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The two papers in Ch. 5 examine how lawyers and law professors, operating in private arenas, successfully revived a pre-modern legal system, the Lex Mercatoria – the international body of trade law derived from merchant practice. Stone Sweet’s paper traces the development of a transnational legal system, comprised of a national contract law and a network of arbitration houses that compete to supply third-party dispute resolution to the international commercial world. The paper is divided into two parts. The first discusses, in a theoretical manner, obstacles to the emergence of a stable network of traders engaged in relatively long-range, impersonal exchange, focusing on three generic problems of human community: cooperation and commitment, transaction costs, and institutional choice and governance. The second part examines three quite different regimes that have governed transnational commercial activity: from the mediaeval law merchant, to the Westphalian state system and its institutional failings (including discussion of conflict of laws practices), and – the principal focus of the chapter – the new Lex Mercatoria and its institutionalization.

This chapter assesses the quantitative position of ‘traditional’ industries in the economy. Traditional industry — which accounted for the largest number of gainfully occupied workers — developed steadily in the modern era and continued to provide opportunities to workers that were not absorbed by the modern industrial sector. The role of the traditional commerce and service industries is emphasized, which functioned as a ‘buffer’ for economic fluctuations. The regional diversity of these industries is also analyzed using the statistical method of principal component analysis.

This chapter examines the propriety of federal laws under the power most often invoked to justify restrictions on liberty: the power to regulate commerce among the several states. Courts are not empowered to disregard powers that are expressly enumerated in the Constitution, even those that violate the rights of the people. They are authorized only to interpret the meaning of these powers, and where this meaning is underdeterminate, to construe them in a manner that is consistent with original meaning and that would render their exercise as legitimate as possible. The chapter analyzes the federal power to regulate commerce by explaining what the Commerce Clause means. It also considers judicial interpretations of commerce during the period 1824–1935 and shows that the term “among the states” independently limits federal power with respect to commerce. Finally, it reviews John Marshall's arguments in Gibbons v. Ogden.

Russia's commercial growth and political power after the late eighteenth century were fueled by access to the sea. The ports of southern Russia grew through trade with the rest of Europe. Intermittent wars with the Ottomans did not hinder the take-off of cities such as Odessa. Travelers from the rest of Europe increasingly visited the coasts, especially after the Crimean war.

The Supreme Court in Austin v. Michigan Chamber of Commerce upheld the application to the Michigan Chamber of Commerce, a nonprofit corporation funded by dues from members, three-quarters of whom are business corporations, of a Michigan law that forbids non-media corporations from using corporate treasury funds to make independent expenditures in connection with state elections for public office. The decision in Austin can be seen as resting on the view that business corporations are constrained in ways that systematically preclude them from cultivating civic virtue. Ironically, despite its often enormous wealth, the corporation is a paradigm of the materially dependent actor that has no choice but to look relentlessly to its self-interest. The modern corporation is operated for the sake of fictional shareholders, who are assumed to care only about maximizing the financial value of their shares, but, given the increasingly broad ownership of shares, shareholders also may well be employees of the company in which they hold stock or members of a community in which the corporation is an important economic presence. Union activity represents an effort at self-governance in the workplace, which requires consideration of and trade-offs among a variety of both material and nonmaterial goods.

Theories of liberalism, constitutionalism, and democracy are mutual advantage theories. Liberalism is about arranging institutions to allow all of us to prosper in our own individual ways. Political liberalism was partly invented in response to religious claims that some ways of believing should be suppressed, and economic liberalism grew and was eventually more or less institutionalized in government policy because it caused all to prosper through the prosperity of each. Constitutionalism works when and only when it serves to coordinate a population on some matters, such as social order, commerce, and national defense that are more important than the issues on which they might differ. Similarly, democracy works only when there are no deeply divisive issues that override the value of order and other very generally advantageous values. The pre‐eminent theorists of mutual advantage are Thomas Hobbes, David Hume, and Adam Smith, although there are many strands of mutual advantage arguments in virtually all of political theory and in the predominant school of economic theory of the past several centuries in Scotland and England, Western Europe, North America, and, recently, most of the world.

Constitutionalism requires merely coordination on big issues of general structure and protections; coordination on any detailed program is virtually out of the question. It works at all only if there is relatively wide agreement on core issues, such as the agreement of the American political elite on the need for something like the Commerce Clause to enable the growth of an American economy through the creation of an open American market under the US Constitution. In polities in which there is no such general agreement, constitutionalism cannot work well. Indeed, it is plausible that the only government that can “work” in many contexts is authoritarian government.

The US Constitution embodied a limited degree of laissez faire, enough to give capitalism at least an advantage over any other economic organization of the society if Adam Smith's theory is roughly right. What capitalism mainly needed was free markets, and the US Constitution went very far toward providing that interstate commerce would not be trammeled by the states acting for narrow interests against farmers and producers in other states. In the conflicts between commerce, small farming, and plantation agrarianism, nearly neutral government was good for the longer‐run workability of the constitution and its government. The fundamentally important issue in the design of constitutions is to enable rather than hinder economic transitions that are not well understood in advance. When the economies of eastern socialist regimes ceased to benefit from centrally controlled mobilization to do what was already well done elsewhere, their Communist governments were an obstacle to developing in other ways and, in particular, to making the transition to market economies.

Established in 1983, the European Strategic Program for Research in Information Technologies (ESPRIT) is the oldest of the European Commission's research and technology development (RTD) programmes. ESPRIT came into being as a result of the fear that Europe was lagging far behind the United States and Japan in vital information technologies. Collaboration, rather than competition, among Europe's IT companies, it was imagined would yield synergies, the flexibility to adapt in volatile markets, and the shorter product cycles essential for international competitiveness. The chapter explores the significance of external linkages for innovation in ESPRIT in the light of the reality of collaboration. Empirical data focus on ten ESPRIT projects, examined as case studies. Particular attention is given to the informal networks that link members of the ESPRIT projects to the most dynamic parts of the IT world in the United States and beyond.

This chapter describes how computers came into wholesale and retail industries, what applications they were used for, and the extent of their deployment by wholesalers and retailers across three periods of time from the 1950s to the present. It includes discussion of how computers were used in inventory control, accounting, point-of-sale applications, and applied universal product codes (UPC) and bar codes. It concludes with a discussion of retailing over the Internet (e-commerce).

This chapter examines the modernization of American society by focusing on economic issues such as industrialization and the decline of household manufacturing. It first provides an overview of economic development in America between the eighteenth and nineteenth centuries before discussing the shift from an economy that was largely based on agriculture and barter to one that was based much more on the monetary exchange of services and industrially produced goods. It then analyzes money-based commerce and the role magazines played in this rapidly growing part of the economy, along with the rise of rationality and “science” in America. It also investigates how magazines fostered the development of scientific agriculture and concludes by exploring the ways in which agricultural magazines supported communities of practice that had a distinctly traditional, antimodern cast.

This chapter outlines the complex processes which sparked the ‘revolution’ in retailing and assesses the depth and nature of its impact, before exploring the place of the traditional mail order firm in this new world of shopping. The mail order industry established home shopping at the end of the 19th century. By the end of the 20th century, the mail order industry had gone through a series of radical changes. The relationship between the customer and the enterprise was now mediated by a new connectivity — an impersonal and systematized computer-driven regime now moved goods and assessed credit, replacing the old fusion between the social network and the firm. Net shopping, retailing, e-commerce, and a host of other epithets were applied to the new economy, driven by technical factors including the ubiquity and scale of computer power, personal computer ownership and networks, and the growth of the Internet.

This chapter reinterprets Louis Brandeis's role in the crisis of progressive era railroad regulation. While others have implicated Brandeis in the crisis, the essay shows how he identified fatal flaws in Interstate Commerce Commission (ICC) ratemaking and proposed a coherent alternative. Brandeis showed how rate-of-return regulation made false promises to measure the objective value of railroad property and gave the railroads perverse incentives to increase costs. Drawing on the work of scientific manager F. Lincoln Hutchins, Brandeis proposed to replace valuation with a benchmarking system by which railroads could compare their performance. Drawing on his work in Massachusetts natural gas, Brandeis proposed to set rates according to a system of ‘sliding scales’, in which railroads received higher dividends when they provided lower rates. In theory, Brandeis's system was superior to rate-of-return regulation because it provided railroads with incentives to improve and information, unavailable from the firm or the market, about how to improve.

This book examines whether the U.S. Constitution—either as written or as actually applied—is legitimate. It argues that the most commonly held view of constitutional legitimacy—the “consent of the governed”—is wrong because it is a standard that no constitution can meet. It shows why holding the Constitution to this unattainable ideal both undermines its legitimacy and allows others to substitute their own meaning for that of the text. The book considers the notion of “natural rights” as “liberty rights,” along with the nature and scope of the so-called police power of states. Furthermore, it analyzes the original meaning of key provisions of the text that have been either distorted or excised entirely from the judges' Constitution and ignored: the Commerce Clause and the Necessary and Proper Clause in the original Constitution, the Ninth Amendment, and the Privileges or Immunities Clause of the Fourteenth Amendment.

This concluding chapter argues that the original meaning of the entire Constitution, as amended, is much more libertarian than the one selectively enforced by the Supreme Court. It cites the evidence of original meaning presented in this book; for example, the “privileges or immunities” of citizens included natural rights as well as rights created by the adoption of the Bill of Rights. The term “commerce” unquestionably meant trade or exchange and did not extend to such other vital economic activities as manufacturing or agriculture. The “judicial power” included the power of to nullify unconstitutional statutes. The Ninth Amendment mandates that unenumerated rights shall not be denied or disparaged. The chapter asserts that attempts to perfect the Constitution by judicial construction conflict with and override its original meaning. It ends by insisting that the opportunity still exists to adopt a Presumption of Liberty and restore the lost Constitution.