C. Parity: A Bridge from Feudal Labor Regulation to Modern
1. The Argument from Parity
competition (between sellers of labor and buyers of labor) is unfair, because one side is being subjected to strictures (regarding the ability to exert collective power) that the other is not. In other words, if business is going to be subject to these restrictions, then, out of fairness, labor should be as well. Thus, the classicists were perhaps concerned with horizontal competition only insofar as differential restrictions on
132. See generally BENSEL, supra note 84, at 289-354 (discussing the construction of the
"national market").
133. See Hovenkamp, supra note 112, at 926-32 (describing the common-law treatise tradition's strong bent toward characterizing the law of combinations as treating "labor combinations more favorably than business combinations" and urging that "the public policy toward labor combinations ought to be the same as the policy concerning cartels").
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combinations to limit that competition affected the balance of power between capital and labor in vertical competition. Prominent lawyer
Arthur Eddy wrote:
The object of decisions and laws against combinations being to protect the consumer against maintenance of price at abnormal levels, it would naturally be supposed that both laws and decisions would be directed impartially against combinations of both labor and capital;
that no discrimination would be made, since a combination of one may affect prices in exactly the same way as a combination of the other; but so far from there being no discrimination, it is well-settled [that labor combinations are legal while capital combinations are not.]'34
Eddy's concern was "fairness" and "impartiality" in the application of a rule, whatever its content, not with furthering the purposes of the rule itself.13 5 Lamenting the application of the "strict" rule of consumer protection to capital while it is not applied to labor, he was moved to comment: "The manifest injustice, not to say absurdity, of this condition of things appeals to every fair-minded man."1 36
The assertion of this "unfairness" was arguably made with a presupposition of the very social hierarchy that neutrally applied freedom of contract principles ought to have condemned. In other words, in asserting that antitrust law's failure to punish worker collective action was unfair, classicists betrayed a normative commitment to a hierarchy between workers and employers that should have been anathema to them. Many classicists felt that the balance of power between capital and labor was already tilted in labor's favor.
Among the reasons they cited (for the background imbalance of power between capital and labor) was America's supposed labor shortages.137 But Hovenkamp also describes a more surprising strain that
"dominated" classicist thinking about labor: classicists' concern with
134. ARTHUR EDDY, THE LAW OF COMBINATIONS: CONTRACTS IN RESTRAINT OF TRADE 1331 (1901) (emphasis added).
135. That Eddy, in particular, was not particularly interested in the consumer protection content or purpose of the rule itself is also suggested by, among other things, the fact that he was personally responsible, in his capacity as a corporate lawyer, for organizing the National Carbon Company (out of many previously existing carbon companies), which soon controlled 75% of the worldwide carbon market, as well as having a key helping hand in the incorporation of several other massive oligopolies. Big Carbon Firms Combine: Three-Fourths of This Industry in the
World Included, N.Y. TIMES, Jan. 10, 1899, at 1.
136. EDDY, supra note 134, at 1331.
137. Hovenkamp, supra note 112, at 930.
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Enduring Ambiguities
the relative social mobility between the working and owning classes in the United States (as compared, for example, to Europe).
Equally important was the perception of easy worker mobility that dominated most nineteenth century thought: any American laborer could save a little money, borrow from others, and become an entrepreneur himself. As treatise writer Theodore Sedgwick observed as early as 1836, New England laborers could "lay up half their wages" and within a few years they could either "settle as farmers in the new states" or "undertake an independent business in the old." On the other hand, "[i]n Europe, the common rule [was], once a servant, always a servant; once a mechanic, always a mechanic; once a tenant, always a tenant. .. ."138
Such a "rule" would in fact be a barrier to market entry, a violation of the most fundamental classicist principles. Construing the absence of the rule as an imbalance in labor's favor suggests an underlying
commitment to the hierarchical suppression of workers' freedoms as the natural order of things.
Direct reliance upon hierarchy by the classicists aside, there may be enduring reasons to consider the distinctiveness of labor contracts, which might pose problems for a categorical argument from parity. A strong version of this distinctiveness is articulated by theorists from Marx to Polanyi: if labor is a "fictitious commodity" then it is nonsensical to posit an equivalence between its sellers and sellers of actual commodities. 13 9 However, it is not necessary to embrace the strong version of this critique to see that labor contracts have some distinctive features that might pose problems for a simple-minded argument from parity. The republican tradition, which was associated with the Sherman Act, certainly recognized this distinctiveness. Labor republicans pointed to the hierarchy inherent in labor contracts together with the differentials in both market power and wealth between the parties that came to characterize such contracts, allowing employers to unilaterally set terms.14 0 A growing strand of contemporary labor economics recognizes these same dimensions of distinctiveness. 14 1
138. Id. at 931.
139. POLANYI, supra note 82, at 75 ("Commodities are ... objects produced for sale on the market .... But labor, land, and money are obviously not commodities .... Labor is only another name for a human activity which goes with life itself, which in its turn is not produced for sale but for entirely different reasons, nor can that activity be detached from the rest of life, be stored or mobilized. . . .").
140. GOUREVITCH, supra note 123, at 106-16 (discussing the labor republicans' idea of the distinctiveness of labor contracts: "material domination" grounded in absence of wealth on the
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