The Business-Friendly Constitution

Guest Blogger

Sandy Levinson

For the symposium on Michael Greve's The Upside Down Constitution (Harvard University Press 2012).


Michael Greve has written a remarkable book that should be read by anyone interested in federalism. He also offers an interesting--and quite persuasive--defense of Swift v. Tyson and subsequent "federal common law" and, therefore, critique of Brandeis's success in Erie v. Tompkins in eliminating the ability to provide a national common law to protect, say, the insurance industry against the vagaries of state regulation.

One must begin, incidentally, by clearly distinguishing legal (or constitutionalized) "federalism" from political preferences or policies that instantiate "decentralization." The distinction is crucial, for it underscores that the former is a "locked-in," judicially enforceable legal norm, whereas the latter is only a discretionary decision--often made, ironically or not, by people at the top of a centralized hierarchy who altogether accurately believe that decentralized policy formation or implementation will bring about desirable results.   See, eg, modern China, which I gather is remarkably decentralized in many important ways though not remotely "federal."

So why have "federalism"?  Many modern defenses sound in the importance of "diversity" or, as in the often fatuous comments of Justices O'Connor or Kennedy, the completely unsubstantiated belief that there is a necessary connection between local autonomy and "liberty"--or, in some versions, self-government.  That is not Greve's tack at all.  This is most certainly not a book written from a civic-republican sensibility.

Instead, he is primarily interested in what might be termed the "political economy" of federalism, by which I mean its essential role, for Greve, in liberating business from oppressive regulation by generating competition among the states to attract business (and by eliminating the ability of states that might well be reflecting the views of local communities to freeze out goods produced by companies in business-friendly states).  This requires vigorous enforcement of the dormant commerce clause, on the one hand, and limitations on congressional power, on the other hand, to impose "cartelization" by a coalition of dominant states who wish to limit the autonomy of outliers.  The key examples of the latter, of course, are Hammer v. Dagenhart and its overruling case of Darby Lumber.  He would also happily constrain the power of states to impose punitive damages on vulnerable business.  He is unabashed and admirably candid in articulating what might ne termed a "Coolidgean view" of the constitutional enterprise, by which the business of Constitutionalism is protecting business.

Many things might be said, of course.  A "liberal" or "progressive" will be tempted to say that Greve is basically indifferent about the prospect (or likelhood) of "races to the bottom," where a relatively few states can stymie widely-desired reforms (such as regulating child labor or other working conditions) by holding out and threatening their progressive counterparts with the loss of their manufacturers, for example, to more states with more "business-friendly" policies.    

That being said, one of the things I found most interesting about the long, consistently illuminating, and well-argued book is its orthogonal relationship with what passes these days for "conservatism." Thus, for example, he is withering in his dismissal of "originalism.". No doubt there are overlaps between the political preferences of Greve and, say, Randy Barnett, but there is no agreement at all on the underlying meta-theory of interpretation.  Nor, as already suggested, does he have any patience for Scalia's hostility to the dormant commerce clause (because it is in fact created nearly out of whole cloth by judges) or his tolerance of state imposition of "disproportionate" punitive damages in the name of state autonomy and restricting judicial power.  Nor does Greve seem to have his heart in defending states' rights to stifle alternatives to heterosexuality.  This is a book--and argument--about liberating business, nothing more, nothing less.
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