Guest Essayist: Richard Epstein

Mahlon Pitney was appointed to the United States Supreme Court by President William H. Taft in 1912, and served there for ten and one-half years until his retirement in December, 1922.  He is generally regarded as a footnote in the annals of American Supreme Court justices.  But for the ten years that he was on the Court, he was in my view a powerful intellect who often bested both Justices Holmes and Brandeis on the many occasions when their views clashed.

Why then his neglect?  The answer: Supreme Court history is winner’s history and Pitney was on the wrong side of history, even if he was on the right side of the intellectual debate. The judicial heroes of the progressive era running roughly from 1900 to 1933 were justices like Brandeis and Holmes whose judicial philosophy and decisions prefigured the New Deal triumphs.  Pitney in contrast was a systematic classical liberal who took great pains to defend strong property rights and limited government, on the correct ground that this approach would advance human liberty and human prosperity.  State intervention should be regarded as an evil until it is shown to be a good.

Perhaps the most distinctive opinion that he wrote on this subject was his oft-reviled 1915 opinion Coppage v. Kansas, which held that it was unconstitutional infringement of liberty of contract under the Due Process Clause of the Fourteenth Amendment for Kansas to make it a criminal misdemeanor for an employer to insist that his employees not  join a union so long as they continued to work for the employer.  Pitney then doubled down on this position two years later in Hitchman Coal v. Mitchell, held that any union that sought to induce a worker to breach that contract of employment by joining, or even promising to join, a union while remaining on his job.

These two decisions provoked an enormous uproar at the time, including dissents by Holmes in Coppage and Brandeis in Hitchman Coal, on the ground that they were largely subversive of the rights of workers to engage in collective bargaining.  The Holmes/Brandeis position slowly worked itself into law during the 1930s, with the passage of such pro-labor statutes as the Norris-LaGuardia Anti-Injunction Act of 1932, the National Labor Relations Act of 1935, and the Fair Labor Standards Act of 1938, all of which were unconstitutional under Pitney’s views.

So why is Pitney right, and Holmes and Brandeis wrong?  The answer relates to the relationship between competition and monopoly.  Pitney thought that competition had a preferred constitutional status relative to monopoly in all areas of economic life, a proposition that both Holmes and Brandeis denied.  Pitney thus recognized that ordinary contracts for employment would produce gains from trade for both sides, and that the strongest protection for any worker lay in his ability to obtain alternative employment. Even the threat of quitting would impose market discipline on employers, which it did, so that real wages rose during the period, even if mutually advantageous contracts could, and often did produce greater disparities in wealth between the employer and employee.  But those increased differentials were a byproduct of successful exchanges, so that it is no accident indeed that the so-called Lochner era between 1870 and 1940 represents, as Robert Gordon demonstrates in his book The Rise and Fall of American Growth, the greatest period of economic growth in American history—without properly acknowledging the legal framework that helped make that innovation possible.

On this view, Pitney rightly understood that antitrust legislation directed toward monopolization counted as an important limitation on freedom of contract.  Indeed, it was exactly on this ground that he defended the so-called “Yellow Dog” contract that prevented unions from recruiting workers while they owed a duty of loyalty to their current employer.  This contract was a private means whereby employers could blunt the monopoly power of unions, which received its first major legislative boost with the passage of Section 6 of the Clayton Act of 1914 that immunized unions (and agricultural agreements) from the antitrust, even though both had been covered by it under the earlier case law, most notably Loewe v. Lawlor, decided in 1908.

The great defect in the position championed by Holmes and Brandeis is that they were too indifferent to the risks of monopoly power in labor markets.  For Holmes, part of the logic was to help the workman to secure a fair contract, which required “an equality of position between the parties in which liberty of contract begins.”  That point is flatly wrong.  So long as there is no coercion, liberty of contract lets workers improve their positions by voluntary agreement, which is what happened during this period.  Brandeis, for his part, misunderstood the reach of the tort of inducement of breach of contract, which covered both workers who secretly joined unions while remaining their employer’s employee or merely promised to do so when called out.  As Pitney, himself a master of equity jurisprudence noted, workers could strategically wait to join a union until the time that their collective withdrawal from service had its maximum effect.  Any sensible reading of the basic contract between an employer and employee would preclude that result.

In the end, these and other fallacious arguments took their toll on labor markets, so the current law now institutionalizes labor monopoly power by giving exclusive rights to bargain and strong protection against outside competition though minimum wage and overtime regulations.  The huge strike wave that took place after World War II was a direct consequence of the massive instability that unionization introduced into law markets.  Today, global competition and the rise of small specialized firms with rapid labor turnover have diminished union power in the private sector.  But 100 years after these key decisions, Pitney clearly outdueled his two major intellectual rivals on matters of the highest political and theoretical importance.

Richard A. Epstein, is the inaugural Laurence A. Tisch Professor of Law at NYU School of Law. He has served as the Peter and Kirstin Bedford Senior Fellow at the Hoover Institution since 2000. Epstein is also the James Parker Hall Distinguished Service Professor of Law Emeritus and a senior lecturer at the University of Chicago. He has been a member of the American Academy of Arts and Sciences since 1985 and has been a senior fellow of the Center for Clinical Medical Ethics at the University of Chicago Division of Biological Sciences since 1983. He was a winner of the Bradley Prize in 2011. Epstein has written numerous articles on a wide range of legal and interdisciplinary subjects, as well as over 15 books; his most recent is The Classical Liberal Constitution: The Uncertain Quest for Limited Government (Harvard U. Press, 2014). He has also edited (with Catherine Sharkey) Cases and Materials on the Law of Torts (11th edition, 2016). He writes a weekly column for Defining Ideas and is a contributor to and Follow him on Twitter at @RichardAEpstein.

1 reply
  1. Publius Senex Dassault
    Publius Senex Dassault says:

    Awesome essay that elicits too many thoughts.

    1. Re. being a lone thinker. “For the time is coming when men will not tolerate wholesome teaching. They will want something to tickle their own fancies, and they will collect teachers who will pander to their own desires. They will no longer listen to the truth, but will wander off after man-made fictions. For yourself, stand fast in all that you are doing, meeting whatever suffering this may involve.”

    2. I struggled understanding why Pitney was right. But the concern over monopoly v. competition is compelling. Monopolies can drive rapid change for a season. But in the end it stifles prolonged growth. This is true whether it is corporate, unions, governments, etc. How long will or should Google, Facebook, Amazon etc. be allowed to control 80-90% of their markets and crush competition using size as a weapon as did Standard Oil, Carnegy Steel, Alcoa, etc.

    3. The legal framework may have made innovation possible from 1870 to 1940, but it seems that expansionism, massive immigration, and rapid industrial changes was overwhelming. I think one of the mistakes we’ve made over the past 20+ years is to not increase the number of allowable legal immigrates. In the early 1900s we were admitting about 1% of the population as legal immigrants with 15% of Americans foreign born. We avg about 0.3% now, but when illegals exceeding legals, for a net of 15% of the population. So crack down on illegals while simultaneously increase legals as the total population grows.

    4. Awarding exclusivity and/or monopolies are rarely, (ever?) socially desired. NFL, MLB, Unions, separate retirement and healthcare programs for USGov, can’t give money to foreign government officials [bribes] but US Congress and Gov’t workers are allowed to receive money under the law. The founders were appropriately obsessed with preventing corruption and intrigue. We’ve codified it.



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