relationships with capitalists and with similar class interests ruled consistently to protect the privileges of monopoly capital.

Indeed, after 1840, judges adopted the idea that all legislatively authorized acts, whether by public officials or private charters, were entirely immune to damages. Since most corporations were then licensed by municipalities to fulfill functions which otherwise would be the purview of government, this meant corporations could generally do anything they pleased, free from damages, by claiming they were on government business. This kept government budgets small, and therefore kept taxes low, which, as Horwitz cleverly notes, meant that the incidence of the cost of development fell not on the wealthy, who would be affected by high taxation, but on the poor, whose property was seized or destroyed without compensation. The historic American aversion to taxation and big government was, in this formulation, an ideological cover for shifting the burden of development from the wealthy to the poor. It was nothing less than an early form of socializing costs and privatizing profits.

At first the commitment to promoting monopolies was total, and extremely effective. In 1780, there were exactly 7 corporations in the United States; by 1840 there were hundreds. Judges even began to rule that an attempt to set up competition and draw away business was an infringement on the property rights of licensed corporations. But eventually enough capital accumulated and infrastructure developed to such an extent that monopolies became a hindrance rather than a help, and the new capitalist class began to resent the legal profession for limiting commerce rather than aiding it. Beginning with the Charles River Bridge case of 1837, there was a shift away from monopoly to competition, on the grounds (in the argument of Roger Taney, Andrew Jackson’s Supreme Court Chief Justice who later ruled in the notorious Dred Scott case) that granting monopoly franchises restricted later legislation, and therefore the will of the people.

To buttress this new concept, there was a change in the conception of contracts. Previously they were considered to be based on some standard of objective justice which would be the standard for a ruling in the case of dispute. Then it was established that instead, contracts were an arbitrary meeting of wills with no underlying principle of justice. Since contracts were often used for the delivery of goods at a given price in the future, it was a simple matter to extend this idea to rule that there was no such thing as a “just price,” for goods and no responsibility of fairness or equality in the negotiation of contracts or prices. “Modern contract law,” Horwitz writes, “was thus born staunchly proclaiming that all men are functionally equal because all measures of inequality are illusory.” This statement is the basis for all Marxist interpretations of law, and it took a supreme effort of will not to stand up and declaim a well-known line from the first volume of Capital.

Horwitz concludes his painstaking analysis through the application of these new principles to commerce with a brief summary of his findings. Based on the evidence, he concludes that by 1860, judges had a) reduced the ability and jurisdiction of juries to mete out damages, and therefore consolidated power in their own specialized, professional class, b) reduced regulatory and protective doctrines, c) fostered monopoly capital at the expense of property, d) subordinated labor to capital in contract negotiations and liability, and e) ratified and codified market-generated inequality. He sets up the beginning theme for the second volume, which details the rise of “legal formalism”: the strict-constructionist sort of argument we associate (if we can stomach it) with Antonin Scalia. In Horwitz’ formulation, formalism serves a specific purpose: flexibility joined the legal profession with capital and secured their dominance, and once dominant, only rigidity would keep them there.

A few structural points. This is legal history, not theory, so the reader spends a lot more time working through the minutia of riparian water rights as they pertain to Palmer v. Mulligan rather than experiencing the difficult excitement of seeing a new theory unfold. In that sense, this book serves as an excellent repository of specific information to supplement the more general theories to be found in Polanyi, Miéville, and Pashukanis. If you need to know specifically who decided and on what case that competition should be enshrined into common law in order to win an argument or cement a thesis, this is the place to look. There is quite a lot of fascinating historical information, but it is not presented in a very chronological format. I spent a lot of time noting down the dates of cases and then realizing that the dates suggested a slightly different interpretation from Horwitz’s narration. Further, each section ought to be thought of as happening in tandem, not in linear progress as Horwitz at first seems to suggest. There is a lot of repetitive “Initially, the conception of X was A, but then it shifted to Y,” much like in this review.

Horwitz seems at times to overstate his case. He very much wants to argue that the construction of modern capitalism was a deliberate process (almost, but not quite a conspiracy) by judges who were personal friends of capitalists, but the evidence does not always support this sort of teleological interpretation. Instead it seems to have been a halting, trial-and-error sort of process, quicker in some states under certain judges, and slower in others, sometimes doubling back on itself or contradicting itself, sometimes leaping ahead. His analysis of the starting point and the ending point are indisputable, but sometimes he reads more deliberate malice into the transition than was probably the case. A sociological concept of class and institutional interests would help his argument quite a bit. As a legal history, though, as a primer on the development of the key issues in American law, and as a dense, factual supplement to any critique of law and capitalism, it is unparalleled.

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