Horwitz: Law and Economic Interests

Although interest groups shape the law to achieve their parochial goals, law itself helps shape the contours of society. The “Wisconsin School” of American legal historiography contends that the evolution of private law in America was related to the efforts of middle-​class capitalists to utilize law to accelerate economic development. [47] The Wisconsin School has emphasized economic issues and their relationship to legal doctrines and institutions, and has minimized jurisprudential, societal, political, and ideological themes in American legal history. Horwitz, who embraces the approach of the Wisconsin School to legal history, presents a basic theme: at the close of the American Revolution, the common law reflected precommercial, antidevelopmental values; during the next eighty years, a major transformation of the legal system took place which “enabled emergent entrepreneurial and commercial groups to win a disproportionate share of the wealth and power in American society… at the expense of farmers, workers, consumers, and other less powerful groups.…”

Horwitz carefully details the process by which nineteenth-​century judges revamped property law doctrines to eliminate the agrarian, antidevelopmental bias which characterized the older common law. In general, a new theory of property gained acceptance, with similar results across the board: “… the idea of property underwent a fundamental transformation—from a static agrarian conception entitling an owner to undisturbed enjoyment, to a dynamic, instrumental, and more abstract view of property that emphasized the newly paramount virtues of productive use and development.”

The author feels that, contrary to Horwitz’s assumption that economic motivations explain judicial behavior, history is not that neat. Rigid use of an economic model ignores the complexities of the real world such as the autonomy of ideas, the influences of institutional structures, and historical accident. In effect, Horwitz pursues a conspiracy theory of history, maintaining that the transformed character of the legal system did not result from a social consensus for development. Smith points out that there was no necessary causal relationship between the profiting of entrepreneurs from economic development and an alleged “worse off” status of other groups. Furthermore, there is some evidence that those burdened by the transformation of the legal system—“farmers, workers, consumers, poor whites”—enjoyed corresponding benefits from the new economic prosperity with the rising standard of living in the interim between the Revolution and the Civil War.

According to Horwitz, the emerging capitalist class had largely completed reorienting American law to serve its interests by around 1850. Once the legal system had adopted rules favorable to business and commerce, business groups sought to disguise the recent origins and biases of the new system and prevent further judicial innovations which might be redistributive. Consequently, the application of laissez-​faire decision making came to dominate post-​Civil War law. A basic theme was that judges were not considered lawmakers, but supposedly only applied uniform legislatively-​decreed rules, policy was for the legislatures and not the courts. Smith questions the premise that the successful entrepreneurial groups somehow persuaded judges to swap an instrumental for a formal conception of law, having earlier adopted an instrumental view for the benefit of these groups. To Smith, the primary cause of the shift toward legal formalism in the later part of the nineteenth century was the emergence of the ideal of law as a science.