The Economic Significance of the Commerce Clause - Term Paper Example

Commerce Clause The federal government of the United s is limited in its power to only those powers granted to it through the single document of the United States Constitution. In spite of this, the federal government might be considered to have a surprisingly strong grasp on the ability of states to make their own laws and regulations. In many cases, this power is derived from a broad interpretation of the Commerce Clause. The Commerce Clause refers to the third clause of Article 1, Section 8 of the US Constitution. It states: “Congress shall have power … To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.” The way in which this clause is interpreted can have drastic consequences regarding which powers belong to the state and which powers the federal government might be permitted to exercise in overturning decisions of the state. The economic ramifications of this clause are equally widespread. Because of the broad definition of the term ‘commerce’ throughout history, the definition of the term ‘economic’ has also been muddied. Any attempt to determine the economic significance of the Commerce Clause must first consider the nature of the clause, the way in which the term ‘commerce’ has been defined throughout history and the resulting effect this has had on the definition of the term ‘economic.’ In working to ensure the prosperity of the nation and the furtherance of equitable trade efforts between states, the term ‘commerce’ has often been interpreted to refer to a wide variety of activities, some involving an exchange of funds and some not. The founding fathers, reasonably presumed to have been referring merely to the trade of goods and services based upon a strictly monetary front, nevertheless did not spell out exactly what they meant when using the word ‘commerce’ within this portion of the Constitution. Changing definitions and comparison with other contemporary documents have brought about a blurring of the lines between economics and other elements of human interaction such that the meaning of the word ‘commerce’ has been expanded to include just about anything the government wishes it to include. “All human activity goes on in a seamless web of give and take, sometimes with money, sometimes without. Today we understand that ‘commerce’ is not so much a separate sphere of human activity as it is a way of thinking about our actions. We now view economics as a tool for analyzing the entire interconnected web of human behavior – much as we also view anthropology, psychology, or comparative history, each of which approaches that web from a different perspective” (Kuznicki, 2004: 4). This modern context is expressed through a number of other scholars as well, reaching differing conclusions. For example, Akhil Reed Amar suggests that the founding fathers did not associate the term ‘commerce’ with economic activity at all. Indeed, there are several examples of eighteenth century writing in which the term is used where no economic activity is present that seem to support Amar’s claim. In 1841, Lord Henry Bolingbroke wrote about “the free and easy commerce of social life” (426), referring to interpersonal relationships rather than the economy of dollars and cents. This also seems to be the chief definition intended in William Paley’s statement regarding “our Lord’s commerce with his disciples” (1831: 104) as he talks about the difficulty his disciples had in understanding him. Thus, the idea of ‘commerce’ as it was conceived in the eighteenth century, and presumably within the minds of the framers of the Constitution, could be defined not as a measure of the types of economic trade activity that might occur between foreign nations, states and with the Indian tribes, but was instead intended to refer to the sort of ‘substantial human relations’ suggested in these other forms of writing (Amar, 2006). This understanding of the term is also consistent with the inclusion of foreign nations and, more particularly, the Indian nation since the federal government would be naturally expected to handle not only financial issues between the international trade, but also the more human interactions required to live in peace. Through this reasoning, the Commerce Clause could be said to apply to just about every area of trade and human interaction, and, as will be shown, it has. However, other scholars have continued to argue that the clause, regardless of the interpretation of the meaning of the word ‘commerce’, was not intended to be used with such broad application. According to Robert Bork, the word ‘commerce’ as it appears in the Constitutional Convention and the Federalist Papers clearly indicates the intended meaning of trade or exchange rather than the broader conception of simple human interaction. In the Constitutional Convention, it was necessary for the Congress to establish some means to encourage the various individual states to work together economically by establishing some means of enabling the federal government to intervene when unfair commerce laws were enacted that served to reduce a state’s ability to participate in economic trade (Bork, 1991). In using the term in the Federalist Papers, James Madison clearly makes a distinction between the interpersonal elements of foreign relations and the economic considerations of commerce: “”The second class of powers, lodged in the general government, consists of those which regulate the intercourse with foreign nations … to make treaties; to send and receive ambassadors … to regulate foreign commerce, including a power to prohibit, after the year 1808, the importation of slaves, and to lay an intermediate duty of ten dollars per head, as a discouragement to such importations” (1788). If James Madison had a clear conception of commerce as something other than the power to establish significant interpersonal relations with foreign countries through the exchange of ambassadors and so forth, it can be assumed that, regardless of other definitions of the term used by other writers, the founding fathers, in attempting to establish a new form of government, intended the word they used in the Commerce Clause to refer to the type of definition offered by one of them. Numerous cases in which the clause has been invoked continue to illustrate the lack of agreement regarding what is meant by the term ‘commerce’, thus making it difficult to ascertain just what type of economic significance the clause has had for the nation and the individual states. One of the earliest decisions involving the Commerce Clause was Gibbons v. Ogden in 1824. In this case, the Commerce Clause was more clearly defined to give the government the power to regulate interstate navigation, which would seem to indicate an emphasis on trade and economics, but again only served to complicate the issue in the language used within the ruling. According to Chief Justice John Marshall, the definition of commerce only begins with the idea of trade: “Commerce undoubtedly is traffic, but it is something more, - it is intercourse. It describes the commercial intercourse between nations and parts of nations in all its branches, and is regulated by prescribing rules for carrying on that intercourse” (cited in Ripley & Bullock, 1905: 369). By 1905, the Court determined that the federal government had jurisdiction over local issues in Swift v. United States. In this case, a particular meat-packing company attempting to circumvent governmental regulation by conducting all of its primary business operations in a particular state even though it actually operated in a variety of states thanks to the convenience of the railroad. “Swift and its affiliate companies had come to control about 60 percent of the national market in fresh meat. Many of the practices of the company were designed to manipulate the interstate price of the stock purchased” (Swift and Co. v. United States, 2008). Through this manipulation, they were able to fix prices for their own supplies very low while fixing prices for the sale of their products high. By invoking the Commerce Clause in these cases, the government was able to more appropriately protect trade within the nation. With the court decisions of 1935-1937, the Commerce Clause was expanded beyond the realms of what is commonly considered economics – the trade of goods and services for financial gain or loss. This was started as President Franklin D. Roosevelt attempted to push through his plans for ‘New Deal’ legislation that would assist the laborers then out of work, but that the courts held they had no jurisdiction over through the powers of the Constitution. This changed with the labor relations occurring in the factories however, with the creation of the National Labor Relations Board and the court’s support. This was the first obvious shift from financial concerns to more abstract elements of the economy. As Sheldon Richman (1995) points out, this progression perhaps should have been evident from the start. “A market economy is an integrated web of activities in which everything affects everything else, however remotely. Manufacturing arrangements can influence commercial activities. It was only a matter of time before the barrier would disappear and the national government would begin to regulate production directly” (Richman, 1995: 3). With the passing of the Labor Relations Act in 1937, the federal government had the authority to ensure employers nationwide engaged in collective bargaining as an appropriate means of addressing employee relations, arguing that the Commerce Clause gave them the power to regulate all elements of commercial activity that affected trade and production, including regulating labor disputes when necessary. By 1941, with the Fair Labor Standards Act, the federal government had gained control over the production of goods that were intended to be shipped over state lines and were soon to acquire power over what one did in their own yard. With Wickard v. Filburn (1942), the Court gave the federal government the power to regulate what types of crops were grown on an individual’s land even when it was intended for personal and private use. In this case, a small-time pig and poultry farmer by the name of Roscoe Filburn achieved long-term fame by having the unfortunate honor of being the first to question the powers of federal government to regulate trade. Filburn grew wheat on his farm with a three-fold purpose in mind. First, he was able to sell some of his wheat to help earn the money he needed to keep his farm in operation. Second, he was able to use some of this wheat to feed to his livestock, thus saving himself some of the expense of purchasing feed for it. Finally, Filburn used some of the wheat he grew to help him feed his family and thus reduce the grocery bill. Under the Agricultural Adjustment Act, the federal government informed Filburn that he was permitted to plant wheat on only 11 acres of his land and that he could only harvest 20 bushels per acre of it. In keeping with the spirit of the commandment yet realizing he still needed to provide for his family, Filburn exceeded these limits by 12 acres in order to produce the food he needed for family and livestock upon his own farm. The federal government learned of this overage and fined Filburn, but the farmer refused to pay, allowing the case to progress all the way to the Supreme Court. “In 1942, the justices unanimously ruled against the farmer. The government claimed that if Mr. Filburn grew wheat for his own use, he would not be buying it- and that affected interstate commerce. It also argued that if the price of wheat rose, which is what the government wanted, Mr. Filburn might be tempted to sell his surplus wheat in the interstate market, thwarting the government’s objective” (Richman, 1995: 4). With this decision, the Supreme Court introduced a long era in which the federal government increasingly encroached not only upon state’s right to regulate trade within their own borders, but also upon the individual’s rights regarding what they could do on their own property. Since this so-called Constitutional Revolution of 1937, the application of the Commerce Clause continued to expand to incorporate such elements of human activity as intense labor relations and safety codes, land use and occupancy, and human relations in general until very recently. This was not always brought about as a means of affecting pro-government or dominant ideology. For example, the Civil Rights Act of 1964 established a national prohibition against businesses who attempting to restrict integration efforts by discriminating against black customers. However, it was increasingly invasive thanks to the broad applicability of the somehow fuzzy definition of the term ‘commerce.’ The Commerce Clause was applied in every possible way, including regulating businesses that served interstate travelers as a portion of their consumer base, restricting restaurants that served food that had moved across state lines despite their predominantly local clientele and controlling entire businesses because one small element of it utilized products that had been shipped in from another state. This general progression was brought to a halt under the direction of Chief Justice William H. Rehnquist. Rehnquist didn’t stop the universal application of the Commerce Clause entirely, but he brought it back within what some would consider reasonable limits. In United States v. Lopez, Rehnquist placed limits on the applicability of the Commerce Clause to the channels of commerce, the instrumentalities of commerce and actions that substantially affect interstate commerce. Thus, activities such as growing wheat on an individual’s property as a means of feeding the livestock and family would no longer fall within the confines of federal law. However, “the distinction between economic and commercial activities as contrasted with non-economic and noncommercial activities is evaluated on a case by case basis and the dividing line may be somewhat murky. The question of whether the activity regulated is economic or not may depend on the scope of the Congressional regulatory scheme” (Harpaz, 2005). This is evident in the ruling of Gonzales v. Raich (2005) in which the court again upheld the earlier decision that the federal government might regulate what crops might be grown legally on private property regardless of intended use or pertinent state law. In this case, the defendant was arrested for growing marijuana on private property intended for personal medical use as was permitted under California state law. The justification for this decision seemed to be little more than the half-hearted claims of the earlier Filburn case, that increasing interstate market prices might drive the grower to introduce their product to the market as a means of pulling in a profit. As a result of this conflicting definition of the term ‘commerce’, it is difficult to understand exactly what the economic significance of the Commerce Clause may have had on the nation’s welfare. The clause has made it possible for the federal government to increasingly take control over what were previously exclusively state’s rights, a situation that is only becoming more pronounced as the world becomes more globalized. It has brought about a number of beneficial decisions, such as introducing effective, peaceful and equitable means of coping with labor disputes and enforcing fair treatment of individuals regardless of skin color. However, it has also made it possible for the federal government to involve itself in the private lives of individuals and usurp state’s rights to self-govern. While it has established standardized practices, safety standards and production quality, thus improving the nation’s economy in terms of protecting consumers, it has also functioned to restrict and prevent individuals from determining their own economic possibilities. The term ‘economic’ has become as blurred in its definition as the term ‘commerce,’ thus ensuring there will be no definitive answer as to whether the Commerce Clause has been a positive or negative economic force in the welfare of the nation. References Amar, Akhil Reed. America’s Constitution: A Biography. New York: Random House, 2006. Bolingbroke, Lord Henry St. John. The Works of Lord Bolingbroke: With a Life Prepared Expressly for this Edition, Containing Additional Information Relative to his Personal and Public Character. Vol. 2. Philadelphia: Carey and Hart, 1841. Bork, Robert H. The Tempting of America. New York: Touchstone, 1991. Harpaz, Leora. “Outline of Congressional Power to Regulate Interstate Commerce.” Constitutional Law. New England: Western New England College, 2005. Kuznicki, Jason. “The Poverty of the Commerce Clause.” Positive Liberty. (November 20, 2004). April 7, 2008 < http://positiveliberty.com/2004/11/the-poverty-of-the-commerce-clause.html> Madison, James. “The Powers Conferred by the Constitution Further Considered.” Federalist Paper N. 42. from the New York Packet. (January 22, 1788). April 7, 2008 Paley, William. The Works of William Paley, with a Life of the Author. Oxford: Oxford University, 1831. Richman, Sheldon. “The Commerce Clause: Route to Omnipotent Government.” Freedom Daily. August 1995. Ripley, William Zebina & Bullock, Charles Jesse. Trusts, Pools and Corporations. Michigan: University of Michigan, 1905. Swift and Co. v. United States. Law Library – American Law and Legal Information:: Great American Court Cases. Vol.. 19. April 7, 2008 Read More