B004E3WO62 EBOK

by Morton J. Horwitz

  The Public-Private Distinction

  One of the most important contributions of Legal Realism was its challenge to the classical liberal division between public and private spheres.

  Through legal doctrine, one can trace the steady growth during the nineteenth century of ever more formal versions of the public-private distinction.63 It makes its first appearance in justice Story's classification of public and private corporations in the Dartmouth College Case (1819).64 By the time of the Civil War, it had already been extended to a rigid categorization of public versus private takings under state eminent domain provisions.65

  A massive expansion of public-private rhetoric emerged after the Civil War under Fourteenth Amendment state action doctrine'66 as well as under public versus private tests of the legitimacy of municipal taxation to satisfy bonds floated to build railroads.67 A striking formalization of this distinction is also reflected in the postbellum cases eliminating punitive damages in tort because they mixed the functions of public and private law.68 With the Supreme Court's intervention into the process of rate making by the end of the century, the distinction between legitimate regulation of public bodies and illegitimate regulation of private ones was mediated by a hybrid category of "business affected with the public interest. 1169

  What was the significance of the growing separation between the public and private spheres? It expressed not only the increasingly separate spheres of men and women,70 but also the growing separation between the market and the family71 as the factory system and the division of labor compartmentalized existence .71 It reflected, as well, the increasing power of laissez-faire ideology and its tendency to shrink the sphere of legitimate governmental regulation of the economy. Even pro-regulatory intermediate categories like business affected with the public interest had the effect of reinforcing an essentialist mindset, so that much political and legal thought was devoted to searching for supposedly inherent characteristics of public and private spheres.

  A picture of a decentralized, competitive, and self-regulating market lay at the core of all efforts to define the public-private distinction. Just as the analogous division between public and private law pre-supposed that voluntary relations of market exchange would usually make coercive regulatory intervention unnecessary, the more general separation of activities into public and private spheres was also driven by a conception of a neutral, apolitical, and, above all, selfregulating economic realm.

  The first challenge to the orthodox public-private distinction emerged in precisely the same area in which it had been originally formulated-the law of corporations. Seventy-five years after justice Story deployed the public-private dis tinction to uphold the constitutional rights of business corporations, the private character of recently consolidated industrial enterprises was drawn into question, first in terms of railroad regulation, then in terms of economic regulation more generally.71 In an era in which the financial resources of corporations vastly exceeded those of many state governments and at a time when the ability of these corporations to buy political officials was widely noted, it should have come as no surprise that Progressive legal thinkers were unprepared to treat these corporations as simply private entities.

  The orthodox line between public and private spheres began to be challenged in many different realms. We saw earlier the ways in which Progressive thinkers after Lochner followed Holmes and attacked freedom of contract by arguing that private law was really a form of regulatory public law. The culmination of this view in the scholarly literature was Morris Cohen's assertion in The Basis of Contract" (1933) that the power to contract was nothing more than a choice to delegate public power to individuals based on social considerations.74

  The most dramatic example of the triumph of the Realist analysis occurred in Shelley v. Kraemer (1948), where the Supreme Court held that judicial enforcement of racially restrictive covenants was "state action" barred by the Fourteenth Amendment.75 As has been argued many times since, if enforcement of private contracts is state action, then all private activity is public activity and all private law is public law.76 That was precisely the conclusion to which the Realist critique led.

  The trade association movement of the 192os also played a critical role in undermining the public-private distinction.77 Classical liberal thought, especially in America, had always found difficulty in conceptualizing intermediate groups that stood between the state and the individual.78 We have seen the fantastic energy legal thinkers expended, beginning in the 189os, in attempting to legitimate a non-individualistic entity theory of the corporation.79 Similarly, during the 192os, the trade association movement, advancing under the banner of economic cooperation as an alternative to cutthroat competition, sought to defend private lawmaking within various industries against the charge that it simply constituted price fixing or monopolistic control of output.

  By the time of the New Deal, industrial self-regulation had also become an important element in efforts to combat the Great Depression. 80 In 1936, the Supreme Court in the Carter Coal Case struck down as an unconstitutional delegation of legislative power a provision of the Bituminous Coal Act that had permitted coal companies to regulate output.81 The Court's analysis proceeded from traditional conceptions of the illegitimacy of delegating public power to private groups. In an article on the Court's decision, "Law Making by Private Groups," Louis Jaffe delivered one of the most trenchant Realist critiques of the publicprivate distinction.82 After two decades of expansion of trade association regulation, as well as an enormous increase in group self-regulation through the power over licensing of professional and skilled crafts, Jaffe was able to offer a broad catalogue of coercive regulations by private groups that were supported by legal sanctions. His point was that it was no longer possible to distinguish sharply between public and private exercises of coercion. Just as Morris Cohen had recharacterized the power to enforce a contract as a delegation of public power, Jaffe saw lawmaking by intermediate groups as equally a symptom of pervasive delegation of state power. The disapproved delegation in the Carter Coal Case, he maintained, was no different from any of these.

  The doctrine of unconstitutional delegation of legislative power made much more prominent one year earlier in the Schechter Poultry Case formally concerned the somewhat different question of legislative delegation to the executive.83 In reality, however, Schechter and Carter Coal were virtually identical. The National Industrial Recovery Act, which Schechter struck down, also involved industrial self-regulation through the famous codes authorized under the act.84 These codes acquired legal force when they were promulgated by presidential executive order, which was, in reality, simply a rubber stamp of whatever provisions the interest groups had previously agreed to. The case, nevertheless, was formally analyzed not as a delegation of lawmaking power to private groups, as in Carter Coal, but as a delegation of lawmaking power to the President.

  The collapse of the delegation doctrine after Schechter and Carter Coal has perhaps more to do with the vast expansion of administrative regulatory power during the New Deal than with recognition of Jaffe's analysis of the pervasiveness of private lawmaking. Yet after Jaffe's attack on the public-private distinction, it became as difficult to think of an inherent category of exclusively legislative lawmaking as it was to continue to think of lawmaking as inherently public. Both moves were not only part of a general skepticism about essentialist categories but were also a reiteration of Hale's views on the pervasiveness of coercion. It was as difficult thereafter to conceive of all coercion as essentially public as it was to think of coercion as a monopoly of legislative power.

  Realism: Critical or Scientific?

  From the beginning, the Realist critique of the old order was filled with potential contradictions. There were those who criticized Classical jurisprudence for being too political-and for disguising its political preferences in abstraction and systematization. In much of the critical literature of Legal Realism, conceptualism is identified as the primary disease, acc
used of causing intellectual distortion in situations where there might otherwise be clear expressions of reality. The cure was to produce a better jurisprudence-one that was less formalistic and more contextual.

  For others, however, the problem with Classical Legal Thought was not that it was illicitly political but rather that it expressed bad politics. Thus, whether the goal of Realism was to root out distorting juristic methods in order to create a purer and more neutral system of legal concepts or, instead, to acknowledge the necessarily political character of law and insist upon a better system of political values were differences that from the beginning produced contradictory analyses.

  Another potential contradiction was contained within the Realist criticism that law had lost touch with life. With this criticism, Realism challenged the assertion of the autonomy of law that was at the core of all Classical legal ideas. Realists agreed that law needed to be brought back in touch with life, that legal categories needed to reflect better or express a more complex social reality. For some, the critique of autonomy meant that legal questions needed to be more closely rooted in the traditional inquiries of moral and political philosophy. For them, the central task was to shed moral light on the traditional questions of, for example, freedom, equality, and justice. If law lacked autonomy, they reasoned, this only meant that there was no fundamental divide between law and morals or between legal and political questions. Thus, the choices within law needed to be addressed within the discourse of moral and political philosophy. For many other Realists, however, the absence of legal autonomy meant that law became the dependent variable, society the independent variable. The task of bringing law back in touch with life meant that law needed to become a mirror of social relations. Since their goal was to develop a method that permitted the legal system to receive undistorted messages from reality, they turned to the social sciences to learn what that reality was.

  This Realist turn to social science research was a direct extension of pre-war Progressive sociological jurisprudence. The famous Brandeis Brief submitted in Muller v. Oregon (1908) is a perfect illustration of the practical influence of sociological jurisprudence on legal understanding. 85 In that case, the U. S. Supreme Court was asked to decide whether maximum hour laws for women were unconstitutional under the ruling in Lochner v. New York. Containing two pages of legal argument and ninety-five pages of sociological and economic data about the conditions of working women's lives in factories,B6 the Brandeis brief, by highlighting social and economic reality, suggested that the trouble with existing law was that it was out of touch with that reality. It was at precisely this time that an alliance between the social sciences and th„ movement for legal reform was being forged under the theoretical umbrella of sociological jurisprudence. 87

  Two different faces of Realism-one critical, another reformist and constructive-emerged from these contradictory critiques of the old order.88 Critical theory tended to dominate the earlier post-Lochner phase, while social science reformism, allied with administrative law, became a major Realist mode after the New Deal came to power in 1933. In its critical phase, Realism drew on a reservoir of political and moral outrage at the injustices of the old order. Barely concealing its political commitments, its debunking, deconstructive style sought to undermine the claim of the old order that its legal categories and modes of legal reasoning were natural, neutral, and necessary. Critical Realism remained not only passionate, but the most sophisticated version of cognitive relativism available in American thought."

  In its constructive mode, Realism subordinated political and moral passion to social science expertise.90 In Llewellyn's famous phrase, Realism sought "[t]he temporary divorce of Is and Ought for purposes of study," thus postponing the question of appropriate values while concentrating on developing a rich collection of social science studies about the way society actually worked.91 While Progressivism had initiated this distinctively modern emphasis on the legitimating role of expertise and professionalism,92 it was this strand of Realism that pushed the behavioral social sciences in directions that ultimately dulled the critical edge of Realism itself.93 Behavioral and value-free social science .not only suppressed the moralism of early Progressive social science; it was also dependent on a completely naive view of social thought.

  The social science methodology that Llewellyn sought to represent-incorrectly, I believe-as the essence of Realism has been something of an embarrassment among legal historians.94 Virtually all agree that most of the social science research projects undertaken by Realists were either trivial attempts to prove the obvious through pseudo-scientific methodology or else naive and misconceived efforts at social science research.95 Except perhaps as it fed into the developing administrative law theory of the regulatory state, this constructive strand of Realism was a failure even in its own terms.

  But the question remains whether the turn to positivist social science was not also a political and moral failure because it not only suppressed the critical stand of Realism but also encouraged Realists to rely on a methodology that strongly tended to confer a privileged position on the status quo. To understand this point, we need to see why Llewellyn was happy to accept the "temporary divorce of Is and Ought."

  The emergence of positivism within turn-of-the-century American social thought is a major development that has only recently begun to be explored. Though there is a close family relationship between legal, logical, and ethical positivism, it is only the last, emphasizing a separation between objective facts and subjective values, that I wish to focus upon here.96 In America, as I pointed out earlier, positivism emerged amid the collapse of Darwinism and its desperate effort to maintain that evolution could combine the descriptive and the prescriptive, the Is with the Ought.97 American intellectuals thus entered the twentieth century with a terrifying doubt about whether either religion or science could objectively justify values.98

  Twentieth-century American social thought has thus been preoccupied with finding a method that can either determine values objectively or avoid the value question entirely. The turn to social science was part of this general effort to find alternative forms of legitimation amid the decline of religious belief and the disintegration of an orthodox Darwinian paradigm. When Holmes declared in 1897 that the man of the future would be the master of statistics and economics, he was abandoning an immanent evolutionary theory for modern social science methodology.99 The best that one could now hope for was that law could be brought back in touch with society, not that it could continue to reflect an autonomous process of progressive moral evolution.

  In the absence of any autonomous method for objectively determining values, secularly inclined social reformers turned to society to generate values. They maintained that what was wrong with Classical Legal Thought was not that it was based on bad values-for who could presume to defend the objectivity of any system of values?-but that it was simply out of touch with social reality. Social reality-the Is-became the source of the Ought. Description was privileged over prescription. Value was to be discovered from social fact. The turn to positivist social science was thus an attempt to evade the value question by substituting expertise and professionalism as the central forms of legitimation.

  As early as 1934, Lon Fuller understood the political implications of the Realist turn to social science. "Why should realism," he asked, "which starts out as a reform movement, carry in its loins [an] essentially reactionary principle?"10° The answer was that "the cleft between Is and Ought causes acute distress to the realist." 101

  He sets about resolutely to eliminate it. There are two ways in which this may be done. The Is may be compelled to conform to the Ought, or the Ought may be permitted to acquiesce in the Is. There are enormous difficulties in the first course. Life resists our attempts to subject it to rules; the muddy flow of Being sweeps contemptuously over the barriers of our Ought. There is something even more disheartening. We find it impossible to say exactly what it is we wish life to conform to, what our Ought i
s. Life laughs at our rules, and even our rules betray us by refusing to reveal their nature to us. The easier course beckons temptingly, to let the Ought acquiesce in the Is, to let law surrender to life. 102

  The problem, Fuller saw, was that in attempting to have law simply mirror society, Realism ended up endowing the Is with normative content. He offered an illustration that appears, in light of Llewellyn's future involvement in drafting the Uniform Commercial Code, as nothing short of prophetic.

  If I have to choose someone to draft a statute regulating the banking business I may put a high value on a knowledge of banking practice. I may regard as the ideal man for the task the man who knows the practices of the banking world so thoroughly that lie can predict with certainty the psychological reactions which the sight of a postdated check will invoke in any banking employee, from messenger boy to president. I may prefer him to a man who, though less familiar with the behavior of bank employees, has spent his life studying the history and theory of banks and banking law, and many hours in arm-chair reflection on the possible ways of organizing and controlling the banking business. I am entitled to my preference. But I am not entitled to escape responsibility for it by saying it involves no "value judgment," no philosophy of what ought to be. 103