WHEN George Washington was elected the first president of the United States in 1789, what were his powers? Article II of the 1787 Constitution vests executive power in the president but neither defines it nor the organizational form of executive government. It states only that the president shall be “Commander in Chief of the Army and Navy,” has the power to nominate and, with the advice and consent of the Senate, appoint ministers and other officers, and that Congress can vest the power to appoint inferior officers in the president alone.
Three executive departments, headed by the secretary of state, the secretary of war, and the secretary of the treasury, were immediately established. Alexander Hamilton, as treasury secretary, supervised the largest department, of thirty-nine clerks, as compared with Thomas Jefferson’s five employees at the State Department. Excluding the military, Washington presided over a much smaller total staff in the federal government than the one hundred slaves who served him at his estate at Mount Vernon.1 This was a world in which “the government” could truly be defined as an “executive” and the doctrine of the separation of powers, the idea of balanced government, and the classical theory of constitutionalism all made sense.
Today, the federal government is organized into fifteen departments, supplemented by a broad range of organizations, including the National Security Council and the Office of Management and Budget, grouped within the Executive Office of the President. The federal government employs over nine million people, has a budget of over $4 trillion, amounting to more than 20 percent of GNP, and assumes responsibility for a wide range of public services, including defense, homeland security, social security, health, education, energy, agriculture, urban development, and environment. The range and nature of the government’s powers have been completely transformed since the era in which the role of the executive was determined according to a three-branch theory of constitutionalism.
Such changes in the nature, scale, and organizational arrangements of government in the United States have been replicated across the world. Under these dramatically altered conditions, it is widely recognized that the three-branch metaphor no longer offers an adequate account of the allocation of governmental tasks, and some have argued that the entire scheme of classical constitutionalism erects a barrier to understanding.2 What are the implications for contemporary understandings of constitutionalism?
I address this question first by considering how government growth alters the character of the state and then by showing how, once it was realized that classical liberal ideals could not be met in an era of big government, neoliberals revised some of the basic assumptions of classical constitutionalism and devised a project appropriate to the times. Recognizing that free markets and individual liberty could be preserved only by vigilant governmental action, they advocated a new role for the constitution, that of establishing an institutional order that could guarantee the maintenance of a well-functioning market system. This new role for the constitution modifies the claims of classical constitutionalism and advances the philosophy of Ordo-constitutionalism.
Jellinek’s grand synthesis of nineteenth-century German state theory concluded that the state could be explained only by acknowledging its two essential aspects—the normative and the actual, Recht and Macht, the formal and the material. How do these two dimensions of the state function in the era of big government? This was the question that remained just below the surface of the Weimar jurists’ debates over method. These debates, driven by the rise of what Sartori called “intense politics”—the coming of democracy, the adoption of legislation as the primary vehicle of law-making, and the rise of governing in an administrative mode—were replicated across the Western world during the early decades of the twentieth century.
These developments generated a series of related crises in conceptions of law, constitution, and state. Law came to be understood simply as a set of rules enacted by the legislature and mainly expressing the political will of government rather than parliamentary deliberation. Parliamentary deliberation was further etiolated by virtue of primary legislation being increasingly supplemented by executive law-making through regulations, directives, and decrees. Variously referred to as the “statutorification of law” and “motorization of legislation,” these changes provoked wide-ranging debate about the nature of law in modernity.3
These changing forms of law gave rise to constitutional questions, especially as notions of the separation of powers and balanced government waned and governments responded to interwar crises with increased resort to emergency provisions within the constitution. And these legal and constitutional developments in turn exposed even more basic dilemmas concerning the character of the modern state. Over many centuries, argues Schmitt, “the sweeping horizons of European jurisprudence” have been determined by two competing movements: “on the one side, to theology, metaphysics and philosophy; on the other, to mere technical craft.” But in the twentieth century, threats no longer came from theology and only occasionally from metaphysics; instead, they came from “an untrammeled technicism which uses state law as a tool.”4
The implications for the state were exposed most dramatically in 1933 by the overthrow of the Weimar Constitution by the Nazi dictatorship. In Behemoth, Franz Neumann advanced a materialist account of National Socialism, arguing that it amounted to a totalitarian version of monopoly capitalism. Its workings had destroyed any authentic sense of the state and, by reducing law to a mere instrument of domination, it had established a regime of lawlessness and anarchy.5 But his erstwhile law partner, Ernst Fraenkel, presented a more nuanced analysis. Far from overthrowing the state, argues Fraenkel, the Nazi dictatorship exploited the distinction between its two aspects. Under the Nazi regime, the state divided into two coexisting aspects: the normative state (Normenstaat), a system structured by statutes and court orders, and the prerogative state (Maßnahmenstaat), a set of measures established in accordance with the exigencies of party rule.
Fraenkel argues that the emergence of this “dual state” enabled Hitler, after grasping power, “to transform the constitutional and temporary dictatorship (intended to restore public order) into an unconstitutional and permanent dictatorship.” By eliminating restraints on police powers, abolishing judicial review, and elevating the Nazi party into its primary decision-making body, the prerogative state became a regime of institutionalized lawlessness. Since its limits were not externally determined but “imposed by the Prerogative State itself,” its chief characteristic was “the complete abolition of the inviolability of law.” But, critically, the normative state was still a necessary—though dependent—complement, making the two parts “constitute an interdependent whole.”6
The main function of the normative state was to lend an edifice of formal rationality to the regime. It functioned as the legal framework for market activities and other kinds of contractual relations and for regulating relations between government and business. Even though the governing powers could unilaterally change the rules of the game, some rules were indispensable for securing a predictable basis for economic activity. Driven by a perverse and irrational ideology, the Nazi regime still needed the edifice of a normative order to supply the stability that enabled capitalism to flourish.
Fraenkel’s thesis about the dual state (der Doppelstaat) recognizes that the Nazi regime totally supplanted the Rechtsstaat. In the Rechtsstaat “the courts control the executive branch of the government in the interests of legality,” whereas in the Doppelstaat “the police power controls the courts in the interest of political expediency.”7 But the regime was more than a lawless dictatorship: the substantive irrationality of the prerogative state was bolstered—and in certain respects legitimated—by the formal rationality of the normative state.
The Nazi dictatorship, though a deviant case, can still be situated within the framework of the two-sided theory of the state. In less extreme circumstances, the dialectic by which the modern state functions is not, as in the Nazi regime, between formal rationality and substantive irrationality but between the right and the good—that is, between formal and substantive rationality. The value of such a framework is highlighted in Michael Oakeshott’s study of the character of the modern European state. For Oakeshott, the modern state expresses “an unresolved tension between the two irreconcilable dispositions,” between the state as a set of rules of conduct and the state as a corporation established to further certain designated purposes. Labeling these two dispositions societas and universitas, he emphasizes that they are not alternative accounts of the nature of the state but rather the “specification of the self-division of this ambiguous character.”8
Oakeshott explains that many theorists have commonly identified the state as societas—that is, as a formal rule-based relationship in which the conditions of association are specified by a system of law. But while the rule of law flourishes in theory, this disposition has not prevailed in practice. What he calls the “unpurged relic of ‘lordship’ hidden in the office of modern monarchs” has been so exploited by their successors that the modern state is now recognized as a corporation, its territory an estate, its government a form of estate-management, and its laws a set of rules for advancing the enterprise. Oakeshott attributes this development mainly to governmental responses to the question of social justice. In their attempts to resolve this question, governments have commanded resources, modified laws by making provisions for substantive benefits, promoted administrative regulation at the expense of judicial control, and overlaid civil rule with a notion of teleocratic rule.9
Oakeshott’s account of the modern state as an amalgam of two antagonistic ideal types replicates Jellinek’s two-sided theory of the state. Just as Jellinek had argued that the state was not a purely normative construct of Recht nor a social-historical phenomenon of Macht, so Oakeshott contends that the state exists by virtue of “a political imagination which is itself constituted in a tension” between a rule-based and purposive order. Both would recognize Fraenkel’s conceptual framework of the Nazi regime as a “dual state” comprising a division between a normative order functioning alongside a state of measures. In Fraenkel’s study it is easy to conceive the “prerogative state” as a corrupt and debased form. But Oakeshott’s important point is that the conjunction of these divergent modes remains “the most effective apparatus for understanding the actual complexity of the state.”10
Too many jurists assume that the state is a rule-based order, and this leads them unreflectively to adopt the nostrums of classical constitutionalism. A less ideologically inflected analysis is needed. For assistance, we might invoke Paul Kahn’s study of the evolution of the American constitutional regime. In The Origins of Order, Kahn argues that when imagining constitutional order we are held captive by models, two of which—project and system—have been particularly influential.
For Kahn, modernity is signified by our aspiration for autonomy, an aspiration that finds expression in political imagination. “Revolution in practice and social contract in theory are both political responses to this need for autonomy.” But alongside this is the desire for belonging, for being part of something more like an inherited system than a self-created project. And the overriding characteristic of modernity is that it is “a condition under which no matter which perspective we choose, we will be subject to criticism from the other perspective.” Project and system, the aspiration for freedom, and the desire for belonging “can never be brought into a stable alignment.”11
Kahn presents his thesis through a study of US constitutional development. The constitutional project is to establish a system that endures, yet at the same time, a constitution too strictly constrained by past decisions “would become our prison, rather than an expression of our capacity for self-government.” Politics begins with the design of a constitutional order, that is, as a project made by “the people.” Having faith in the project demands integrity with the intentions of the author: “Project is the language of the first-person plural: We the people declare and we act.”12 Classical constitutionalism, then, is a project in which the ends are the maintenance of the basic rights of the citizen, and the means are provided by constitutional design.
For most of the nineteenth century, the Constitution as project was dominant. Lincoln’s Gettysburg Address, opening with the claim that “four score and seven years ago our fathers brought forth on this continent, a new nation, conceived in Liberty, and dedicated to the proposition that all men are created equal,” is exemplary. But in the period after the Civil War the idea of “the living constitution” gained influence: project was increasingly challenged by system. By the end of the century, the notion of a fixed, written constitution was an anachronism, not least because the idea of a project is limited by the imagination of its author, whereas system knows no such bounds. The narrative of the constitutional project had a precise beginning in the American Revolution. But from the perspective of system, “the very idea of a beginning is an error,” one that “confuses the appearance of deliberate intentions with the reality of immanent order.”13
When conceived as system, “the real Constitution is not the written text, but written customs and practice and belief.” Rather than “a project put in place through deliberate intentional action in 1789,” it is “an immanent order of reason—a system—that has no definite beginning and operates quite independently of the deliberate efforts of the Founders.” Constitutional order is seen as a product of experience and growth. Consequently, legal science “can no more make political order than biology can make organic order.” The role of legal science is merely to reveal “the systemic character realized in and through natural growth.”14
There are many ramifications of Kahn’s study, but its value at this stage of our inquiry is to highlight parallels between Jellinek and Oakeshott’s two-sided theories of the state and Kahn’s divergent conceptions of constitutional order. The constitution as an immanent normative scheme has affinities with the idea of the state as a rule system (Recht / societas), while the narrative of project, especially with respect to its means-end rationality and the constitution as the expression of political will, is analogous to the idea of the state as a purposive entity (Macht / universitas). Classical constitutionalism accentuates the former and neglects the latter. By bringing these into closer alignment, the challenges of reviving constitutionalism in a world of big government are clear.
In the narrative of the constitution as project, the social is subordinate to the political: the political consists of a collective will that adopts the constitution to advance social change. But in the narrative of system, the political is subordinate to the social. There is no concept of the sovereign will in a social system that evolves historically, only a prevailing sense of right generated by the configuration of social forces. Kahn argues that the tension between these two narratives is an intrinsic feature of modernity, and it would therefore be wrong to think of them “as a problem to be resolved.”15
Contrary to such jurists as Jellinek, Oakeshott, and Kahn, who treat these irreconcilable dimensions of state and constitution as fixed features of modernity, classical liberals maintain that the two dimensions represent true and debased conceptions. No one has done more to advance this argument than Friedrich Hayek. Drawing on a long lineage of liberal thought, Hayek claims that such two-sided doctrines are unfortunate by-products of the ideas of the Enlightenment. The entire narrative of project is a form of Cartesian rationalism he calls “constructivist rationalism”—the belief that society can be constructed anew through an exercise of human reason. For Hayek, this erroneous belief has fueled the tremendous growth of modern government and is the source of socialist ideas that are destroying freedom and ushering in a new era of servitude.
The case was first presented in 1944 in his short book The Road to Serfdom. Arguing that we have been progressively moving away from “the basic ideas on which Western civilization has been built,” Hayek maintains that we are creating modern regimes of governmental planning that institute “arbitrary rule” and erode “the great principles known as the Rule of Law.” National Socialism, then, was not “an irrationalist movement without intellectual background” but “the culmination of a long evolution of thought.” It was a “lamentable fact” that Western democracies, in their dealings with dictators, had revealed “confusion about their own ideals and the nature of the differences which separated them from the enemy.” So many features of Hitler’s system, he argues, are integral parts of our own contemporary systems of government. If freedom is to be restored, we must start by reevaluating the liberal ideals of the Enlightenment era.16
Hayek’s reevaluation takes the form of two major works, The Constitution of Liberty (1960) and his three-volume study, Law, Legislation and Liberty (1973–1979). In the former, he emphasizes that “the great aim of the struggle for liberty has been equality before the law,” a principle leading inexorably to the demand for everyone to share in the making of law. This is the point at which classical liberalism and democracy not only meet but also where views diverge. This is because liberalism “is concerned mainly with limiting the coercive powers of all government,” whereas the democrat “knows only one limit to government—current majority opinion.” Herein lies the confusion: whereas the liberal holds to the idea of law as a set of general rules of conduct, the democrat is liable to call a specific command “law” merely because it emanates from the legislative authority, a belief that leads to legislation becoming “the chief instrument of oppression.”17
Hayek argues that the only solution is the reinvigoration of classical constitutionalism. This requires that all power “be exercised according to commonly accepted principles” and all persons on whom power is conferred being “selected because it is thought that they are most likely to do what is right.” A free society, he emphasizes, “needs permanent means of restricting the powers of government.” This can only be realized within a constitutional system founded on the separation of powers and that establishes the rule of law as a metalegal doctrine requiring that all laws conform to certain principles and all governmental powers be subject to its ideals.18
It is, however, only in Law, Legislation and Liberty that the full implications of Hayek’s arguments are made explicit. Only after restating the classical doctrine of constitutionalism in the 1960 volume did he come to realize why constitutionalism had not gained enough support in the modern era. He gradually became conscious of “three fundamental insights which have never been adequately expanded,” and therefore devotes this three-volume study to each of them.19 The first is that there are fundamental differences between a spontaneous order and an organization—between what Kahn calls system and project—differences inherent in the two kinds of “laws” that prevail in each. The second insight is that the modern principle of social justice only has meaning within a purposive organization. The third is that a system of government in which the representative body of the legislature both enacts the rules of just conduct and directs governmental action necessarily leads to the gradual transformation of the spontaneous order of a free society into a totalitarian regime.
Of particular importance is his critique of what he calls the constructivist rationalist fallacy, the assumption that all social institutions are the product of deliberate design. Attributable to our unbounded confidence in science, this rests on a fiction of the “synoptic delusion,” the belief that “all the relevant facts are known to some one mind, and that it is possible to construct from this knowledge of the particulars a desirable social order.”20 He then founds his central argument on a distinction between two kinds of order, those that are made and those that have grown. The former, which he calls taxis, is constructed, the type of order implied by organization. The latter, called cosmos, is spontaneous order, the type of order implied by organism. While the former is the product of rational design, the complexity of the latter is not limited to what the human mind can grasp.
This distinction between types of order is then extended first to embrace government and society, with government being an organizational mechanism and society a consequence of organic evolution, and then between legislation and law. Arguing that law is much older than legislation, Hayek distinguishes between “made law,” or thesis, and “grown law,” or nomos. Understood as a set of rules of conduct, nomos is the product of spontaneous growth. It may require the deliberate efforts of judges and jurists to improve the existing system of law by incrementally laying down new rules, but this law is both the outcome of a process of evolution and depends on lawyers striving to make the system coherent. By contrast, “the law of organization of government” consists either of directions to particular officers or agencies, which are more appropriately described as “the regulations or by-laws of government,” or, in the case of constitutional law, is better understood as “a superstructure erected to secure the maintenance of the law, rather than … the source of all other law.”21
Hayek’s critique of constructivism indicates why the attempt of modern governments to realize “social justice” through the use of legislation is a “mirage.” In his second volume he goes on to argue that social justice is a “vacuous concept,” an “incubus which today makes fine sentiments the instruments for the destruction of all values of a free civilization.”22 His third volume is of particular interest because it outlines “a model constitution.”23
The basic purpose of the constitution, he explains, must be to prevent all authorities, including the legislature, from imposing arbitrary restraints on liberty. It must therefore include a clause stating that any restriction on liberty could be imposed “only in accordance with the recognised rules of just conduct,” which should also contain “a definition of what can be law in this narrow sense of nomos.” Such a clause, he suggests, would achieve more than bills of rights were meant to secure, and “it would make any separate enumeration of a list of special protected fundamental rights unnecessary.”24 With respect to constitutional design, he argues that since legislation should be enacted in accordance with opinion rather than interests, only those above the age of forty-five can select representatives to the Legislative Assembly. That assembly, in turn, would elect members of the Government Assembly. Adherence to the “rules of just conduct” would then be policed by a constitutional court.25
Hayek’s trilogy slowly reveals the radical nature of his original proposal to reinvigorate classical constitutionalism. He resolves the tension implied by all dualistic theories of state and constitution—between Recht and Macht, Normenstaat and Maßnahmenstaat, societas and universitas, system and project—by rejecting entirely the legitimacy of all governmental activities that use power, measures, and enterprise for the purpose of delivering “the good.” But he goes even further. He begins in The Constitution of Liberty by committing to the idea of limited government, the values of the Rechtsstaat, and the precepts of classical constitutionalism. He eventually comes to realize, though, that even this regime is founded on an acceptance of the legitimacy of the state as a bounded political community. It is, after all, the idea of boundedness at the root of a sense of solidarity that drives notions of social justice. Consequently, he ends up repudiating the entire political worldview on which concepts of state, sovereignty, authority, and constitution—and, ultimately, classical constitutionalism—have been founded.
Freedom, it would appear, can only exist in the evolving order of society. For Hayek, liberalism “is no longer a state ideology but a theory of the free society that transcends political boundaries.”26 Institutional mechanisms to limit the power of the state, he comes to realize, will never achieve their ostensible objectives. To protect liberty, the social must be reconceived in terms that renounce the entire political worldview. The constitution of liberty demands the transcendence of classical constitutionalism’s precepts.
Hayek argues that freedom depends on the flourishing of spontaneous orders of society, especially those of markets and law. To realize this aim, any sense of a state teleology or of a constitutional project must be abandoned. Given the world as we know it, these are patently unrealistic ideals. In the mid-twentieth century, however, a group of German scholars came together who shared Hayek’s liberal values but disagreed over his method. They agreed that the preservation of markets and law was vital to the maintenance of liberty but realized that such systems do not develop spontaneously. For such systems to flourish, an order must be imposed. Drawing on Aquinas’s scholastic philosophy of ordered existence,27 the school of Ordo-liberalism argued the need for a robust institutional framework to maintain a well-functioning market system.28 This was the state’s essential task. Classical constitutionalism, they maintained, could only be realized through a state project. The state’s purpose must be to establish an “economic constitution,” a framework for a market order and a set of duties imposed on public authorities to preserve it.
The claim of their “Ordo Manifesto” of 1936 was “to bring scientific reasoning, as displayed in jurisprudence and political economy, into effect for the purpose of constructing and reorganizing the economic system.” And because the various sectors of the economy are interconnected, “the treatment of all practical politico-legal and politico-economic questions must be keyed to the idea of the economic constitution.”29 This order-based method reconciled the values of economic efficiency and individual freedom. It also restored the political to a central role but placed it firmly in the service of market freedoms.
Driving the German Ordo-liberal project was the experience and catastrophic collapse of the Weimar Republic. Contrary to classical liberals, Ordo-liberals recognized that the laissez-faire policies of the Weimar era had led directly to the emergence of monopoly or cartel-dominated capitalism. Despite its social-democratic credentials, the Weimar Constitution lacked a strong legal framework to prevent this misuse of economic power.
Walter Eucken, one of the leaders of the Freiburg school of Ordo-liberalism, argued that the two economic orders—a centrally planned economy determined by the state and an exchange-based economy dependent on individual interactions—both lead to destructive outcomes. A planned economy was incompatible with the rule of law, and an exchange-based order, though formally compatible with the rule of law, produced an accumulation of private power that eroded the freedoms ostensibly protected by the rule of law.30 If economics and politics, market and state, could not work in harmony, they would destroy each other. The solution, Ordo-liberals argued, was a constitutional order that would outlaw monopoly power and impose an obligation on the state to preserve competitive free markets. This thesis gave birth to the principle of Ordo-constitutionalism.
Ordo-constitutionalism postulates the establishment of a constitution that imposes duties on public authorities to safeguard the operation of the private market system. Its mantra is “the free economy and the strong state.” The constitution must guarantee a market-based economic order and prohibit government from becoming an active agent in economic activity. Just as the liberal democratic constitution ensures a properly operating system of representative democracy, a constitution structured on Ordo-liberal lines must perform the similarly important function of guaranteeing a properly operating market system. This requires a strong but constitutionally restrained state.
This argument was advanced by Franz Böhm in his paper on “the rule of law in a market economy.” For Böhm, classical liberals misunderstand modern society if they see it in terms of the individual and the state. Classical liberalism overlooks the fact that the connection of the individual to the state is refracted through the medium of what he calls “the private law society,” the clubs, associations, and competitive mechanisms that private law supports but “are not constituents of the political constitution.” This private law society—more commonly known as “civil society”—should be controlled by “an automatically functioning coordination system” that would “relieve the state of the task of maintaining central economic controls.” In this type of regime, the “constitutionally determined mandate to legislator and government is to create, preserve and manage that regulative framework which guarantees the functioning of the free market as an allocation device.”31
These Ordo-liberal ideas helped shape the Federal Republic of Germany’s postwar constitutional settlement. Monetary policy and the maintenance of price stability enforced by a central bank independent of all political influence came to symbolize the so-called German economic miracle (Wirtschaftswunder). It was rarely made explicit, but the “social market economy” was established on the foundation of a comprehensive constitutional order. This included an “eternity clause” to ensure that certain arrangements and rights could never be the subject of constitutional amendment, making it possible for the German Federal Constitutional Court to reject the classical liberal distinction between public and private and assert that the Basic Law erects “an order of objective values” that permeates the entire regime.32
Ordo-constitutionalism has now become an influential constitutional model.33 Based on the principle of “militant”—meaning “constrained”—democracy, it promotes a regime that rejects the classical liberal stance of maintaining neutrality over ends in favor of explicit protection of the liberal order.34 Its characteristic feature is a range of counterdemocratic mechanisms that ensure that electoral majorities are prohibited from undermining the liberal order instituted by the exercise of the people’s constitutive power.35 An independent judiciary acting as guardian of the constitution and the protector of basic rights is absolutely necessary, as is an independent central bank needed to protect monetary policy from political influence. Ordo-constitutionalism moves beyond the classical liberal distinction between state and society, public and private, according to which the constitution constrains government to allow private freedoms to prosper. Coming into its own in the age of constitutionalism, Ordo-constitutionalism acknowledges the idea of the total constitution, imposes major restrictions on democratic decision-making, and advances a powerful project designed to protect a specific system.