Liberty of Contract

As a follow-up to my last week’s post, I want to write about a particular idea of freedom from U.S. history: Liberty of Contract. It’s an example of how complicated the basic idea of “freedom” really is.

Liberty of Contract is the idea that no outside entities should interfere with contractual agreements between individuals, especially between employers and employees. For a time (roughly, the 1870s through the 1937), Liberty of Contract was regarded as the fundamental principle of Constitutional Law in the arena of economic and freedom. The quintissential example was the case of Lochner v. New York (1905), in which the Supreme Court overruled a New York state law that limited bakers to 10 hour days and a 60 hour week. The state had passed the law for health and safety reasons but the court ruled that this was unfair interference with the employer-employee contract which limited the rights of these individuals to freely enter contracts with whatever stipulations they desired. Thus the period is known as the Lochner Era.

Why should we care about this little history lesson, since the principle died in the onslaught of the New Deal, almost 80 years ago now? A few reasons:

This forces us to imagine an time in which the freedoms listed in the Bill of Rights were not regarded as your most important freedoms or even as the most important protections from government. If that’s the case, we have to consider how stable our current understandings of core freedoms are.
Liberty of Contract is an implied freedom. It rested on extra-Constitutional ideas of liberty suggesting that the government must scrupulously avoid singling out either individuals or classes for special treatment. So our current fight over the implied “right to privacy” at the heart of the abortion debate isn’t really new. We’ve been arguing about implied Constitutional principles for a long time now.
Ultimately, the principle was discarded in the face of popular cries for the government to do something about the economy during the Great Depression. In response to this pressure, justices began to rethink their concepts of liberty and government. The written (or unwritten) constitutional order wasn’t absolute when a crisis came.
Once the justices ditched Liberty of Contract, they had to articulate a new theory of the Constitution and liberty. What they settled on was much closer to our current conception of a Bill of Rights focused approach. But they didn’t invent that out of thin air. It came from first a Progressive Era thrust by the ACLU and second from a Great Depression-era cooperation between African American civil rights leaders, unions, and communists. These groups has already articulated a new vision of government and freedom, followed-up by FDR with the New Deal, that was already prepared and packaged for adoption.

So if you don’t love our current conception of freedom, you could wait around or actively work for change. And if you do like it (and feel it’s slipping away), you might need to work hard to maintain the current order, especially in light of the challenges of the War on Terror. But above all, don’t assume that your vision of freedom is ‘obvious’ or ‘just what the Constitution says.’ For a long time, some very smart people had a very different view of what the Constitution meant.