The Regulatory State and Federalism

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Book Chapter

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Thanks to federalism, state and federal regulation were treated by different constitutional doctrines. Underlying this diversity, however, was an economic mindset that involved common questions about the robustness of markets and the extent of special interest capture. The Lochner era reflected a deep hostility toward economic regulation at both federal and state levels, and an often explicit premise that harmful special interest legislation was to blame. In sharp contrast, the 1938 Carolene Products introduced an almost naïve trust in economic legislation and extreme deference. The result was that for nearly a half century the Constitution became virtually useless as a tool against regulatory capture except in extreme cases involving deprivation of individual rights. The principal nod to federalism was the destabilizing Erie doctrine, which prompted massive state and federal legislation in order to preserve uniformity in markets that were increasingly national rather than local.


regulation, federalism, Erie doctrine, Lochner, Caroline Products

Publication Title

The Opening of American Law: Neoclassical Legal Thought, 1870-1970