The text of the Constitution contains one commerce clause. However, the Supreme Court has always behaved as though there were two commerce clauses, one “active” commerce clause granting power to Congress to regulate matters affecting commerce among the states, and another “dormant” commerce clause governing state regulatory activity affecting interstate commerce in the absence of congressional action. In practice, if not in textual fact, there are two commerce clauses.
Although the theory underlying both commerce clauses was originally derived from the single overriding concern with developing a national marketplace, the jurisprudence of the two commerce clauses has diverged to the point that active and dormant commerce clause principles often conflict. The Court’s obeisance to economic localism in its dormant commerce clause opinions contradicts the strong bias in favor of economic nationalism that dominates the Court’s active commerce clause decisions. This anomaly has become especially pronounced since the “constitutional revolution” of 1937.
In its post-1937 active commerce clause decisions, the Court consistently has recognized the systemic implications of virtually all economic transactions, even relatively insignificant individual transactions that are conducted locally. Conversely, in its dormant commerce clause decisions, the Court often has been willing to ignore the systemic implications of state regulatory behavior that affects broad segments of the national economy, choosing rather to emphasize that only unrelated local transactions are being regulated. The Court effectively has established a macroeconomic active commerce clause and a microeconomic dormant commerce clause. This Article addresses that anomaly.
More specifically, this Article investigates two related phenomena. The first is the domestication of the active commerce clause – that is, the transformation of the commerce clause in its “active” form from one of the primary obstacles to progressive social and economic reform in the first part of this century, to the benign lapdog it has become in the Court’s modem cases. This phenomenon is undoubtedly familiar to any student who has successfully completed a basic constitutional law course.
The second, less familiar phenomenon is the contrary role the Court’s dormant commerce clause jurisprudence continues to play in channeling the development of capitalism in the modem era. This Article will argue that the prevailing intellectual currents in the Court’s dormant commerce clause jurisprudence directly contradict the economic premises that inform the Court’s modem active commerce clause doctrine. Moreover, this Article will argue that this conflict carries ideological overtones: the Court continues to treat dormant commerce clause cases against a backdrop of many of the same conservative economic theories and presumptions that animated its now-derided active commerce clause decisions in the period leading up to the constitutional revolution of the thirties. The “revolution” in economic thinking on the Court thus is less complete than is usually assumed.
The commerce clause once caused the Supreme Court a great deal of trouble. In the hands of a very conservative Court the commerce clause provided the basis for some of the most reviled opinions the Court has ever issued. The traditional version of this tale has a happy ending: after effectively thwarting the popular will during a period of grave economic crisis, the Court and the country were saved when Justice Roberts switched his vote in an important economic regulation case, the Four Horsemen of Reaction retired soon thereafter, and President Roosevelt quickly appointed several vigorous young New Dealers to the Court. Thus was the country’s economic system saved and, the story goes, the Court taught a harsh lesson about the limits of its constitutional power over economic matters.
The traditional tale is misleading, however, because it ignores the persistence of economic themes in the dormant commerce clause cases that the Court was forced to abandon in the active commerce clause area. More specifically, the Court continues to be influenced in its dormant commerce clause rulings by the intellectual remnants of nineteenth century neo-classical economics. Like neo-classical economics, modem dormant commerce clause theory is premised upon a transactional, microeconomic model of economic behavior. The Court’s dormant commerce clause decisions treat economic actors in isolation from the full macroeconomic context in which they operate. Although the Court has accepted in theory the concept of a national market in both its dormant and active commerce clause decisions, the Court nevertheless regularly rejects commerce clause challenges to state actions that fragment the national marketplace by regulating economic activities that are clearly national in scope. This fragmentation leads inevitably to inadequate regulation, and to the dilution of public political power in a context defined by ever-increasing concentrations of private economic power. The Court’s adherence to an outmoded set of economic premises cultivates an overriding conservative bias in commerce clause discussions, which makes comprehensive national economic regulation and coordination more difficult to achieve.
Modem commerce clause scholarship has not recognized the inconsistencies of the Court’s approach. In fact almost all of the scholarly literature implicitly accepts the Court’s own biases. This is reflected in the vernacular of the dormant commerce clause debate, which usually concentrates on defining the extent to which the Court’s current approach properly protects federalism or state sovereignty interests. Because it is usually defined in this way, the debate concedes the most important issue at the outset by assuming that the states have a natural role to play in regulating economic activity. It is not surprising, therefore, that most recent articles have recommended that the Court adopt an even more passive approach toward state regulation of national economic activities. The Court should intervene, so the argument usually goes, only to prevent discrimination by one state against another.
This Article is presented in five sections. The first section addresses the origins and early application of the national market concept in the Marshall Court’s commerce clause decisions. This section also discusses the ideological significance of the national market in the Court’s early years, and the reasons for the Court’s drift away from a strong nationalist position in the years immediately following Chief Justice Marshall’s death.
The second section of this Article outlines the intellectual framework of neo-classical economics. It describes several of the particular tenets of neoclassical economics, many of which were translated into commerce clause theory by the Court beginning in the mid-nineteenth century. This discussion also concentrates on the normative basis of neo-classical economics, especially its role in explaining the operation of an unfettered economic market in terms that did not allow for consideration of fundamental changes in political control or regulation of economic activity. This section also includes a brief discussion of the successors to neo-classical economic theory and a recent attempt to revive some aspects of neo-classical thought.
Sections three and four analyze the Court’s application of neo-classical economic ideas in its commerce clause decisions. Section three describes the Court’s ill-fated attempt to impoit directly into active commerce clause theory many of the presumptions and intellectual models of neo-classical economics. This section concludes by discussing the complete abandonment of these notions after the constitutional crisis of 1936. Section four describes the odd persistence of the same neo-classical concepts in dormant commerce clause decisions that have now been explicitly abandoned in active commerce clause decisions. This section begins with the Taney Court’s modifications of the Marshall Court’s commerce clause jurisprudence, and traces the dormant commerce clause through the Court’s adoption of Chief Justice Stone’s standard and the application of that standard in some recent cases.
The final section summarizes the conservative bias that the Court has built into its dormant commerce clause decisions. This section analyzes how this bias has affected the Court’s consideration of cases involving the state as a market participant and the recent spate of state corporate takeover statutes. The section then discusses the interrelationship of the political principle of federalism and the economic decentralization required by the neo-classical dormant commerce clause. This section concludes with a consideration of the proper regulatory role of the states, and urges that the Court should require stronger, rather than weaker, judicial oversight of state regulatory activities.
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