Sunday, August 12, 2018

Blending Business History and Legal History

Thank you to Karen, Dan, and Mitra for inviting me to participate in the Legal History Blog.

To get started, I want to introduce what I’ve been working on for the better part of a decade, my recently published book, American Fair Trade: Proprietary Capitalism, Corporatism, and the "New Competition," 1890-1940 (CUP, 2018). I began this research project in graduate school at the University of Virginia and, in another post, I plan to discuss how I came to this topic. I’ll also offer some advice to graduate students looking for dissertation topics. Today, however, I’d like to tell you a bit about the book and then reflect on writing in two disciplines – legal history and business history. Interdisciplinary work posed some methodological challenges but also opened opportunities for analytical reinterpretation of historical events. For historians of regulation, it seems critical to incorporate both the social scientist’s approach to business history and the institutionalist perspective present in legal historian’s methods.

American Fair Trade argues that trade associations of independent proprietors acted as regulatory intermediaries between individual firms and government agencies in the fifty years before World War II. In doing so they facilitated the growth of the administrative state and altered the legal meaning of “fair competition.” Rather than viewing the history of American capitalism as the unassailable ascent of large scale corporations and free competition, American Fair Trade shows that trade associations lobbied and litigated to reshape antitrust law to their benefit. Cooperation among businesspeople and state regulators legitimized codes of fair competition that prohibited certain business practices, such as sales below cost or secret rebates, and standardized production and retailing specifications. New Deal partnerships in planning borrowed from those efforts to manage competitive markets, but ultimately, distended and discredited the fair trade model by incorporating large scale businesses and mandating economy-wide trade rules that sharply reduced price competition. State-level fair trade laws persisted through the 1950s, but their popularity waned with consumers and jurists thereafter.

To some business historians, the supposed failure of the fair trade movement may appear inevitable. One might reasonably believe that the early twentieth century’s independent proprietors – such as specialty producers of foodstuffs, coffees, and make-up as well as independent retail druggists and grocers – never stood a chance against the superior efficiencies of mass production and retailing with its improved economies of scale and scope. Those technological imperatives, that narrative goes, acted as a driving force behind historical change, at least according to a simple caricature of the Chandlerian paradigm. If viewed from that lens, it is easier to dismiss the proponents of fair trade contracts and the fair trade laws that enforced them as rent-seeking, backwards, and merely nostalgic for a bygone era. (For more on Alfred Chandler and the Chandlerian paradigm, see Richard John's historiography here, which appeared in the Business History Review.)

Of course I would not allege that the Chandlerian framework would require such a simple critique, nor would I assert that all business historians subscribe to the Chandlerian paradigm even in its more sophisticated form of historical analysis. Historians like Philip Scranton have pioneered alternative narratives that emphasize the continued importance of independent proprietors, entrepreneurs, and craftspeople. The point here is that there is a technological determinism that we all must confront, regardless of the history we’re writing.

Here’s where I think that new opportunities emerge for historians of regulation to overlay the interpretative lens of legal history onto business history’s deep studies of firm-level challenges and changes. Legal historians offer a skill set adept in analyzing how the law shapes markets through procedures, rules, and enforcement. They also demonstrate how legal change happens over time by investigating key litigants, lawmakers, and mezzo-level bureaucrats who propel institutional change forward. Likewise, business historians offer key analytical insights on how private firms govern markets through inter-firm contracts, trade association rules, and industry norms. Those firms and associations often inform the law-making process – we can refer to it as capture or coordination of the regulatory process; examples abound of both. But, only by taking both fields’ analytical frameworks and emphasis on particular actors (policymakers and regulators, on the one hand, and firms, on the other) can historians of regulation produce truly robust explanations of institutional and economic change. (Ed Balleisen has written extensively on the history of regulation, blending business and legal history. Several other historians have as well, such as Lou Galambos, Naomi Lamoreaux, Brian Balogh, Victoria Saker Woeste, to name just a few.)

American Fair Trade blends legal and business history to construct an institutional analysis of U.S. competition policy between 1890 and 1940. It focuses not on the large scale firms and the trust-busting cases that have garnered so much attention, but rather it emphasizes the role that independent proprietors played in shaping private markets and influencing public law. It demonstrates the surprising flexibility of early twentieth century antitrust policy and the unexpected partnerships between business groups and federal regulators. The institutional story displaces the myth of free market competition and, I hope, leaves us with a more thorough understanding of how law and society reflected time- and place-specific rules governing fair competition, which – at least for some time – ordered markets.