American Law in the Age of Hypercapitalism

The Worker, the Family, and the State

Ruth Colker

• Publisher: NYU Press
• Year: 1998
• ISBN:
  9780814772188
• Topic: Law
• Subtopic: Law Theory & Practice
• Index: Law

Since the fall of communism, laissez-faire capitalism has experienced renewed popularity. Flush with victory, the United States has embraced a particularly narrow and single-minded definition of capitalism and aggressively exported it worldwide. The defining trait of this brand of capitalism is an unwavering reverence for the icons of the market. Although promoted as a laissez-faire form of capitalism, it actually reflects the very evils of selfishness and greed by entrepreneurs that concerned Adam Smith.

Capitalism, however, can thrive without an extreme emphasis on efficiency and personal autonomy. Americans often forget that theirs is a rather peculiar form of capitalism, that other Western nations successfully maintain capitalistic systems that are fundamentally more balanced and nuanced in their effect on society. The unnecessarily inhumane aspects of American capitalism become apparent when compared to Canadian and Western European societies, with their more generous policies regarding affirmative action, accommodation for disabled persons, and family and medical leave for pregnant woman and their partners.

In American Law in the Age of Hypercapitalism, Ruth Colker examines how American law purports to reflect--and actively promotes--a laissez-faire capitalism that disproportionately benefits the entrepreneurial class. Colker proposes that the quality of American life depends also on fairness and equality rather than simply the single-minded and formulaic pursuit of efficiency and utility.

1

THE TATTERED SAFETY NET

Isabelle Dumont, a legal immigrant to the United States from Haiti, works for the Bayer family. In return for taking care of their children while they are at work each day (from at least 8 A.M. until 6 P.M.), she is paid $250 per week. When the family goes on vacation, she has her own (unpaid) vacation. Because she is not a U.S. citizen, Isabelle is not eligible for Medicaid, and she cannot afford private health insurance on her modest wages. Isabelle brings her own daughter, Medina, to work with her each day and finds it exhausting to juggle the child care responsibilities of another family’s children along with those of her own. Isabelle is worried about retiring someday because the Bayers do not contribute to Social Security on her behalf. When she asks about this, Mrs. Bayer tells her it is in her best interest that they do not, because if they did, Isabelle would also be responsible for Social Security taxes.

When Isabelle heard that the federal minimum wage was being raised, she asked Mr. Bayer if she was entitled to a pay increase. Mr. Bayer smiled and said, “You’re not covered by federal wage and hour laws because you are a domestic worker.” Because Isabelle’s immigration status is dependent on her being employed with the Bayers, she has to look the other way when Mr. Bayer makes lewd comments or touches her in ways that she finds unwelcome.

Isabelle lives on the margins of American society. If she becomes pregnant again, she can expect no assistance from the state. Even if she becomes a U.S. citizen, she would have to work for an employer who employed more than fifty people in order to qualify for twelve weeks of unpaid leave (which she could never afford) after giving birth. Even her poor, native Haiti has better maternity benefits than the rich United States does. And her quality of life would fall even lower if she developed any of the disabilities that seem to run in her family—diabetes and hypertension in particular—because of the few health insurance benefits and work opportunities available to her.

Even though Isabelle keeps hearing that America has great civil rights laws, they do not apply to her because she is part of the underpaid contingent workforce. She is hoping that her daughter will do well enough in school to win a college scholarship someday, but she has been warned that the special scholarship programs for racial minorities have been eliminated in her state following a recent Supreme Court decision. It does not seem fair to her that the Bayers are confident that their children will attend Harvard someday, since both parents are alumni of that institution. When Mr. Bayer sends in his contribution to the school each year, he chuckles that it is really his children’s insurance policy.

Isabelle has considered trying to juggle school with a part-time job in order to become a licensed practical nurse. It is unlikely, however, that she would find the conditions in that profession any better than those in her current situation. Not only do licensed practical nurses have to perform more and more menial jobs because of the continual layoffs of nurses, but they also are not allowed to unionize because at their $7 per hour wage, they are considered to be “supervisors” exempt from the labor law’s protection. Ironically, highly paid professional employees like airline pilots are allowed to join a union. In the United States, it is hard to understand who is worker and who is management.

Isabelle has heard that the best nanny jobs these days involve working for people with political aspirations. Such employers actually seem to fear that they may someday be criticized for shirking their responsibilities to pay Social Security taxes. But these people also are not hiring recent immigrants. Indeed, some of them are actually hiring unemployed white elementary schoolteachers to cradle their infants. Isabelle has seen these high-priced nannies at the park—they have no idea how to calm a screaming infant or discipline a bratty child. Their academic degree, she realizes, makes them qualified in a way that she cannot match, despite her decades of child care experience. She is determined that her own daughter will have the credentials that matter in this capitalist society so that she, too, can hire someone to take care of her children. America is the land of opportunity, she remembers. Whose opportunities, she wonders....

Isabelle’s friends who emigrated to Canada report a different story. They have health insurance, and those who live in Quebec receive some state support if they have children. In Canada, immigrants can work in child care centers where they actually earn a living wage with several paid weeks of vacation each year. (Isabelle has inquired about working at the local child care center, but the conditions and benefits are no better than at the Bayer residence.) From Isabelle’s perspective in Haiti, North America looked like a uniform monolith. She is now beginning to wish she had heeded people’s warnings that despite its thriving economy, America’s version of capitalism is actually impoverished.

Isabelle’s story goes virtually unheard in the United States. When Zoe Baird and Kimba Wood were unable to be confirmed as U.S. attorney general because they had employed noncitizen nannies, the political response was to expand the Social Security exemption for these wealthy employers rather than to try to improve the nannies’ working conditions. Little thought was given to the fact that the United States’ treatment of domestic workers harms the workers themselves as well as the country’s next generation of children. Working parents scramble everyday to find safe and nurturing environments for their children, with almost no federal subsidy of child care, whereas wealthy parents receive increasing subsidies for their use of low-paid immigrant labor in their homes.

This book tells Isabelle’s side of the story. Chapter 2 questions why affirmative action for privileged white people in the form of alumni preferences go unnoticed while affirmative action for racial minorities is criticized and said to contribute to the “stigmatization” of racial minorities. Why is no stigma attached to the privileges extended to the ultrarich? In chapter 3, I compare judicial interpretations of the Americans with Disabilities Act with interpretations of similar statutes in Canada, Australia, and Great Britain. Although the United States was historically the leader in enacting protection against disability discrimination in employment, the United States is the only one of these countries that sometimes excludes from coverage people with insulin-dependent diabetes or hypertension. Why do U.S. courts render such narrow interpretations of disability discrimination law? In chapter 4, I discuss pregnancy-related issues, in which the United States consistently fails to provide meaningful protection to pregnant women, fetuses, or newborn children, in comparison with Canada and western Europe. Why does the United States not show more concern for the well-being of the next generation? Chapter 5 connects the homophobia underlying American law and the country’s militaristic and moralistic style of capitalism. Why do the principles of laissez-faire capitalism disappear when issues involving gay men and lesbians arise under the law? In chapter 6, Isabelle’s plight is connected to that of all unprotected workers in the United States—the contingent workforce consisting of nearly one-third of all American workers and especially women, the poor, racial minorities, and recent immigrants. Why does the United States consistently exclude the most underprivileged workers from meaningful workplace protection? The last chapter considers the story of Isabelle’s daughter, Medina. She will be sorely disappointed if she expects the principles of laissez-faire capitalism to apply to her dreams and aspirations as the daughter of a legal immigrant. But if we use our imagination, we can conjure up a better life for Isabelle, Medina, and all of us who strive to combine family and work with the assistance of our government and society.

In each chapter, we see that the uniquely American response to the needs of the worker and the family is sometimes justified under the rubric of laissez-faire capitalism—a capitalism that I believe should more aptly be termed hypercapitalism. This hypercapitalism is finally beginning to receive long-due criticism from sources as diverse as philanthropist-financier George Soros, who sounded the alarm in a 1997 Atlantic Monthly cover story;¹ to Robert Kuttner, whose critically acclaimed book, Everything for Sale, is subtitled the Virtues and Limits of Markets;² to the late Leonard Silk, economics reporter for the New York Times and Newsweek, a self-avowed capitalist who similarly questioned the unrelenting and single-minded manifestation of American capitalism after the cold war.³

This emerging critique, however, has not yet reached the U.S. Congress. A Republican Congress swept into office in 1992 proclaiming “laissez-faire” capitalism, even though their version of capitalism has little similarity to a pure laissez-faire model. They proposed rolling back federal regulatory power and reducing federal outlays from one-third to one-half in order to advance “the simple idea that people should be trusted to spend their own earnings and decide their own futures.”⁴ At the same time, Congress recommended increasing the federal military budget with its inefficient subsidy of industries. These proposals would supposedly help create a “just and compassionate society” but can easily be unmasked as corporate welfare at the expense of the working class. Although the Republican revolution was not entirely successful, it did push President Bill Clinton to endorse a welfare reform package that radically departs from our previous understanding of the relationship between the state and the family.

American-style capitalism helps perpetuate the class inequities among Americans while also undermining the interests of our economy as a whole. We cannibalize our most precious resource—the health and well-being of the next generation—to serve the interests of the ultrarich. Although American politicians applaud such results in the name of laissez-faire economics, no other Western industrialized country—nor even Adam Smith—would recognize these policies as laissez-faire. The answer, however, is not to strive to turn American-style capitalism into a purer laissez-faire model. The answer is to introduce a moral component into American capitalism that protects the most disadvantaged members of our society rather than only the ultrarich. Such a capitalism dominates the legal-economic landscape of Canada, western Europe, Great Britain, and Australia to a greater extent than it does in the United States.

Law schools and legal education in the United States often disregard the legal-economic structures of other countries. The proponents of the field labeled “law and economics” frequently rely on a distorted version of laissez-faire economics and make little reference to economic and legal systems outside those of the United States. In the purported name of laissez-faire capitalism, they applaud the hodgepodge of inadequate protection for American workers and families. Their distorted view of laissez-faire economics has also seeped into American legal decisions and statutory law.

The belief that government intervention in the workplace is inherently inefficient greatly influences many judges on the courts of appeals as well as the justices of the U.S. Supreme Court. Why we should care more about the economic freedom of entrepreneurs than the needs of workers is rarely addressed. As Jules L. Coleman noted in a stinging critique of the economic analysis of Judge Richard Posner’s work, “[T]here is a difference between saying—if you want to promote utility or wealth then these are the rules you should adopt—and saying—because these rules would promote utility or wealth in the abstract we should adopt them.”⁵ But as a scholar and as a judge, Posner repeatedly assumes that a rule is appropriate simply because it maximizes utility or wealth.

American law needs a more humane economic basis. The prevailing economics in law must be exposed so that we can question America’s mindless devotion to its hypercapitalism. What exactly is the American version of capitalism? Should it promote efficiency and utility at the expense of all other values? Or is it possible to maintain a private marketplace while also recognizing the inherent limitations of entrepreneurs as decision makers? Does American law consistently follow a laissez-faire approach to the workplace, or is it inconsistently laissez-faire, to the detriment of the most underprivileged members of our society? Why do we withdraw benefits from welfare moms under the assumption that they are lazy and selfish and, at the same time, increase benefits to middle-class parents under the assumption that they deserve more leisure time and economic assistance in order to be effective parents? And who is harmed by these policies—only the poor or the entire middle class? Finally, can we structure state intervention so that utility does not become selfishness and efficiency does not become greed?

This book does not challenge the inherent value of capitalism, however. Predictions that capitalism will inevitably self-destruct seem especially ill founded these days. Nearly every Western nation is based on a capitalist economy, and the few remaining Communist regimes continue to founder. Moreover, many Western countries are turning to the United States as an economic model and are considering abandoning their longstanding support of the family and worker. If there is one thing that we can safely predict, it is that the United States will remain firmly capitalistic and serve as a model for other countries trying to attain economic success.

Although the American version of capitalism is far from pure laissez-faire because it tolerates state intervention in the marketplace, the American version is generally less protective of the worker and family than are the versions used in other parts of the Western world. Not all kinds of capitalism, however, assume that utility and efficiency for the entrepreneurial class must be the dominant principles. Some favor the welfare of the worker out of the conviction that such policies benefit both workers and the economy as a whole. But the appropriateness of the American version of capitalism is rarely questioned in jurisprudence, perhaps because so little work on American law makes reference to other legal regimes.

Laissez-faire arguments are advanced in the United States most aggressively when lawmakers or activists seek to extend protections to the less privileged members of our society, and they are ignored when politicians and others recommend greater protection for middle-class Americans. American law reflects neither a laissez-faire economy nor a social welfare state; instead, it has a capitalistic perspective that disproportionately benefits the entrepreneurial class and often relies on a moralistic agenda.

Other countries provide a larger social safety net to families and workers, not simply out of a desire to achieve greater class equity, but from a conviction that such policies benefit all society. Today’s child who receives nurturing care from parents who have been provided with health insurance and paid maternal or paternal leave will be tomorrow’s responsible member of the community. But even though such programs benefit the long-term interests of society, it is unrealistic to expect employers to provide for free those benefits for the well-being of society. Rather, such decisions can be made only at a governmental level because “even in a market economy there are realms of human life where markets are imperfect, inappropriate, or unattainable."⁶ Furthermore, the United States is virtually the only Western capitalist economy to leave the development of such policies primarily in the hands of entrepreneurs.

The point of this book is not that the United States should blindly adopt the policies of western European countries or Canada. Instead, the point is that a comparative investigation of the policies of other capitalist countries should lead us to modify our version of capitalism. By looking at examples of other capitalist economies, we can see the inequities and limitations of American capitalism. As I will show, even Adam Smith would give a failing grade to the economics underlying American law.

Laissez-Faire Legal Economics

Although public interest law grew substantially in the 1970s and early 1980s with a sharp critique of the state’s treatment of the poor, the last decade has brought a heightened interest in laissez-faire economic principles in law. Nearly every law school in the United States has added a course on law and economics to its curriculum. In some schools, this is even a required course in which students are taught how to apply economic principles to law, under the assumption that American law has—and should have—a laissez-faire, capitalistic perspective. The teaching materials in this area seldom offer any critique of this increasingly dominant philosophy, and in the meantime, the law of the welfare state has vanished from many law school curricula. As governmental assistance for society’s less privileged members has become more unpopular, law schools have reorganized to focus on the law of the entrepreneurial class rather than the law of the poor. Students graduate from law school understanding the economics underlying the tax code (with its subsidies for the rich) but knowing nearly nothing about the economics underlying the new welfare laws.

The origins of law and economics in American law schools can be traced to Richard Posner, currently a judge on the U.S. Court of Appeals for the Seventh Circuit. In 1973, he published the first textbook treatise on the economic analysis of legal rules and institutions. Now in its fourth edition,⁷ this book aspires to make his brand of law and economics the foundational principle for the entire legal system.

Unbalanced in the extreme, Posner’s work presumes that the principles of value, utility, and efficiency should govern the analysis of law from an economic perspective based on the assumption that human behavior is rational. Acknowledging that a reader might have trouble with this view of human rationality, Posner offers some (unsubstantiated) generalizations about the predictive power of...