Did Corporations Fund the Rise of Law and Economics in the 1940s and 1950s?

|The Volokh Conspiracy |

A post by Robert Van Horn at the blog of Stigler Center of University of Chicago's Business school asserts that "from 1946 throughout the 1950s, corporations made possible and crucially supported the rise of Chicago law and economics through funding and advice…" He implies that corporate involvement influenced the normative positions of Chicago School economics, in particular skepticism of antitrust laws. Michael Simkovic at Leiter has more.

The problem is that there is nothing in Van Horn's post documenting that corporations funded the relevant scholars at Chicago. The only funding discussed in the article is from the Volker Fund. As Wikipedia explains: "The William Volker Fund was a charitable foundation established in 1932 by Kansas City, Missouri, businessman and home-furnishings mogul William Volker. Volker founded the fund with the purposes of aiding the needy, reforming Kansas City's health care and educational systems, and combating the influence of machine politics in municipal governance. Following Volker's death in 1947, Volker's nephew, Harold W. Luhnow continued the fund's previous mission, but also used the fund to promote and disseminate ideas on free-market economics."

So out of curiosity I checked the longer academic article on which the blog post was based. There, I found that Van Horn refers to Volker as a "nonprofit corporation." Sure, but when we talk about "corporate funding," we aren't usually referring to philanthropies. Is funding from the Ford Foundation "corporate funding?"

Beyond that, we learn that Chicago Law School Dean Edward Levi "obtained funding for fellowships from corporations. Starting in the fall of 1952, Standard Oil of Indiana, Swift and Co., International Harvester, International Mineral and Chemical Co., Borg-Warner Co. and Sears Roebuck provided funds for three years. The funding would go toward the study of antitrust law, and the project became known as 'The Antitrust Project.'" Beyond that, another corporation funded a two-week antitrust seminar for lawyers.

In sum, "corporate funding" amounted to a handful of three-year fellowships for independent scholarly research, and a two-week seminar. To extrapolate from that corporate funding was "crucial" to the rise of law and economics (the start of which the author himself dates to several years earlier), much less that it affected the substantive views of those involved, is quite a stretch.

This perhaps is not of great interest in and of itself, but seems part of a pattern. There has been a sudden outpouring of scholarship from left-leaning scholars on the history of post-World War II free market and libertarian thought. Much of it lacks academic rigor and has something of a conspiratorial tone, as if no reasonable person could believe such ideas, and therefore they must be the product of corporate influence, a cover for racism and white supremacy, and so on.

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  1. “Sure, but when we talk about “corporate funding,” we aren’t usually referring to philanthropies.”

    It’s pretty much the same thing with the opposition to the Citizens United decision. People who want non-profits restricted, but know it looks bad, set out to restrict “corporations”, because they can mislead people into thinking they’re talking about for profit companies. When the non-profits are the real target.

    1. Just heard a review of Citizens United on NPR yesterday. The announcers still hated it, as did their learned guests, but the guests at least stated they were not for censorship. Mild progress.

      1. Opposing Citizens United IS for censorship. I frankly don’t see how anyone could claim to be against censorship while opposing Citizens United. I don’t see how this is even mild progress; just the same old story.

        1. Exactly. At this point they still have to say they’re against censorship, but that doesn’t require actually being against censorship, just denying that what they want to do IS censorship.

          The whole reason for being mad about the CU decision is that it stopped them from censoring interest groups like the NRA.

          1. “The whole reason for being mad about the CU decision is that it stopped them from censoring interest groups like the NRA.”

            The complaint is that some non-profit groups qualify as “non-profit” and “tax exempt” by a section of tax law that isn’t meant to shield advocacy groups. Groups that qualify as tax-exempt can, and should, lose that status if the reason they’re tax-exempt doesn’t permit acting like advocacy groups, and they go on to act like advocacy groups. (and no, having the IRS actually checking this does not count as “militarizing the IRS against political adversaries”)

    2. “It’s pretty much the same thing with the opposition to the Citizens United decision. People who want non-profits restricted, but know it looks bad, set out to restrict “corporations””

      The “corporations” set up their own “non-profits”. There’s no clear dividing line.

  2. Let’s see a study of the rise of anti-trust legislation and reasoning as development of a cover story for political bribery in a democracy with a free press.

    Unlike standard corrupt dictatorships, where bringing oodles of cash on bended knee to the local officials for permission to do anything, such an unfortunate development as a free press and the vote mean the corruption must hide itself much better, and trumpeted facades serve that purpose. If they have even a little validity, so much the better for waggling fingers behind the back.

  3. Law and Economics, fortunately, has no relevance to real world problems and is hardly even mentioned among practicing lawyers.

  4. Beyond that, we learn that Chicago Law School Dean Edward Levi “obtained funding for fellowships from corporations. Starting in the fall of 1952, Standard Oil of Indiana, Swift and Co., International Harvester, International Mineral and Chemical Co., Borg-Warner Co. and Sears Roebuck provided funds for three years. The funding would go toward the study of antitrust law, and the project became known as ‘The Antitrust Project.'” Beyond that, another corporation funded a two-week antitrust seminar for lawyers. In sum, “corporate funding” amounted to a handful of three-year fellowships for independent scholarly research, and a two-week seminar.

    Shoddy work. Let’s hope the intern responsible for it was a first-year student.

  5. Given how rigorous left wing academics are, I’m sure they’ll be saying that Adam Smith was secretly funded by the Koch brothers next!

  6. It’s not a coincidence that the University of Chicago was founded by John D. Rockefeller, and that “University of Chicago school” (small “s”) thinkers in various disciplines, especially economics, advocated policies which worked to the benefit of the rich and powerful. L & E is just one example. When I took Antitrust in law school (1992), the “University of Chicago school” was dominant, and their view was that antitrust law shouldn’t even exist.

    1. What about the Bilderburgs and the Queen of England?

      1. Don’t forget what that great scholar Lyndon LaRouche said about the Queen of England.

    2. … Can you name a single private university in the US which hasn’t gotten most of its funding from rich (generally successful business) people? Or whose continued funding isn’t dependent on private enterprise. (Hint: schools like Harvard have large endowments that are invested in stocks).

      This is the most profound sort of confirmation bias. You find one data point that supports the narrative you want to believe, and you ignore all the other ones with the same ‘causal factor’ that don’t follow the narrative.

      1. Look up “University of Chicago school” (small-s) if you don’t know what I mean. It was founded to help get government off the backs of rich people. It was not just a university, it was a philosophy.

        1. Its a floor wax and a dessert topping.

          How does one “found” a philosophy?

          1. “How does one ‘found’ a philosophy?”

            You be the first (at least first in popular perception) to state it publicly and advocate for others to adopt it.

        2. I knew Rockefeller was clever, but to be so prescient as to donate money for a university in 1890, knowing that in the 1950s it would house a few free market-oriented economists, that’s just amazing.

          1. Republicans’ recent record with respect to tariffs, protectionism, and general Trumpiness would incline a self-aware conservative to shelve the ‘free market-oriented economists’ line for at least a few months.

            But this is the site of Libertarians For Authoritarian Immigration Policies, Libertarians For Statist Womb Management, Libertarians For Tariffs, Libertarians For Torture, and Libertarians For Government Micromanagement Of Medical Clinics, and Libertarians For Government Gay-Bashing, so this point seems somewhat futile.

          2. Instead of “free-market economics”, think of the older term, “laissez-faire”.

            The U of C’s first president, hand-picked by Rockefeller, was William Rainey Harper, who followed the laissez-faire line. For example, he would sack any professor who showed sympathy for labor unions.

  7. This stuff is certainly interesting as a historic measure, but I don’t care that much about it. Law and economics is theory. And theory either holds up or doesn’t hold up on its merits. It can be evaluated by everyone in the field, no matter the funding source.

    (I would draw a distinction with situations where funders might be paying for factual claims, e.g., the tobacco companies back in the day. That sort of thing should always be sussed out.)

  8. Any time historical “scholarship” approaches history from any contemporary political leaning, it is suspect, not just from “left-leaning scholars.” Plenty of inaccurate history being promulgated from the right as well.

    Gordon Wood’s book “The Uses of History” is an excellent read on the general topic.

    1. There can’t be much (academic) history coming from the right, because the vast majority of historians are on the political left.

  9. I don’t much care who provided the original funding for work in this area. The interaction of law and economics is certainly a worthwhile area to explore. Results should be evaluated on the merits.

    That said, my impression is that the field seems to have more to do with supporting ideological biases than with really investigating issues. The papers I’ve seen discussed here have been quite unimpressive.

    I don’t think that, as a rule, legal academics are good at economics.

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