Law and Society

Critical Approaches

Gerald Turkel
University of Delaware

INTAG SEMARANG

Allyn and Bacon

Boston London Toronto Sydney Tokyo Singapore

,
 MDOKTOR
PROGRAM
AKAAMPRO

UNTA CSEMAR

Contents

Preface

1 Introdaction: Approaches to Law and Society 1

Some Directtons from the U.S. Eperlence
The Social Consiruction of Law 6
Defintng Law by Approaches to the Study of Law
Max Weber's Typology of Approccbes to the study cflau
Alternatfve Soctologieal Approacbesto Law 15
Concusion 20
References 21

2 Law, Solidarity, ari Social Organization 23

Positivist Approaches 24
Emile Durkheim: Lau, Social Organization, and Morality 26
Law, Solidarity, and Moral Boundartes 33
Conchusion 42
References 43

3 Liberal Society, Rationality, and the Rule of Law 45

Classical Ltberalism and the Rule of Law 47
The Rul2 of Law and Rattonal Soctial Life 49
Rationalityy and Types of Legal Decision Making 52
52
The Rule of Law and Formal Rationality 56
The Rule of Law and thbe Rise of Corporate Capitalism 58
Conclusion 64
References 64

4 Law and the Logic of Capitalism 67

Karl Marx: The Rule of Capital and the kule of Law 68
The Logic of Capitalism 69
iii
 Chapter 3
Liberal Society,
Rationality, and
the Rule of Law

Like other universities, the University of Delaware has a policy that enables students
to complain officially about their grades and seeka remedy. This policy provides us
with a good starting point for thinking about the rule oflaw."
Thepolicy,specified in the Student Handbook, has four steps(Eir. the student
must discus:her or hi_ grade with the instructor and try to resolve the dispute. If the
student and instructor cannot resolve the dispute through discussion, the student
takesthesecond)step; she or he presents the case to the chairperson of the depart
ment in whichthe course is listed. The chairperson notifies the instructor about the
student's action, and the instructor is aforded the oppormunity to state her orhis rea-
sons for the grade. If the dispute is rot resolved by the chairperson, the student can
80 on to the third stage.
Forthedhird)stage, each department is required to have a committee in place to
hear students' academic grievances. The committee is composed of equal numbers
of faculty and students. The student presents his or her case for disputing the grade
to the comnittee. The student can present evidence, including the testimony of wit
nesses. The instructor can present his or her case, including evidence. Each party
has the opportunity to make an opening statement, to be represented by a member
of the university community, to crosS-examine one anoher and the witneses, and
to make a closing statement. The members of the committee are charged with mak-
ing a judgment based on the information and argumenis presented at the hearing
Should the dispute not be resolved at the third stage, it can be appealed to the
The Faculty Senate Bylaws
University Senate Committee on Academic Complaints.
State that this committee is to be composed ot studerts and faculty. The committee
IS empowered to hold a hearing following the sanie rules as the comnmittee at the
46 Chapter 3

Should the
irregularities.
procedural
to focus on any changing the
departument level. It is required remedies, including
it c a n specify
committee find for the
student,
there are two broad
reasons for students
In addition to these
procedures, the studernt must claim
grade.
that are recognized as legitimate: (1)
and/or (2) the student
claims of unfair grades discriminated against,
o r she w a s
and demonstrate that he violated either university
or course
demonstrate that the instructor
must claim and unfair based o n the academic
cannot claim that
a grade was
procedures. The student

judgment of the instructor. of the Univer

of the internal regulations
for disputing grades is part number of fea-
This policy and does not meet strict legal standards. Yet it has a
of Delaware law.
sity term rule of
we generally think
of when we use the
ures that in positions
the exercise of power by those
First)the policy aims at controlling
accountable to rules of
nondisCrimina üon, to uni
Instructors are held
of authority. to course organization
of students
and the evaluation
versity regulations uhat pertain
The policy aims at controlling, if
perfomance, and to their own course procedures. instructors
may exercise over stu-
-

that
not completely eliminating, the arbitrary power
procedures.
dents' grades. (Second,)the_policy is implementedthrough universal
These procedures apply throughoutthe universiy. They are
available to all students
instructors. Third) the policy af
and can be used to challenge grades assigned by all
deem unfair. At the same
fords equality to all students to challenge grades that they
to iefend their decisicns and poli
Tine.the Fcliuy gives instrutors the opuntuni or rauonales for complaining about
cies.Fourth, the gruunds
policy provides specific
grades: the student must demonstrate that there has been discrimination and/or a vi
oladon of course p:ocedure by the insiructcr. Arguments and cvidence must address
these issues(Fifth, the last stage of the process is for appeals on the acministration
of the policy and the rnles through which it is implemented. It determines whether
all parties to the dispute have had "due process: has the policy been applied properly
at lower levels? While issues of fact may be raised at the appellate level, the focus is
on whether the procedure has been properly applied to a particular case.
As our example suggests, the rule of law means that our relationships and ac
ions are govemed by codified, impersonal, and impartial procedures and rules thal

are appliedequallyand
fairly
to ll Our people. actions, from the
relaionships and
exercise of power by people in state agencies such as the military and the police, tc
the obligations that people take on in their business relations with one another, tc
relaions within the family, are subject to
legal regulation. Under the rule of law, peo
ple shase he belief that their relationships and actions are constrained
and legal instituions, and by legal codes
insiruions are shaped through similar
rule of law means that law is the
ultimate source of social control.
expectauons. The
In order to
explain the social sources of the rule of law, this
model of cassical chapter presents a
liberalism
rule of law fits he stuctural and competitive capitalism.
This modei shows how u
and culrural conditions of
petiive capitalism. Once we understand the rule of classical liberalism and com
can th'nk about it law in relation to
more
In this light, the clearly. liberalism, we

rule of law can be

interpreive science approach to law. defined more precisely by using Max Webers
By focusing on Veber's interpretaton of raio
 and the Rule of Law 47
Lilera! Socicty, Rationality,

nality, social action, and most importantly for our purposes, legal decision making.
we can uincerstand the rule of law more fully. We can analyze it in relation to social
structure and as a source of rational, meaningful action through which people con-

stuuct law and society.

This chapter goes on to discuss some of the implications of the rule of !an.
focuses on social change by analyzing how the rule of law has shaped the change
fro.n classical liberalism and competitive capitalism to corporate liberalism and cor
which was
porate capitalism in the United States. 1he power to organize markets,
an important feature in thè change from small-scale business to corporate enterprise,
was largely shaped through legal institutions and legal argum

Classical Liberalism and the Rule of Law

The rule of law is most fully associated with social movements and patterns of socia!
life that take the liberty ot the individual as a basic principle of social organization
According to historian E. P. Thompson, the rule of law came about in England
as a

rest of cffcrts by people to ga.n frecdoms and liherties from onpressive monarchs,
to a jury trial, to
arbitrary power, and powerful social classes (1979). Rights
state
religious beliefs and freedom of conscience. to form associations such as political
pastice and tride union., and to cue proccss iu cruninal procceciugs re legal cx
pressions of liberties that have been won through popularstruggles. At the core of
the American experience, from its wa: for independence from Britain through the
ratification of the Constitution of the United States in 1789, the Civil War in the 1860s,
and the New Deal of the 1930s and beyond, is the atempt to secure individual lib-
erties and freedoms through law (Hartz 1955).
to the
Principles of la, such as the Bill of Rights-the first ten amendments
United States Constiution that limit the powers of the national government-are fun-
damental for establishing individual liberties as legal rights. The Civil War amernd-
ments to the Constitution prohibit slavery, extend the right to vote, and extend ihe
protecions of the Bill of Rights and constirutional law to afford protection from the
pover of state governments as well as the federal government. New Deal legislation,
such as the Social Security Act, seeks to make individual life and liberties more eco-
benefits. Thus, the rule of
nomically secure through old age pensions and survivor's
law is rooted in the recognition that individual freedom and security are accom-
plished through a society governed on the basis of legal limitations on state power

legal equality, and economic rights.

While there are strong ties between the rule of law and efforts to establish indi
vidual political liberties and individual liberties of conscience and religion, diverse
scholars have considered the relationship between competitive capitalism and the
rule of law (Weber 1968; Trubek 1972; Turkel 1980; Unger 1976; Olsen 1983; Hab-
ermas 1973, Friedman 1986; Neumann 1957). These scholars agreethat a competitive
the rule ot law and a partial outcome of the
market economy is both a condition for
rule of law. A competitive market economy is defined by five major features:
Chapter 3

of land, busirese
assets and
.

Otvnership
ownership of
property.
Ihere is a wide
throughout
the society.
other forms of wealth is spread
the of small businesses bust ing and
interactions

The market is organized

through failure of one business or.
another. The
services to one
selling goods and damage the
nation's economy.
of businesses cannot seriously and not by hired managere
Businesses are directly run by
their owners
The are free
economy
Workers to move from job
is self-regulating tojob.the decisions and actions ofbusiness
through
ment and econ
levels of employme
workers, and
consumers. High omic
market relations of people without governmer
Ovners, wi
growth will result from theor businesses.
ef
torts to b0ost employment support

etiiive capitalism is
Scholars maintain that compet
best served by
legal order a

based on the rule of law: the law is impartial; it treats people making claims aheu
contracual obligations and propety relations with detachment and equality; and
has institutional, procedural, and intellectual distance from specific economic inter
ests. Under the rule of law, exchanges on the market, he planning and implemen.
tation of investments for making private profits, the ownership of property, and
contractual obligations are given predictability and security. Because economic pow.
er and decision making are spread throughout sociery, stable legal rules that are
everly appicd to everyone make life iteiligble and predictable.
The nule of law, moreover, is not oriented toward social goals or solving social
problems by creating and implementing policies., Law is not an arena for salving
problems of poverty, unemployment, or lack of health iFsurancetRather, the rule of
law provides a stable order for individuals and businesses
to pursue their economic
interests. Itis a framework for the conduct of social and economic activities. Iike the
rules of chess, checkers, or the rule of law
baseball,
and impartially without concem for the outcome of applies
to all players equally
the game.
Beyond the link of competiive capítalism and the rule of law, classical liberalism
is kind of culture that defines and values a
a
type of individual and a way of ap
proaching the world. 1here are very deep associations among law, individual ibery,
personality, and society. Indeed, underlying classical liberalism is a highly indiviau-
alized and legalisuc
understanding of personality and society. As C. B.
argues, the basic way of
understanding MacPnerso
the individual person in classical
thought is hrough the logic of ibera
inasmuch as he is proprietor "possessive individualism": The individual is ie
freedom from dependence on the of his person and capacities. The human nce
session. Society becomes a lot wills of ouhers, and essen
of free individuals freedom is a function
of p
of their own related to each oher as ors
capacities and of what
they have acquired by their propSociery
consists of relauons of exchange between exercise. alism
understands society as relatons proprietors" (1962: 3). Classical
power of their possessions for theiramong persons who interact on loed he
s ofthe
the Da
ports the logic of the compeutve individual gein. This view blends d sup
ership and contracts. market and legal wiun w
As the discussion of concepts such as inciv
becomes more p0sitivist
developed and moreapproaches to law and society law

dominant as society becomesnas comple olex com

inor
 Liberal Society, Pationality, and the Rule of Lau 49

Society becomes more prone to the rule of law when social organization becomes
more complex, economic activity is conducted through competition and markets,
property is pr'vately owned, individual identity becomes more importan: than co!
lective identity, and society becomes more ethnically and religiously diverse. Under
these conditions, law becomes an increasingly dominant way of settling disputes and
conuroilings the actions of individuals.
This pattern of social life enhances tendencies toward the veakening of
neighborhoods and communities. It supports the split berweer the pubtic world
and
of
law politics and the
more private spheres of market relations, family life
and patems of association-religious, political, and intellectual-based on the lib-
erties of the individual the basic actor in society (Unger 1976). As religious be
as
lieis, morality, and political values become features of private life and individual
liberty, the law iends to become a mure independent and pervasive source of so
cial regulation.
While the nule oflaw is rooted in principles of individual liberty and the political
and moral equality of all individuals, it is also a rich culnural value that serves to sup-
port the legal order. As Thibault and Walker have demonstrated through social ps
chology experiments, perceptions that people have about procedural faimess in
resolving disputes are strongly associated with the degree of satisfaction that they
have with the resolution of disputes (1975). While people may not understand legal
procedures even when they enter into disputes in civil court (O'Barr and Conley
1989), they value aspects of the legal order tdhat support fairness, consistencv and
ethics across whatever diferences they may have in terms of their social origins and
backgrounds (Tyler 1988).
Beliefs about the rule of law also support the political order. Elected officials in
the U.S. govermment, from the president to members of Congress, take pride in stat
ing that the United States is "a government of laws and not of men": their actions are
conducted through legaB procedures and instiutions and not on the arbitrany values
orinterests of individuals, even if they constitute a majority of the citizenry.
In the international arena, the nule of law is also used as a way of legiümating
action. The ambassador to the United Nations from Kuwait, for example, vas asked
why the United States and its allies should fight for the liberation of Kuwait from Iraq
when Kuwait itself was a monarchy that did not have a democratic fom of govern
ment. The ambassador argued tlat the liberation of Kuwait was required by interna
tional law, including the charter of the United Natlons and the resolutions of the
Security Council. He maintained that Iraq, by, taking over Kuwait, violated the inter
national rule of law.

be Rule of Law and Rational Soctal Life

Max Weber's ideal types of law and society help us to appreciate the rule of law as
an important feature of social development and culture that shapes social action and
institutions. Shared beliefs and understandings provided through law enable pe
to coordinate their activities more fully and to plan projects. The law provides a set
of meanings about such things as property, responsibility, obligation, and rules of
30 ie
cOmmitm?nts to oone
interaction that are the background
for people
niaking
another
and planning activities together. also enables
us to better unco
law and society
and culture. Mod
and the
Weber's approach to social development
feature of n law
ule of lav as an important rsonal
based o n imperso social
that is increasingly ela
develops as pat of society 1972; Kronman 1983; Swidl
a

tionships, rationality,
and calculation
(Bruun
individua.ism are
1973)
social action, and rooted
o d e r n culture, social organization, and accomplishino i n
coordinating
o n successfully
shared meanings that focus become m o r e anonymous aw
mentally defined goals. As our relationships through stan
and our activities
another
oriented, we tend to understand one in our personal:.
situations rather than just lives.
ized meanings that hold across all
In order to apply for entrance into college, for example, students must take a crstan-
dardized Scho!astic Apürude Test (SAT).
The SAT provides scorcs that enable col.
students from all over the coint.
lege administrators to quantitatively compare
and, indeed, the world. Through instruments like the SAT, our orientation t
knowledge, schooling, and other people becomes more abstract, more technical
more impersonal, more concerned with standard vays of measuring things, and
more rule governed.
Whether we are engaged in building bridyes, conducüng war, curing diseases
educating the young, or making profitable investments, we increasingly tend to think
of our activities as rational: we base our understanding of them on the Sest empirical
information available and focus on 2cconplishing them. in an crdely and efficien
manner. We compare different investments on their relative degree of risk and oa
their rates of renurn. We think about basehal players in tcrms of batting averages and
runs bared in. When we account for our past actions or plan new ones, we tend to
focus on how the ends of our actions, our goals and values, are
accomplished
through particular means. Moreover, since we value the successful accomplishment
of our actions, we tend to have both flexible ends and flexible means. We tend to
rationally calculate our goals and the means available tc realize them in terms of the
likelihood of successfully accomplishing those
goals.
These features of modern rationality have two
very important dimensions for so
cial acion. On the one hand, rationality is a way in which
people understand
ther
acionc. Raional calculaion forms oúr common
sense interpretation of
and our acions. On he other
hand, ouselves
order. For example, rationality is a feature or of
propery a soca
capialism
derstand and coordinate their
is a form of rational
economic action: individuals un
ments, profit,
everyday economic activities by calculating inves
and income. At the same
time,
things, expressing values incapitalism
is a social order that i5
on, among other
terms of money and modern
o
1991). Moreover, both tihe everycay accou
ing practices (Colignon and Covaleski
of individuals and the ratüonauy
accounting practices of business
nent and reinforce
another. The
one enterprises tend to
com
because instirutions are based on everyday rationality of ir.dividuals is
get high SAT sCores because
rational meanings: high
school students
poo
into college. The rational
they know that these scores wan
them for properies of instinutions are important for gusing
planning and coordinating their supported
are by peopic
goals and activities.
 Libera' Society, Rationality, and the Rule oflau 51

Inmodern society, more and more spheres of life become rationalized as they
become increasingly based on impersonal rules, calculation, and predictions of out-
comes. The everyday activities that people engage in and their expectations of the
furure-8oing to school, preparing for a career, shopping for dinner, planning vaca-
tions, goir8 to the doctor-are based on beliefs about society as a stable, ordered
pattem of relationships that can be reasonably accounted for. This rationality of ev-
eryday activities is made possible, in part, because the major spheres of social life
the economy, social organization, government and the state, and law-are shaped
byraional ineanings.
Consider economic activity. As we have suggested, the performance of econom
ic activity through instinutions such as the business firm is based on calculations of
costs, benefits and profits. As economie actors, individuals are oriented toward work
and consumptior through muncy, which enabies them to caiculate their incomes,
CApendirures, and wealth. Capital accounting and budgeting are the grounds for or-
ganizing production, marketing, and distribution. Such accounting is necessary for
making technical judgments about he successful use of economic resources (Weber
1968: 90-9). Economic efficiency, that is, the allocation óf scarce resources to
achieve individual and group ends, becomes the most important way of interpreting
economic organization, production, and consumption.
Bureaucracy, the modem form of social organization, is also hased on rational
ity. Bureacracy is essentially a way of organizing specialized scientific and technical
aca!s (W<ber
kncwledge for acconlishing technically defined 1968:
972-975). it
brings together a variety of experts-scientists, engineers, accountants, lawyers, mar
keting specialists, and personnel managersinto a rule-govened administrative or-
der. This administrative order is based on rules that regulate the authority of the
offices that compose it. Thus, universities are organized into departments, each with
its claim to expertise in a field. Different categories of personnel have different ob-
ligations: professors tèach and do research while administrators manage finances
and organizaion.
Bureaucracy also provides the rational grounds for pèople to work in stable «
reers. They can calculate their incomes and retirement pensions based on their em-
ployment status, educational credentials, and perfomance. Bureaucracy not only
makes raional, organized action possible but also enhances the rational ordering of
life for employeës and clients.
**Just as.the.economy and social organization become more rationalized, so too
Coes the moden state. The moderm state increases the rationality of political action,
the exercise of govermmental power, and the concentration of the means of violence.
The modern state concentrates power, especially the instruments of force and vio-
lence, into a bureaucratically organized order (Weber 1946:78). Politics tends to be
coe an organizational and electoral struggle waged by political parties. These
parties strive to win leadership of the state in order to use state power to fulfill the
interests and values of their supporters and, most imporiantly, to fill state positions
wih their members.
It is imporant to recognize that there are different principles of rationality within
the major arenas of social action discussed here. Economic, bureaucratic, and politica!
52 Chapter 3
principles of rat
of action
are
based o n
dilferent

and the allocati

ationality
eficiency
institutions and pattcrns economic
with on the need to rationally
sources for aternatie uses. It is based owledge distribute
and defnin
se.
concerned Scardceand
re
Economic rationality is
organizing
knorvled
rationality
focuses o n
coordinate specialized 1 d
Bureaucratic
develop and
the need to
sources.
to accomplish
It is based on orderin
realizing goals.
orderto make .
chemical
engineering,
power In
edge, from accounting
accumulating
to
and concentra!ing ternitory
state focuses o n
to support.ona.
and social life secure.
distinct, generally tend
of rationality, though them. Thus, economid'
These patterns conflicts among
tensions and to coordirate speciok
other. There are, however, onganization zed
of bureaucratic
At the same ume, bureaucracies do ne
some measure
ciency requires
and technical activities.
foms of knowledge
to limit their growih, although
their 2/03r
cuonomic elticency
nave a principle of
material r e s o u r c e s . Siate power reaui
must be restrained by
limited financial and
economic growth. At the same
economic resources and
the efficient aliocation of
with economic rationality requires some mea.
tinethe social order that goes along and the maintenance af
on means of violence
sure of state power. Yet expenditures
force may use up economic resources and
undermine economic growth.
Law regulates the tensions and conflicts among all of these arenas of modern
that form modem society lead to
society. In part because the different rationalitües
very complex relationships and problems, law becomes increasingly central for
defiring nd 1egulating relaionships and.acttons. Since this dien.e is discussed
throughout this book, the importance of law for rational action is only touched upon
here. Core aspects of rational economic aciviy, from the money supply to contracts
to property, are legaly defined and regulated. State power, whiçh is brought to bear
to resolve economic conflicts over property and contracts and to maintain the social
order necessary for raional economic activity, is both regulated by and justiied by
law Bureaucratic organization is based on codified rules arnd
legal definitions of au
thority. Thus, la is more than a paterm of rational noms and that insitutions
velops along with modem society. Law cuts across all the major arenas of activityde
m
moden society and plays a central role in
ordering social life.

tionalityand Types of Legal Deciston Making

So far we hav
analyzed typespf rationality in different e
seen not only law is a arenas of social life. We na
that
cuiural pa:e:r. but also that feature of raional action
that iSis aa part
jt part of aa more genera
gc This
secion presents is needed to regulate modem rational
different types offurther aspeçs of Weber's interpretive soCi on
law and analysis of
y understand retional law,legal decision making, which will enable us tofocusf
lav,
rational more clear
legal
focuses onacion,
Weber's typology of law and the rule of law.
paricular cases (Trubek 1972; the ways legal rules are o decide

typology isInverarity,
Sanders 1986). The Lauderdale, and Feld 1983; usea and
pñmarily concened wih how Lemps of attems

specuiCP
 Liberal Soctety, Rationality, and the Rule 53
of Tlau

meaning. procedures, and institutions are involved in making legal judgments. Con-
sistent with much of the discussion about the jurisprudence aFproach t law in
Chapter 1, the typology focuses on judges and thcir decisions a» being at the core
of law. While Weber considers law in relation to an array of social structures, insti-
rutions, and meanings, he is most concerned with the jurisprudence approach:la
is essentia!!y about judges making legal decisions on particular cases.
In analyzing law this way, Weber seeks to interpret different patterns of judg
ment in temms of rational law. By raùonal law, he means the degree to which general
legal principles and rules are consistently and clearly applied to particularcicases.
in its most rational form, law is an internally consistent, logically coherent body
of riles. These nules and the logic that makes them coherent define the legal mean-
ing of virtually all social action. Legal principles and legal rules extend through ali
fields of social acion, providing definitions of social action and facts. These legal
prinip.es and rules make particular events into cases that can be decided by judges
on the basis of law.
Using two basic dimensions of rational law, we can classify legal decision mak
ing fron least rational to most rational. These two dimensions are formality and ra
tionaliy. Fomality is the independence of legal institutions and procedures from all
other social instiutions and procedures, including the family, politics, economics,
and religion. R2tionality is the reliance on specifically legai principles and rules for
making decisions that are logically applied to particular cases. These legal principles
and rules are independent of principles and rules from cther bodies of kioviedge
and rules including religion, politics, and economics. Thus, rational 1aw requires the
highest degree of insitutional, procedural, and intellectual independence of law
from society.
When we combine formality and rationality, we can construct four ideal types
of law. we can then use these types to analyze how different combinations of in
situtonal and intellectual independence of law affect the extent to which law is ra-
tional. Table 3-1 presents the four ideal types of law in order of their degree of
raionality.
Legal decision making that is substantively irrattorna! is the least raional because
it does not have independent institutions, procedures, or knowledge. Law is not dif-
ferentiated from other insirutions and patterns of knowledge. Judgments are made

TABIE 3-1 Types of Law from Least Ratlonal to Most Rational

Formality (Institutional and

Type of Law Procedural Independence) Ratlonality
substantive irrarional
formal irrational
substantive raional
formal rational
54 Chapier 3

trained in speciic
legal procedures
are not givie
nts by giving
by people who do n o t make
judgments
case-by-case basis
on a
roles,
and w h o
insights and wisdom
wisdom the
of the
specific legal o n the
who do not occup are based
render justice.
reasons for their
sions. Judgments capacities to
unique personal berween two wom.
lawmaker, reflecting
the lawmaker's resolution of a dispute
of substantive iraionaliry
Solomon's
The biblical story of King is a n example
child
e n who claim the same baby
as their cut
S o l o m o n prepares to
10-101). As King
and Feld 1983: one of the women
(Inveranity, Lauderdale, half of the child's body,
each woman the other w o m a n . The other
the child in half and give to give it to
child but, rather,
tells the king not to kill the 8ves
h e baby to the
to divide the baby. King >olomon
woman tells Kirng Solomon be the mother.
it remain alive, declaring her to
who is declared the mother is, in
Woman who wants to
that the woman
The biblical account tells us know this. Rather, his action is
but Solomon ioes not
fact, the birth mother, King attrnibute to Goa. while we may
based on his unique wisdom, a
wisdom that people
the welfare child, he does rot give
ofthe
his action as based on concern for
interpret without giving reasons, this
any reasons for it.Since he is a king making judgments
is an example of substantive irationality.
procedures that are specifically
has legal de
used to make
Formalhasirationaliy
a higher level of proced1ral integrity
than does s'ubstantive irrational-
cisions. It
to anaiyze events and are
ity. Although formally irational procedures "do not seek and
reason," they co follow very strirt procedural rules (Lempert
urconsurained by
Sanders 1986: 10). In cther words, fornal imationl decicio.a making c'oes iot ty lo
describe a case in terms of legally relevant mutives and circumstunces in order to
make a judgment about the legality or ilegaliry of the actor or die act. Rather, deter
mining guilt or innocence is accomplished by applying a prowedure. An ordeal is
kind of formal irational procedure.
For example, the Azande unibe in the Sudan determine guilt or innocence
through a rirual conducted by a holy man (inverarity, Lauderdale, and Feld 1983:
101-102). The holy man administers poison to two chickens. If the first chicken dis,
the accused person is deemed guily. If the first chicken lives, the accused person is
deemed inrocert Guit is confimed if the secord chicker. lives
after beiv3
dmin
istered poison. Innooence is confimed if the second chicken dies. Results that are
inconsistent with guilt or innocence are considered to be mistakes in the way he
rirual was performed.
The Azande follow a rigorous
made cn the
procedure; at the same tume, there is no jüdgment
basis of
facs
depicting the actions or motives of the
people
determined to be guiry. Moreover, there are no reasons wno
mination of guilt based on the events of the case. given suppo.t the
to
deter
formal procedures
and Hence, there is a combination
or
specialized roles with
an absence of
Substantive rationaliny combines an absence legal reasoning
with reasoned decision of legal insunutions and procedures
making. The reasons that are
specifically legal. Father they are rooted
in provided, however, are
facts. An example of substantive nonlegal principles,norns, rules, *
ligious leaders who rationalityis decision
making
use moral
norms by a comniunirys
Commandments. These moral norms derived from biblical sources, su:h as the
are
applied to
paricular cases in mzking juos
 Liberal Society, Rationality, and the Rule of Lau 55

ment. They do not come out of case law or norms derived from legal principles and
arguments.

Mashaws srudy of the management of disability clalms by the Social Security adi-
ministration provides another excellent example of substantive rationality (1985).
The powers and decision-making authority of administrators of the disability pro-
gram in the Socdal Security administration are defined by statutes, and the adminis-
trators can be held accountable by citizens in court. Yet in accomplishing the
daunting task of managing more than one million claims a year, administrators face
Immense financial, political, and organizational pressures and conflicts. For example,
Congress wants them to keep their expenditrures within certain boundaries. At the
same time, senators and representatives argue for greater compensatton on behalf oí
individual constituents who have filed claims and aie dissatisfied with their compen-
sauon.
In order to process these claims, the Social Security administration has estab-
lished elaborate criteria and standards for determining the severity oí disabilities a
the amount of compensation cla.mants should receive. These criteria and standards
are largely nonlegal: they are based.on medical and psychological definitions of dis
ability, on age and family profiles of clients, and on other criteria such as work ex
perience and vocaiional skills. These provide the framework for caseworkers in the
Social Security administation to determine amounts of compensation for people
who are making claims. As this framework has been applied, certain clients have
been dissatisfied with decision.s m2de by caseworkers. To answer client ccmlaints,
the Social Security administration has developed internal mediation and arbitration
services, as well as quasi-appellate courts, to review compensation decisions that are
unacceptable to the cdaimants. While the procedures for reviewing these decisions
are partially based on legal principles, the criteria and standards for settling claims
are medical, psychological, and economic. They are substantively rational since they
are layely independent of legal instinutions, legal procedures, and legal reasoning.
Formal rationality is the ideal type of rational law. It has the highest degree of
independent legal instinutions and procedures combined with a pattern of decision
making that is within the intellectual boundaries cf lav. Decisions a:e based on legal
knowledge that incdudes general legal principles, precedents, and rules that deter
mine the legal relevance and fact content of statements.
Tne Supreme Court of the United States, for example, is the ultimate court of
apceals in the United States. By having its members appointed for lifetime tenure
after being nominated by the president and approved by the Senate, the framers of
th: Co- nution designed the Supreme Court to be independent of all substantive
social, ecu..omic, and politial interests. The Court, moreover, is elaborately defined
by formal procedures that determine how it 8ets to hear Cases through processes of
appeal. In addition, the Court decides cases on the basis of the legality of legislative
statutes, lover court decisions, or administrative nulings. Itapplies the Constirution,
principles of common la, precedents, legislation, and other legal sources in pro
viding reasons for is decisions. Because it combines instirutional and procedural in
dependence with rationality based on legal reasoning, the U.S. Supreme Court is
an exanple of formal rationzlity, the highest rype of rationaliry in lan.
 56
Chapter3

fic set of
Because forma legal rationality is rooted in a very specific
aures and ways of analyzing events, it often leads to decisions t.at ma pro legal
nay
suange from ethically based or morally based beliefs about justice. TakTake the appear
Contra affair, for example (Draper 1991; Mayer 1994). During the 1980 Iran-
1980s, high le
Oiticials in the Reagan administration were found to be in violation of fed laws.
eve
Most importantly, they were found to be selling arms to Iran and using the
from those ams sales to fund the Contra rebels in Nicaragua. This viclated l moniees
prohibited the sale of ams to a country designated as a terrorist state, such ast
as well as laws that prohibited supplying the Contras with oher than humanita
aid. itarian
In pursuing these violations of law, two tracks were taken. First, the Conor.
established a committee to investigate these actions. Second, a spccial prosec.
was appointed to bring criminal charges against those involved in breaking the la
Yet these two uracks conflicted. In the Congressional heaings. government official
who testified were given immunity so that their statements would not violate the ffth
amendment right against self incrimination. Many government officials, includino
Oliver North, were called to the committee, were immunized, and gave ful
Colonel
accounts of their acions. Later, when the special prosecutor brought charges against
them, he was faced with serious problems of gathering evidence. Much of the evi
dence that would have been available in pressing criminal charges could not be used
because it had been immunized during the Congressional hearings. In this case, legal
piocedures and legal reasoring made it posible for pecple to not be held fully ac-
countable for violatüng the law.

The Rule of Law and Formal Rationalityy

We must remember that this ypolo8y of law that arranges decision making from the
least rational to the most rational is not a descripion of any concrete legal decision,
institution, or ase in the real world. Rather, it is a constnuction based on theinte
pretation of legal decision making that seves analytical purposes: it enab!es us to
think about the world and observe law and society with greater precision and clariy.
We should not expect to find any of these
types in their pure form in existng
nor should we expect this to be the last word on how to
eties, classify legal decison
making.
In the real world, we analyze legal decision making as having different
ombi

nations of rational and irational features that give actual decision making
degrees of rationality. In jury trials, for example, jurors provide a kind of wisdom of
Hans
peers that does not rest on publicly stated reasons (Kalven and zeisel
and Vidmar 1986). This is an element of subsanive laW.
law.
irationaliry in moden
Moreover, at both rial and appellate levels, testimony giver1 by experts psy
such a
chiauists, social workers, and medical doctors is
part of he
making. While their knowledge may be rational and scientiic, grounds TOanits
it is not abou
and precedents; it is substantively raional. The physical organiz2tion of tne u cOur
 Liberal Society, Rationality, and the Rule of Law 57

room and the dress of judges, along with legal etiquctte and decorum, co.1stitute a
tradition of procedures that is formal withoutbeing rational. These are formally irra
tional features of law.
One intriguing line of interpretive inquiry that comes out of concerns with the
rule of law and formal rationality is the study of how people actually establish fats
and form rational grounds for thelr actons in different legol institutions and contexts
Rooted in a variety of interpretive sociological approaches (Smith 1974; West and
Zimmerman 1985; Zimmerman 1974), for example, Douglas Maynard has studied
pattems of conversation and storyelling in plea bargaining (1988). In analyzing
structures of conversations and stortelling among such officers uf the court as pros-
ecutors, defense attomeys, judges, and publie defenders, Maynard describes how
such legally ratonal and legally irational elements, including "facts, blography. ia
and other matters" are used to construct plea bargaining and to shape decisions

(475). 1his type of analysis helps us understand how rational and irrational legal re-

sources are used in actually accomplishing specific decisions.,

In addition to opening lines of inquiry for studying rational and irational aspects
of concrete legal decision making, Weber's typology of law also enables us to devel-
in which the most rational
op a clearer understanding of the rule of law. The ways
legal insitutions, procedures, and patterms of reasoning combine iwith other legal
and nonlegal features of society to form the ruie of law are, after all, essential to its

definition.
As we have said, the rule of lav is a feature of social and cu!tural change that
has historically been rooted in suuggles against oppressive governments and against
the rule of law is a way of lim-
arbitrary economic and political power. At one level,
iting arbitrary power by enabling people to articulate disputes through procedures
that are available to everyone and that give all paries an equal opportunity
to

rooted in beliefs that justice must be impartial

present arguments and evidence. It is
and that people have dignity and rights. On another level, the rule of law is a way
and institutions. Based
of governing society on the basis of legal ncrms, procedures,
have presented and o u r concerm with analyzing the rule of
on the concepts that we
is characterized by the
law as structural and culural condition of action, society
a

two conditions:
rule of law to the degree that it fulfils
Social institutions, such as
Law is the must pervasive source of social order.
and economic institutüons, such as businesses and
schools and welfare agencies,
law. Conflicts are resolved
trade unions, are defined and regulated through
have access to the power of the state to.secure their
through 1law, and people
contracts and property,
and to get compensation for harms that they have expe
rienced through law.
that contribute to the legal ordering of society, includ.
.While there are elements based on science and tradition, formal
knowledge and procedures that are
ing law. awmakin8, the implementation
over Other types ot
rationality is dominant
making are ulümately constrained by legal institrutions
of law, and legal decision
are independent and have formal rational charac-
that
and patterns of reasoning
teristics.
 Cbaprer 3

by the rule of law must

be regulated through legalin
and that
Societies are ordered
Stitutions procedures rather than other institutions and procedures such as rel.
8ion, tamily, economic firms, or state agencies. The nature of social relationshine
conflicts, and disputes are, ultimately, defined and resolved as legal issues. Bevo
the role cf law as a foundation for social order, however, law must be fully indepen.
dent of other insinutions and procedures in order to secure its im partiality and ot
jecivity. Moreover, there must be independent legal principles, ways of analyzina
evens and esablishing facts that provide the bases for decision making. Formalra
tional law must conrol all other fearures of reasoring and de cision niaking.

Tbe Rule
of Iaw and the Rise of Corporate Capitalism
Societies difer with regard to the extent to which hey are regulated through the rule
of law. This is the case not only for societies that lack technical, organizaional, and
economic complexity, but also for societies that are leaders in international techno-
logical development and economic growh.
For example, in his study of law and social change in Japan irom the end of
World War II through the mid-1980s, Upham shows that for regulating society, bu-
reaucratic leadership and infomality are more centural than such core aspects of the
rule of law as courts and litigation (1987). The tansformction of japaa into a dem-
ocratic industrial society has been
largely accomplished through bureaucratic infor-
malism: policies and regulations are
designed and largely implemented through the
combined leadership of the govemment
bureaucracy; the Liberal Deraocratic Party
which dominates Japanese politics; and large business interests.
Starutes regulatin8
such issues as gender discrimination in
employment and environmental effects of in-
dustrial production are the result of consensus
state bureaucracies, business
leaders, and leaders of the Liberal Democratic among Party. Moreover, state
bureaucrats
given "both wide disaretion to define their mission under a statute and the ability to
are

cary it out through ar administraive process that emphasizes informal consu.tation

and compromise and avoids formal
administrative acts that could trigger
(22). Legal doctrine and
courts give wide latirude to bureaucratic rather liügation
thanrule o
procedures for resolving disputes. To a high degree, these limitations on the ega
law rest on a culture that
the
emphasizes the nation and the collective erterprise over
private individual and that views the individual
as a feature of a network rather
than isolated unit (Hamilton and Sanders
an
As suggested earlier, classical 1988: 302-304).
liberal socieies that have
economies appear to have the most
logical competiive capitalis
with the nle of law, Such socieies, relationship and the best empirical nt
of power over production and market characterized by highly decentralized patterns
ness, and a rational, calculating atirude reltions, foster individualism, competiive
rule govemed, and rational
toward life. A of
helps to make action, partern law that is impartial,
production and exchange, more secure and especially economic planning 10
predictable.
 LIberal Society, Rattonality, and the Rtule of Lau 59

While classical liberal

society and
the rule of law, neither liberal competitlve capitalism have the best fit witn
society,
in particular forms. Rather, liberal
economle organization, nor law stay frozen
society,
tend to change as social relations become competltve capltalism, and the nile ci l**
more complex, technology becomes
developed and expensive, society becomes more productive, and new paterns more
Or
property and market relations develop.
Scholars have maintained that,
especially with regard to the United States at
um of the nineteenth
century, cldssical Iiberalism and competitive capitalism the
to develop
toward corporate liberalism and corporate capitalism ten
Sweezey 196; Kolko 1963; Weinstein 1968; Sklar 1989). This (Baran a2a
4 will disuSs raore fully, erhances closer change, which Chapter
and economic institutions. Under relztioaships among goven.ment, socicryY
invest endrmous amounts
corporate capitalism, large firms develop, which
of capltal and employ thousands of workers In complcx
produclcn processes. These fims, In such industries as rallroads, chemicals,
leum, automobiles,electricity, and meat packing, exercise power over the pricespetro
that
they chage for ther goods as well as over the resources that
they pu:ehase.
Deve
opment of these fims goes along with the development of financial insirutions that
expand redit enormously, creating markets in common stock, bonds, and other
highly specdalized instruments. With corporate capitalism, liberal thought becomes
as focused on insitutions as on
individuals, society becomes 'more procuctive, and
consumption expands. Insututions become more dependent on one another
private business corporations become the ccrmerstone of econumic groth, large
as

inent, national security, and social organization (Fligstein 1990). einplo:

Corporate capítallsm and corporate liberalism have major implications on the
development of law generally and on the rule of law in particular (Fusfield 1972;
Miller 1972). One important feature of the
and liberalism
relationahip between corpoate capitalism
corporate and the 'rule of law is the way in which the nule of
lawhas
facilitated arnd shaped the change from classical liberalism and
sm to
corporate liberalism and corporate capltalism. In
competive capital-
changes in the rule of law have occured; yet the rule of this epoch-m:king change
law has been centrai f
constructing this inassive social transformation.

Constructing Corporate Capitalism Through

the Rule
of Law in the United States
In contast to those
approaches to law and society that stress po!itics and the political
acivities of government and economic elites in determining law and
social policy
(Block 1977; Domhoff 1990; Skocpol 1980), schölárs of law and
aitenion to how formal rational aspects of the rule of law such as society pay more
procedures, and legal rationality shape social and economic organization as judicia
courts,
well as
public policy (Stone 1985; Heydebrand and
scholars of law and
seron 1986; Heydebrand 1990). Some
society have maintained that the law plays a pivotal role in
ing the economic, social, and political relatüons in which v e live and act form-
1977, 1982; Stone 1985; Turkel and Lofquist 1991). From this perspective, the(Balbus
formal
60
Chapter3

rational features that are dominant in legal institutions establisl1 rational undersand
ings and normative boundaries through which peop'e construct their social relatione
and cxpectations of the
consequences of their interactions..
Marin Sklar's study of the formation of corporate liberalism is very instructive
on these issues (1988). It demonstrates how the interplay among the Supreme Coun
egal reasoning, case law, and the politics of legislation constructed he foundetion
ons
of the corporate economy in the United States from 1890 to 1916. His study showe
how central the judgments based on rational law in law creation and implementation
were for
esublishing the meanings for developing the United States as a corporate
liberal society.
The years from 1890 to 1916 were characterized by massive social
change. This
period iniiated the transformation of the United States to a modern industrial sociev.
it was a
time of massive technulogical innovation and great econo.nic ievelopr,uent,
including the mechanization of agriculture, the spread of the railroad, the telegraph,
and the beginnings of mass
production in industrial ciies. During thi» time, the U.S.
cconomy became increasingly interdependent as dinferent
another more intensively due to the spread and regions traded with one
greater use of the railroad. Financial
power became more and more concentrated in
large banks, and society was
being
reconsituted through new social
arangements. These new social arangements
brought tremendous financial, material, and intellectual resources
concenurated contrel over production and distribution through the together. They
legal and organi-
zational form of die modern corporaliou (Edvrards 1979).
Basic to this social transformaüon was the creaticn of new
erty and maket relations that enabled the iegal sorms of prop-
deployment of vast amounts of investment
apital and outets for mass-produced goods. Property went
prietary form in which individuals or families owned farms. beyond iis private pro-
es that they themselves tools, or small business-
worked and
was controlled.
increasingly replaced by negotiable
This proprieury fom of propery
securities, the premier property form of cor
porate capital. Negotiable securities, and
rations, made it possible for business firmsespecially common stock in private corpo
to amass tremendois
and intellectrual resources and t5 base
mana gement or more
financial, technical,
it orientaions. Owners
were
increasingly tzchnicelly precise prot
Rather, their ownership rnghts were displaced from making business decisions.
focused primarily on the
ck, to vote for
the corporation's baard of directors, and to right buy and
to sel
their stock in the form of dividends. receive income from
The corporate
properny form furrhered the
market relaions into national and transformation of local and regional
international
greater interdependency fed into wider arenas relaions. These changes toward
native of
public decision making and alte
proposals for public policy.
While people accepted
negotüable
rate
capita-relaively easiy, there wassecurities-the
ing the
a much
legal property form of corpP
higher degree of conflict suroun
role of private corporauons in
control of the market. The issue of determining prices, condiicns i salc, a
market
marketsbecame a central point of politicalpowerhe
and political interests
organization and conro
and legal conlict.
developed alternative Different econo
policies toward the legal definition an
 Liberal Society, Rationality, and the Rule of Law 61

regulation of markets. Ultimately, this issue was defined and partially resolved
through formal legal institutions and legal reasoning.
Agrarian interests, small manufacturing businesses, and political and social
groups associated with proprietary property and competitive capitalism sought to
limit the power of large corporations through statutes that enforced strict market con-
ditions. They sought to define as illegal restraints of trade many of the powers exer
cised by corporations in establishing prices, engaging in contracts, and distributing
their products and services. These interests wanted to order economic and social life
on the basis of a nule of law that established strict definitions of legal and political
equality. Their approach relied on the state and the courts for policing the market
on the basis of strict legal codes that applied equally to all actors and that allowed
minimal discretion.
At the other exreme, political !eadcrs, govemment oficials, state managers, znd
some business interests sought to maximize public control over corporations, mak-
ing them accountable to the public. They favored such policies as federal licensing,
govemmental reviews of assets and investment decisions, and governmental cerifi
cation of contracts and prices. In this "statist" policy' approach, private corporations
were explicidy defined as serving the public interest for politically defined purposes,
much like public utilities. PoliticaB leaders representing the interests of society as a
whole would direct economic activity and coFtrol niarkets through corporations
In between these extremes, and partially incorporating the logic of each, was the
corpoate liberal approach. This approach was favored by most large corporations,
associated govemment officials, and to a lesser degree, organized labor. The corpo-
rate liberal approach sought to allow corporations to determine markket relations un-
der a state system of regulative law, enforced through the courts on a case-by-case
basis. This approach relied on formal legal rationality to define the corporation as a
private but socially responsible actor that operated within a publicly regulated sphere
of economic action.
This corporate liberal approach combined economic and bureaucratic rationali-
ties much more fully than either the highly individualized market approach or the
statist approach. It reconstructed economic rationality from that of small businesses
operating in local markets to a social order that fused market rationality and profit
ability with complex organizations of specialized knowledge. It sought to blend the
liberty of increasingly complex and powerful private economic organizations with
regulative functions of the state by relying on the formal rationality of the law
Conflicts over who was to determine the pattern of market control and how mar-
kets should be organized were expressed through debates over antitrust legislation.
Once the Sherman Antitrust Act was passed and signed into law by President Ben-
jamin Harison in 1890, the meaning of market power and control and conflicts over
these issues were largely determined by the interpretations of the Sherman Act by
the Supreme Court. Indeed, it was the formal rationality of law as acted out by the
Supreme Court that authoritatively defined the boundaries of corporate power and
governmental regulation.
The Sherman Antitrust Act was to a large extent the expression of the political
and social frustration engendered by the transition to a complex industral society
62 Chapter 3

to the new political, finan.

in opposition
classes and farmers stood
middie Coleman 1985). Ata
C Old (McCormack 1979;
Cia, and market power of emerging large railroads and banks exercised
market power that
minimum, they sought to limit the Out of this contlict emerged
them by determining prices and access to credit.
Over industrics and markcts illegal and
the Shemman Act, which madc monopolizing
the government when the re.
made restraints of trade illegal ard punishable by

Straints went against public policy. The act

also made illegal restraints of trade sub-
for triple damages (Sklar
ject to civil suits by private individuals and conporations
1988: 10S-107).
As is often the case with statutes, the Sherman Act did not specify the meaning

such key terms as "restraint of trade" and "attempt to monopolize." It left these
obasic issues in the legal construction of the law up to the formal procedures and in-
ons of tie judiciary. Moreover, it was up to the judiciarY, ind especially the Su
preme Cout, to determine the relationships between the Sheman Act and the
established body of case law and standards that were already being used to decide
cases involving restraint of trade and monopoly.
The Supreme Court was in the position of determining anttrust law by its con-
struction of the relaive importance among the Sheman Act, common law prece
dents, judicial standards, legal principles, and the Constitution. In particular, the
Supreme Court went through three phases in constructing the Sherman Act. In the
first phase, from 1890 to 1897, the Court held to the paramount authority of the com-
T.C law. T used the comrnon law disincticn between reasonable atid unueasonanle
restraints of trade in deciding cases under the Sherman Act. In the second
rom 1897 to 1911, the Court shifted to a stricter constin1tional standard. It
phase,
did not
apply the common law distincion between reasonable and unreasonable restraints
of trade. Rather, it held that the Constitution
gave Congress the power to regulate
interstate commerce. The Sherman Act was such a statute
that regulated interstate
commerce. Cince the act did not
distinguish between
restraints of trade, it was argied that the Cout should
reasonable and unreasonable
not apply this distinctior. F-
nally, beginning in 1911, the Court went back to
corabe and unreascnable restraints of trade. It used using the distinction between rea-
a climate of
this distinction, however, within
statutory and administrativ
regulation of corporate business practices.
In this last phase, the Court
gave legal support to the regime of
in which
corporations could contractually regulate the market butcorporate liberalism
ment of regulatory law decided by courts on a within an environ
From 1890 to 1897, the common
lw
case-by-case
basis.
siderable discretion to private interpretation
of the Sherman Act
gave con
porations corporations regulate the market
to
could engage in reasonable
restraints of trade as contractually. Cor
creaing a monopoly by long as they vere not
keeping out
potential
public interest. competitors and as long as their ac
ions were consistent with the
For example, in United
States v.
in 892, he federal Trans-Missourt Freiglbt Association et al.
government filed suit
the Sherman Act (Sklar 1988: against a railroad freight begun
120-121). The association under
was engaged in an
illegal restraint of radegovernment alleged that the associauon
through agreements rather than because it was
setting
through competition. shipping ra
The federal district court ae
 Liberal Society, Rationality, and the Rule of Law 63

cided that the association was not guilty of violatiu g the Sherman Act. While the as
sociation did restrict competition, this did not constitrute an illegal restraint of trade.
The rate setting was held to be reasonable because it did not violate any public in
terest and it served to preserve railway service. This lower court decision was upheld
on appeal. In 1895, the Supreme Court upheld he use of the distinction berween
reasonable and unreascnable restraints of urade by lower courts in Uri:ed Siaies i.
E.C. Kngbt Company.
In several decisions in 1897, thè Supreme Court changed the common law con
struction toa construction that did not distinguish between reasonable and unrea-
sonable restraints of urade. Maintaining that the Constinution gave Congress full
power to regulate interstate commerce, the Court found that all restraints of trace
involving the sale, transfer, and distribation of goods were illegal whether or not they
were reasonable or unreascnable.
When the Supreme Court heard he United States v. Trans-Missouri Freigb:
in 1897, it reversed the !ower court ruling (Sklar 1988: 128-129). The Cout stated
that the Sheman Act applied to railroads. In addition, the Court maintained that
the Sherman Act made every contract in restiaint of trade illegal; the act did rot
distinguish between rcasónable and unreasonable restraints of.trade Moreover,
the Court reasoned that through the Sherman Act, Congress had superseded com
mon law dis:incions by maxing all restraints of trade illegal. Given the ciear con
stitutional power of Congress to regulate interstate u2de and the absence of
common law distinctions ir the Stermat. Act, the Court r.ov constnicted the act
vey stricuy.
This construcuon supported those group[ that valued a purely competitive econ-
omy. At he aame time, it provided an occaásion for mobilizing corporate capitalists
to restore the common law definition of the Sherman Act and enable corporate reg-
ulation of the market. It also put labor unions in opposition to the Court's construc-
tion since the Court unahimously found labor unions to be an illegal restraint of trade
in the 1908 case, Loeue v. Laulor Meanwhile, this strict construction enhanced the
power of he execuive branch of government to selectively use the Sherman Act and
to brandish the power of government over interstate commerce.
The shift in judicial construction of the starute had complex consequences for
acion: it seemed to favor those who sought to maximize egalitarian private ordering
on the logic of competition; it energized corporate interests who sought to maximize
private ordering through common law definitions of contract; and it enhanced the
pover of the central govemment to engage in economic policy-making in the name
of the Constitution and the public interest.
By 1911, the Court rerumed to a construcion of the Sherman Act that distin-
guished between reasonable and unreasonable restraints of trade. In Standard Oil
v.United States and in American Tobacco Company v. United States, the Court ap-
plied the rule of reason that "rehabilitated the juridical principle that restriction of
competit.on did not necessarily constirute or imply an illegal restraint of trade or at
tempt to monopolize" (Sklar 1988: 147). Corporaions could restrict competition un-
der the rule of law and, through this, could exert their povers in regulating markets.
Indeed, by 1920, in United Statesv. United States Steel Corporation, the court vas
 Chapter 3

arguing that market relations in h i c h competition was unrestricted could ha.

harm
rights to liberty and propcty (S1lar 1988: 151).
This renewal of a common law centered construction, coming after a period of
strica constituticnal constnuction of the Sherman Act, set the stage for the triumph of
corporate liberalism. Corporations were given greater power in the marketplace un.
der regulatory agencies that had some measure of independence from Congress and
the president. This alternaive avoided the exuemes of either overwhelming state in.
envention in markets or the complete private ordering of markets through contracts
dominated by large corporations. It forged an arena of regulative policy that com.
bincd the rule of law with the private ordering of markets.

Conclusion
This chapter presents core relationships among classical liberalism, competitive
pitalism, and theule of law. It defines the rule oflaw based on Max Weber's ty
pology of legal
decision making and his views on rationality and social action. The
definition maintains that the rule of law characterizes
socieics in which law regu-
ates social and ecoromic ife, resolves conflicts, and provides access to state pow
er. In addition, in societies characterized by the rule of law, formal rational law
dominates other sources of legal decision
making. This means that law has inde-
pendeni insitutons and proceduies, and that deisioas aie based on a
tern of specific pat-
legal reasoring.
This logical construcion of the rule
of law as an ideal type has several
practical
implicaions. Most importanuy, the rule of law is a vital factor in constructing the
uansition from competitive capitaiism ard cassical
and corporate liberalism in the United
liberalism to corporate capitalism
States. This epoch-making change at the run
of the nineteenth
shaping poliücal
century
and social
demoristra tes how the rule of law is
deeply involved in
conflict, as well as shaping basic
and political acion. patterns of economic
The ideas and issues introduced in this chapter are more
next chapter. The definition of the rule of law, fully developed in the
as well as an
political and economic changes from classial to understanding ot the
thinking criially about legal institutions, corporate liberalism, are basic ior
we shall see, criticisms of
law often focus
legal procedures, and legal reasoning. As
on features of the
economic forces that both supportrale of lav and the sg
cial, cultural, political, and
it and undermine it
References
Balbus, Isaac. 1977."Commodity Form and Legal
Form: An Essay on the 'Relative Baran, Paul A. and Paul M.
Sweezy. 1966.
Law.' Law and Soclety Revlew 11:Autonomy' Captiak An Essay on tbe Anericar: Monopo
of
571-588.
1982. Maism and Domination.
Prince- and Soctal Order. New York: ModernEconomm
Reader.
ton: Princeton
University Press. Block, Fred. 1977. The
Rule." Socialist Ruling Class Does No
Reuolution 7:6-28.

Brun, H. H. 1972. Sciernce, l'alues and Politics fn
Max Weber's Metbodology. Copenhagen:
Munksgard.
Ccleman, James w, 1985. °Law and Power: The
Sheman Antitrust Act and its Enforcement in
the Pet:cleum Industy. Soctal Potlems 32:
264-274.
Colignon, Richard and Mark Covalesk!. 1991. "A*
Weberian Framework in the Study of Account
ing." Accounting, Organizatton and Soctety
16: 141-157.
Domhoff, G. william 1990. The Power Elite and tbe
State: How Policy Is Made in America. New
York: A1dine de Gruyter.
Drapet, Theodore. 1991. Tbe Iran-Contra AJatrs:A
Verry 7bin Line. New York: Simon & Schuster.
Edwards, R. 1979. Contested Terratn: 7be Transfor-
raticn of tbe Workplace in the Twenttetb Cen
tury. New York: Basic Books.
Fligstein, Neil. 1990. Tbe Transformation f Corpo-
rate Cont-ol. Cambridge: Harvard University
Press.
Friedman, LawrenceM. 1986. A Histor ofAmerican
Lw. Nen York: Simon & Schuster.
Fusfield, Dariel R. 1972. The Rise.of the Corporate
Sute in America."Journal of Economic and So-.
cial issues 1: 59-79.
Habermas, Jürgen. 1973. Legittmation Crisis. Trans-
lated by Thomas McCarthy. Boston: Beacon
Press.
Hamiton, v. Lee and Josepk. Sanders. 1988. "Pun-
ishment and the Individual in the Unted States
and Japan." Law and Soclety Revlew 22: 301
328.
Hars, Valerie P. and Neil Vidmar. 1986. Judgtng the
Jury. New York: Plenum.
Harnz,Louis. 1955. Tbe Liberal Traditton In Amert
ca: An Interpretattorn of American Polittcal
Tbougbt Since the Revolution. New York: Har
coun Brace Jovanovich.
ieydebrand, Wolf. 1990. *Government Litigation
and National Policymaking: From Roosevelt to
keagan. Law and Ssciety Revtew 24: 477-495.
eydebrand, Wolf and Caroll Seron. 1990. Ratio-
halizing Justice: The Political Economy of Fed-
Cral District Courts. Albany: SUNY Press.
arity, James M., Pat Lauderdale, and Barry C.
eld. 1983. Law and Soctety: Sociologtcal Per-
Liberal Socicty, Rationality, and the Rule of lau 65
specttors on Criminal Law. Boston: Little
Brown.
Kalven, Harry, Jr. and Hans Zeisel. 1966. The Amer.
fcanJuy. Boston: Littde, Brown.
Kolko, Gabriel. 1963. Tbe Triumph of Corservatism
New York: The Free Press
Kronman, Anthony. 1983. Max Weber. Stanford,
California: Stanford University Press.
Lempert, Richard and Joseph Sanders. 1986. An In-
ftation to Law and Soctal Science. New York:
Longman.
MacPherson, C. B. 19%2. Tbe PolittcalTbeoryof Pas-
sesslve Indivtdualism: Hobbes to Lorke. New
York: Oxford University Press.
Mashaw, Jery L 1983. BureaucraticJustice Man
aging Soclal Securithy Disabtlity Clatms. New
Haven: Yale University Press.
Mayer, Michael. 1994. The Iran-Contra Affair and
the Trial of Oliver North" in American Political
Trias, ed. Michael R. Belknap. Westport, Con
necicut: Greenwood Press.
Maynard, Douglas W. 1983. "Narratives and Narra-
tive Structure in Plea Bargaining." Lau end So-
clely Revew 22: 449432.
McCormack, Albert E. 1979. "Dominant Class Inter
csts and the Emergence of Antitrust
Legisla-
tion. Contemporary Crises 3: 339-417.
Miller, Arthur Selwyn. 1972. *Legal Foundations of
the Corporate State." Jourral of Econormic Is-
sues 6: 5979.
Neumann, Franz. 1957. Tbe Democratic and Au-
thorttarian State. New York: The Free Press.
O'Bar, wlliam M. and John M. Conley. 1988. *Lay
Expectations of the Civil Justice System." Law
and Soctety Review 22: 137-162.
Olsen, Francis. 1983. "The Family and the Market:A
Study of Ideology and Legal Reform." Harard
Law Review 96: 1,497.
Sklar, Martin J. 1988. Tbe Corporate Recorstr.ction
of American Capitalism, 1900-1916. New
York: Cambridge University Press.
Skocpol, Theda. 1980. "Political Response to Capi-
talist Crisis: Neo-faxist Theories of the State
and the Case of the New Deal." Politics E Soci
ety 10: 155-201.
Smith, Dorothy. 1974. *The Social Construction of
Documentary Reality." Sociological Inq:uiry 44:
257.
 66
Chapter 3

Stone, Alan. 1985. "1he Place of Law in the Marxian of Legal Procedures. Law and
Law andd 22: 103-136. Society Review
ucture-Superstucture Archetype."
Society Review 19: 39-67. JÚnger, Roberto Mangabeira. 1976 Law in
Swidler, Ann. 1973. The Concept of Rationality in Socicty: Touard a icism of Social Mode
the Work of Max Weber." Sociological Inquir New York: The Free Press. Tbeos
eory.
43: 35. Upham, Frank K. 1987. Law and Social Chana
Thibault, J. and L. Walker. 1975. Postuar Japan. Cambridg Harvard Universi in
ProceduralJustice:
A
Pcbological Analysis. Hillsdale, New Jer Press
scy: Erlbaum. Webe, Max. 1946. From Max eber
Essays in
Thompson, E. P. 1979. "The Rule of Law in English ology. Edited by Hans Gerth and C. Soct
History. Bulletin of the Haldane Sociery of So- Mills. New York: Oxford Universicy Pres.Wright
cialist Laujers. London: Haldane Society. 1968. Economy and Society. Edited hu
Trubek, David. 1972. "Max Weber on Law and the Guenther Roth and Claus Wittich.
Berkeley
Rise of Capitalism." Wisconsin Law Review University of Califormia Press.
1972: 720-753. Weinstein, James. 1968. Tbe Corporate Ideal in the
Turkel, Gerald. 1980. "Rational Law and Boundary Liberal State,
Maintenance: Legirimaing the 1971 Lockheed
1900-1918.:Bostoa: Beacon
Press.
Loan Guarantee." Law and West, Candace and Don H. Zimmerman. 1985
Society Review 15:
42-77. Gender, Language, and Discourse." Hand.
Turkel, Gerald and wiliam 5. Lofquist. 1991. "Priva book of Discourse Analysis, Volume 4. Dis
tizing Nucdear Power and the Price-Anderson course Analysis in Society. Edited
Act: Establishing Limits' to Liability. Studies in
by T. A. van
Dijk. Londori: Academic Press.
Tau, Poiritics and Society i 1: 137-163. Zimieman, Dua i1. 1974. Fact as Practical
Tyler, Tom R. 1988. What is Procedural Justice
3
å
complishment" in Etbnometbodology, ed. R.
Criteria Used by Citizens to Assess the Fairness Tumer. London: Penguin

Cases Cited
American Tobacco Co. v. United States. 251 U.S. United States v. Trans-Missouri Freight Association
416 at 8 FAD 527-571 (1920). et al. 53 Fed 440-459 (1897).
Loewe v. Lawlor. 208 U.S.
274-309, at 297 (1908) United States v. United States Steel Corporation. 251
Standard Oil v. United States. 221 US. 76, at FAD J.S. 416-466 ar 8 FAD 527-571 (920).
143 (2911).