3155+Historical+overview

3 periods

 * Colonial era to 1860
 * Rise of modern industry 1860-1929
 * Positive Gov’t 1929- present
 * Note that many see the 1980s as a watershed, with growing ideological opposition to the federal government as a problem solver—this was notable in the speeches of Ronald Reagan as President and, later, Newt Gingrich in Congress

For each period Lehne evaluates/describes

 * Role of government: what the prevailing consensus is (among elites? Scholars?) about what gov’t should do vis a vis economic activity, and what it in fact does do…
 * Organization of business: how enterprise is organized in production and commerce (what size and nature of companies is), and how business generally is organized to promote its interests (trade associations, etc)
 * Legal doctrine: what the stance of law and courts is towards business, and how it is changing

1. Colonial era to 1860
//(see also the NYT article by Jeff Madrick, Economic Scene, 1/20/05, page C2)//

Role of government during this time: framework functions (eg: in the Constitution) but also promotion?

 * The new nation had legacy of a colonial commercial enterprise…founded in large part (ie: in South and mid-Atlantic states) to create wealth…
 * Question is at the dawn of the 19th C whether to pursue laissez faire or mercantilism: Does gov’t take a hands-off approach or intervene in accordance with prevailing mercantile ideology?
 * Laissez faire: Adam Smith, and Jefferson’s small business/yeoman state
 * Mercantilism: Hamilton’s Encouragement and Protection of Manufactures and Henry Clay/John Calhoun’s American System
 * In fact, gov’t did engage in infrastructure development
 * Turnpikes, bridges, canals
 * B&O and Pennsylvania Railroads, Erie Canal
 * And gov’t faced problems with supporting these enterprises when they went astray… investor problems…

Business organization

 * Rural, small holdings 20M of 23M in rural areas as of 1850
 * Firms were single-unit…

Legal doctrine

 * A first framework function: protecting property rights, particularly in case of creditors from legislation that relieved debts, currency dilution, etcetera
 * See US Constitution Article 1 Sec 10 which (among other things) prohibits states from passing laws that “impair the obligation of contracts”
 * Fifth Amendment: due process…
 * A second framework function: permitting incorporation and business activities to proceed…encouraging competition
 * Incorporation protected individuals in enterprise by limiting liability and guaranteeing them markets or other commercial rights
 * Early on, companies were incorporated to provide commerce identified as some public good and were limited to stated purposes…
 * For example, states chartered companies and limited their lifespan, activities, mobility, size, and constitutional rights
 * Later incorporation for general purposes democratized companies…this meant it was much easier to create a company and the company could do much more than it was initially chartered for
 * See the Dartmouth[|College v Woodward Decision]in which the Marshall court found that legislatures cannot violate private contracts…essentially the charter of the College could not be violated
 * But, more importantly, see the [|Charles River Bridge Case Decision] in which the court found that the legislature could not act against the public interest in preventing new commercial activity (a bridge monopoly was broken by the legislature granting permission for building a rival bridge…the first bridge company sued to overturn)…this overturned a charter in the public interest (competition)
 * And the [|dissent by Justice Story]
 * What about protecting debtors from by enforcing contracts?

Bus organization

 * Factory system emerges: by 1900 60% of workers in industry….and they’re commodified labor
 * Large firms developed here first, promoting great efficiencies first by vertical and then horizontal integration
 * Tremendous competition replaced by large firms horizontally
 * Consolidation and trusts to control firms
 * Tho’ note enough of the captains of industry were mobile to preserve the American dream

Role of gov’t

 * Some promotional activity
 * Increasing concentration of firms and labor: and conflict
 * Regulations emerging at end of the period: Interstate Commerce Act 1887 and Sherman Anti-Trust Act of 1890

Legal doctrine

 * States initially were the site of regulation
 * General incorporation spread between 1846 and 1902
 * Companies came to enjoy rights under the constitution during this time--as natural persons in legal standing--and therefore subject to the protections of the constitution on contracts, etc---[|see this Mother Jones article.] PBS broadcasted a [|NOW segment on the question in 2005.]
 * Crucial to this was the interpretation that Section 1 of the 14th Amendment (due process, equal protection) applies to companies rather than just people
 * This and other Supreme Court cases[|can be found here.]
 * National regulation arose during this time...
 * Triumph of the national system: preventing state legislatures interfering in interstate commerce…eg: 14th amendment as later interpreted
 * Slaughterhouse cases 1873
 * 1886 Illinois regulation of railroads…
 * But the national system was marked by laissez faire ideology which prevented the feds from replacing state regulations until the era of positive gov’t

Bus organization

 * Multinational operations, diversification, professionalization of management
 * Large, medium and small enterprise

Role of gov’t

 * Big gov’t is a 20th C phenom: look at the numbers on p 15 Table 1.1
 * War and the need for control
 * Restructuring in face of crisis: reduce competition to preserve jobs
 * Stabilizing the economy through macroeconomic policy informed by Keynes
 * Monetary policy
 * Fiscal policy
 * Protecting livelihoods and (to a lesser extent) redistributing wealth
 * Regulatory state: New Deal to Nixon

Legal doctrine

 * Conflict over New Deal: whether and what aspects of commerce and labor the Federal gov’t could constitutionally regulate
 * In Schechter and Butler the Court ruled against the New Deal
 * Later in NLRB v Jones and Laughlin Steel the Court ruled that the Commerce Clause gave Congress authority to regulate industrial relations
 * Note the implication is that nationally organized business entails nationally organized regulation