The war on terror threatened the interdependency between nation-state sovereignty and the rule of law. Parliamentary democracies like Great Britain and the United States generally maintained their legitimacy by claiming that law rules over particular leaders or interests. Victorian jurist Albert Venn Dicey articulated a distinctive rule of law, in part to defend British imperialism. Dicey's rule of law derived from the English unwritten constitution and common law heritage. In America the rule of law was inseparable from what legal historian Willard Hurst called the constitutional ideal that all power should be accountable to power outside of itself. Whatever its constitutional form, the rule of law was vulnerable during wartime emergencies as nation-state authorities demanded unilateral power. Professor David Dyzenhaus's fine paper explores the tension between the rule of law and emergency war powers mobilized to preserve national survival, the ultimate test of constitutional sovereignty. Dyzenhaus employs the U.S. Supreme Court's Civil War-era decision of Ex parte Milligan and Dicey's rule of law to address this tension in controversial U.S. cases arising from the Bush administration's war on terror.

In several historical contexts Dyzenhaus offers Milligan as the source for a legal theory defending the rule of law. He frames the discussion of Milligan relying primarily on the facts involving the president's assertion of extraordinary war powers in post–Civil War Indiana. His discussion of Dicey includes passing reference to an imperial “small war” the British fought against South African Boers during the turn of the nineteenth to the twentieth century. President George W. Bush's conduct of the war on terror receives the least historical context.

For much of the twentieth century, conceptions of market efficiency in American antitrust and tort law combined understandings of market incentives with moralistic concerns and social values. The relative institutional autonomy of these judicial-centered fields contrasted with the public choice school of thought that, Jessica Leight demonstrates, has dominated American policy analysis in recent decades. The two fields of law challenge public-choice assumptions that government's “self-centered behavior” succumbs to “private capture” and inevitably undermines legitimate economic policies. Similarly, though these legal fields are not expressly addressed in Daniel Carpenter's constitutive theory of regulation, they provide evidence that the adversarial judicial process can, employing his vocabulary, “constitute” certain market practices as “approval regulation,” and through discovery “overcome information asymmetries,” which in turn “credence good markets” defined as “improved social welfare.” In addition, large damage awards won though antitrust and tort litigation suggest how the adversarial judicial process could be applied – by strengthening private actions within the securities field – to ameliorate what Mary O'Sullivan calls the “hegemony” of “maximizing shareholder value” that has prevailed for decades in American corporate governance.

Since the 1970s a global deregulation movement has sought to orient market relations, political systems, and legal institutions around a particular conception of economic rationality, which stressed reliance on monetary incentives and the pursuit of economic efficiency, narrowly construed. American antitrust and tort law were consistent with this movement's effort to adjust incentives for individual and group action.

Legal innovation in certain fields of property, contract, tort, and corporate law did much to constitute a distinctively American capitalist market economy from 1790 to 1920. British and continental European capitalist systems were characterized by dependence on larger state bureaucracies, whereas American market capitalism resolved social conflict through an adversarial judicial process. “Until I went to the United States,” wrote Matthew Arnold in 1888, “I had never seen a people with institutions which seemed expressly and thoroughly suited to it.” A half-century earlier, Alexis de Tocqueville had contrasted the egalitarian ideology of American democracy with the peoples’ trust that difficult and contentious public issues were best left to judges. These comments suggest that the process of judicial dispute resolution did much to legitimate American society’s changing conception of liberty. Paradoxically, however, enduring conflicts over liberal economic rights created divergent market statuses for free Americans and unfree “others.” In this chapter we examine, first, how the changing constitutional order shaped a producer-oriented political economy; second, the property and contract law promoting that outcome from 1790 to 1860; third, how changes in the constitutional order fostered corporate capitalism from the Civil War to the Progressive era; and fourth, the new economic rights claims that emerged during those same decades. A conclusion suggests that Supreme Court Justice John Marshall Harlan embodies the strengths and weaknesses of American liberal capitalism throughout the entire period.

On April 29, 1938, Franklin Roosevelt put aside pressing foreign policy concerns to present an antimonopoly message. Roosevelt declared that activist antitrust enforcement was essential in order to defend American liberal democracy and free enterprise from becoming a “fascist-collective” system on the European “model.” The dramatic foreign imagery and conspiratorial overtones contrasted sharply with the monopoly problem that Roosevelt defined in technical terms such as patents and cartels. A remedy of vigorous enforcement and investigation seemed tame when compared with the Progressive trust-busting ideology that Louis Brandeis had popularized to combat the “curse of bigness.” Contemporary and later observers sharing the Brandeisian perspective concluded that the message resulted primarily in the disappointing investigation of the Temporary National Economic Committee (TNEC) and Thurman Arnold's flamboyant but narrowly bureaucratic antitrust campaign. Given the context of economic foreign policy and New Deal liberalism's evolving business–government relations, however, Roosevelt's antimonopoly message reconstituted antitrust policy, imposing accountability on the expansion of American managerial capitalism in peace and war.

Placing the New Dealers' bureaucratic struggles within the context of national security and liberal trade politics, this chapter argues that Arnold built better that either he or the historians imagined. Section I examines Robert Jackson's proposals for an antitrust study committee which located patent, cartel, and corporate finance issues within the context of domestic and international economic policies before the recession of 1937 diminished New Dealers' reform hopes. Section II traces how Roosevelt's approval of Jackson's study committee affected the Antimonopoly Message of 1938.

The postwar internationalization of antitrust imposed accountability upon American managerial capitalism, gradually limited cultural collusion permeating Japanese capitalism, and integrated social market capitalism to establish a more unified European community. In Australia, by contrast, the political consensus supporting the postwar resurgence of Australian antitrust instituted an enforcement regime which contested the limits of efficient market competition and social welfare. Section I of this chapter emphasizes that the High Court's constitutional decisions favoring individual economic liberty preceded the better known campaign for a trade practices law identified with Liberal attorney general, Sir Garfield Barwick. Section II examines how R. B. Bannerman, the civil servant charged with implementing the weak law of 1965, worked to reshape the political consensus, reinforcing the success of Labor's attorney general, Lionel Murphy, in passing the stronger Trade Practices Act of 1974. Section III considers the maturation of an effective enforcement regime from 1974 to 1991 and its contribution to remaking the labor-capital settlement through microeconomic reform. Section IV explores how the activist trade practices regime associated with Allan Fels was enlarged to further the reform agenda.

POSTWAR AUSTRALIAN CAPITALISM AND CONSTITUTIONAL ECONOMIC LIBERTY

From 1945 to the mid-1960s, most Australian business interests broadly supported the market stability maintained through cooperation. The benefits of standardized products, quality control, and maximum output seemed more important than restricted entry, fixed prices, and such unfair practices as larger firms' refusing to deal with certain smaller ones on the basis of discrimination, rebates, and predatory pricing.

The postwar immigration of antitrust to Europe followed a middle course. During and after the cold war the European Community accepted a degree of bureaucratic interventions into the market to promote social welfare that was closer to the Japanese and Australian forms than to those of the United States. The European Community nonetheless adopted antitrust more readily than did Japan, primarily because of the overriding commitment to market integration. Still, envisioning the rise of antitrust in Europe as resulting from the subordination of nationalist ideology and political contingency to Americanized efficiency-seeking political economy raises significant questions. The argument that follows is that throughout the postwar era of uneven economic growth, the public discourse constituting competition policy not only shaped European market integration, but also engendered a competition consciousness promoting the broader goal of equal treatment among private as well as public enterprises. This in turn reinforced bureaucratic independence and discretion. Except for giving much attention to the German system and passing reference to the British, French, and Polish regimes, the following discussion does not focus on the axis of development: the interaction between national and European Union (i.e., integration) experience. Rather, the story emphasizes the core institutional, political, and ideological interactions which enabled the European Commission to impose upon business stronger social welfare accountability as compared to U.S. antitrust.

The international spread of antitrust since World War II suggested the historical process shaping global capitalism. During the closing decades of the nineteenth century, the growing separation between owners and operators resulted in managers becoming the primary decision makers. This transformation of capitalism constituted what historian Alfred Chandler called the managerial revolution in American business. Managerial capitalism nonetheless spawned popular anxiety that big business had exceeded the government's capacity to impose accountability, engendering the creation of a regulatory regime known as antitrust. By the 1930s managerial capitalism had appeared in varying degrees in the industrial nations of Europe and in some European settler societies such as Australia, and Japan. Generally, however, these nations expressly rejected American-style antitrust as unsuited to their cultures. The perception of antitrust as a distinctly American response to big business changed after World War II. Governments increasingly adopted workable antitrust regimes; by the turn of the millennium, antitrust was instrumental to the clash between state sovereignty and globalization associated with the World Trade Organization (WTO).

The internationalization of antitrust occurred within a contested cross-cultural public discourse that recognized Americanization as an active element primarily in relation to indigenous factors already constituting capitalist systems. Given this interaction, what foreign and indigenous elements explain the global change from opposing antitrust to supporting it? The Allied occupations of Germany and Japan following World War II suggest the difficulties in answering this question.

Amid persistent resistance to Americanization, divergent capitalist economies changed from opposing to supporting antitrust. As businesses throughout the world employed large-scale corporations and cartel practices to ameliorate risk, antitrust became a process whereby capitalist societies and governments acquired and applied a public discourse of economic and social conflict resolution in order to impose accountability upon expanding yet distinctive forms of managerial capitalism, especially big business operating as multinational corporations. This focus reveals how beginning in 1937–38 New Deal liberals reconstituted antitrust to embrace various social-welfare and efficiency goals based on institutional economic theories. From the 1970s on, however, the U.S. government, legal-economic experts, and the courts used Chicago economic theories to reshape an efficiency standard defined primarily in terms of consumerism and technological innovation. The same focus explains why during the Great Depression and World War II liberal-democratic and authoritarian nations alike opposed American-style antitrust and then reversed course after 1945 to adopt it selectively as divergent systems of liberal capitalism emerged. The present study of changing antitrust institutions and policies in the United States and between the United States and other capitalist economies suggests that internationalization involved processes of institutional and cultural accommodation within the social order which were politically and culturally contingent as well as contested among elites.

Each chapter of this book sets out perspectives on the processes of accommodation. According to Keynesian or Chicago macroeconomic theories, corporate managers mediated risk within autonomous markets conditioned by governments' monetary, tax, labor, currency exchange, tariff, and social-welfare policies.

The Great Depression tested the strength of capitalist institutions in the world's industrial nations, fostering war. The economic policies that governments imposed reflected a divergent liberal and fascist public discourse. Government bureaucracies held capitalist enterprise accountable to conflicting images of national welfare. Each nation's bureaucracy possessed its own institutional culture and professional discourse shaping protectionist tariffs, currency restrictions, and cartel practices. The following discussion locates within political and cultural contexts the policies instituting protectionism over competition in German, British, Japanese, and Australian capitalism during the Great Depression and World War II. The argument is that each nation's bureaucrats and legal–economic experts implemented cartel and trade policies which held U.S. multinational corporations accountable to either liberal-democratic or fascist images of capitalism. In all four nations, the dominant policy enforced protectionism over competitive markets; within each nation, however, individuals possessing greater or lesser influence contested this triumph, thereby offering the image of a different capitalist order in the future.

Section I considers the liberal-democratic and fascist policy discourse – reflecting not only the rejection of American style antitrust but also images of national identity – that British and German officials and economic experts applied to international cartels and U.S. multinational corporations. Focusing on British expert opinion toward international cartel regulation and Australia, Section II briefly explores the impact the British imperial system of trade preference had on promoting the latter's cartelized market capitalism and radical egalitarian social consensus between Conservative and Labor parties.

Japanese antitrust achieved growing significance by the millennium. Prior to 1945, antitrust policy reflected alien images of market competition. Some Japanese authorities nonetheless understood that antitrust's underlying values of economic democracy resonated with their opposition to the wartime control system and the zaibatsu's dominance. During the occupation, the same sort of indigenous resistance contributed to shaping key provisions of the Antimonopoly Law of 1947 and its subsequent enforcement until Japan regained full sovereignty in 1952. As the postwar era unfolded, the Japanese continually contested the process of accommodating antitrust policy and institutions. The few antitrust defenders struggled to preserve competition values against the industrial policy discourse government and big business leaders employed to justify “high speed” growth. Even so, antitrust officials defended small business and influenced the restructuring of Japan's corporate order into the unusual keiretsu system which attained global trade leadership by the 1980s. But this international success soon dissolved amidst profound economic and political dislocation and foreign criticism; for the first time, Japanese business and government leaders promoted deregulation and antitrust. Possessing official legitimacy, Japan's antitrust regime tested the limits and meaning of this reversal in the public stance toward competition policy.

Some Japanese and American commentators have noted that despite the preeminent influence of Japanese bureaucrats' industrial policy it always evolved in relation to competition policy. This chapter reexamines that interaction from the perspective of the antitrust regime itself and the extent to which its institutional culture has facilitated accommodating competition values to Japanese society.