Classical Competition and Freedom of Contract in American Laissez Faire Constitutionalism

Abstract

It is impossible to tell the history of American antitrust law and economics during the so-called formative era (1890-1915) without a preliminary understanding of the economic rationale underlying that major phase of American constitutional law commonly called laissez faire constitutionalism, or Lochner era. The essay is a preliminary effort to locate such a rationale in the almost perfect overlap between classical political economy, especially the notion of competition as the supreme organizing principle of thriving societies, and classical liberalism, in particular the notion of liberty of contract. It is argued that the well-known Progressive interpretation of the Lochner era fails to recognize the true meaning and extent of this overlap. The protagonists of our story are economists Adam Smith, John Stuart Mill and Francis Wayland, and Supreme Court Justices James Wilson, Oliver Wendell Holmes and Rufus Peckham.