The curse of bigness

Louis Brandeis, who was confirmed to the Supreme Court exactly 100 years ago this past week, was America’s greatest critic of bigness since Thomas Jefferson. Denouncing big banks as well as big government as symptoms of what he called a “curse of bigness,” Brandeis was determined to diminish concentrated financial and federal power, which he viewed as a menace to liberty and democracy. He is also the Jeffersonian prophet who has been most consistently vindicated. The “people’s lawyer,” who predicted the stock-market crash of 1929, was a ferocious critic of economic and political consolidation in an earlier age of “too big to fail.” More than any other Supreme Court justice, he shows the importance of translating values of privacy and free speech in an age of technological change.

So why hasn’t Brandeis been invoked more frequently in the U.S. presidential election? Candidates from Sanders and Clinton to Ted Cruz have criticized big banks. Citizens on both sides of the aisle, from Tea Party conservatives to Feel the Bern progressives, have questioned the idea of “too big to fail.” Brandeis would seem to be a natural icon for this moment in American politics, yet politicians today rarely draw on his legacy.

Part of the reason may be that Americans live in a Hamiltonian world—and not only thanks to the hit musical. Liberals and conservatives today attack either big business, like Sanders and Clinton, or big government, like Cruz, but not both. By contrast, Brandeis was the leader of a Jeffersonian tradition that is as distinctive in the 21st century as it was during the New Deal era: He was a progressive champion of federalism and the first person to characterize states as “laboratories of democracy,” a phrase that has become a touchstone of libertarians and conservatives today. At the same time, Brandeis also criticized big business. In his view, only in small communities could citizens develop their faculties of reason through the rigorous self-education he believed was necessary for full participation in American democracy.

Brandeis waited 125 days between his nomination to the Supreme Court on January 28, 1916, and his confirmation on June 1. The anniversary is significant as America confronts not only a hotly contested Supreme Court vacancy but also a momentous presidential election that has unleashed angry forces of economic populism. Brandeis’s long wait for a confirmation hearing reflected, above all, the fierce opposition he attracted from J.P. Morgan and other financial oligarchs who helped cause the crash of 1929 and whose successors at the House of Morgan also helped cause the crash of 2007.

The last presidential election in which opposition to monopoly power was so central was the pivotal race of 1912. All three presidential candidates—Theodore Roosevelt, Woodrow Wilson, and William Howard Taft—agreed about the importance of restraining monopolies. But they disagreed about how, precisely, corporate power should be checked. Taft, a traditional conservative, wanted to prosecute the banks by beefing up antitrust enforcement. Theodore Roosevelt wanted to create strong regulatory bodies, such as the Interstate Commerce Commission, to regulate the big banks. But Wilson—with the help of Brandeis, his closest economic advisor—wanted to break up the banks and the web of financial interests they controlled.

After Wilson won the White House, Brandeis helped shape the reforms of his administration. Brandeis rejected a purely judicial approach to trust busting, preferring administrative commissions that prevented monopolies from forming in the first place. He did not share Theodore Roosevelt’s faith in the power of an enlightened government, and he opposed Roosevelt’s efforts to oversee and plan the U.S. economy through a Bureau of Corporations. The reforms Brandeis inspired included the Clayton Antitrust Act of 1914, the Federal Trade Commission, and the decentralized Federal Reserve, a coalition of private banks that could issue short-term loans rather than bailing out banks that were too big to fail.

More than a century earlier, Jefferson had complained to James Madison that the Bill of Rights contained no “restriction against monopolies” and supported an unsuccessful constitutional amendment that would have limited Congress’s ability to establish monopolies of trade. In his 1913 book, Other People’s Money, Brandeis, too, argued that protection of liberty and opposition to monopoly went hand in hand. “We learned long ago that liberty could be preserved only by limiting in some way the freedom of action of individuals,” Brandeis said in a 1912 speech. “In the same way, we have learned that unless there be regulation of competition, its excesses will lead to the destruction of competition, and monopoly will take its place.” Brandeis was concerned, in other words, not only about the effect of monopoly on the economy but also about its effect on democracy. In his writings and judicial opinions, he focused on the way monopolists appropriated the businesses and property of independent citizens and how this harmed democratic institutions at the local, state, and federal levels.

Alexander Hamilton may be the rock star of the moment on Broadway, but he should not be the rock star of the 2016 election. In the U.S. presidential race, most of the major candidates are taking on the banks, but, unlike Brandeis, none of them consistently opposes bigness in both business and government. In January, Bernie Sanders declared, “If Teddy Roosevelt, the Republican trust-buster, were alive today, he would say ‘break ‘em up.’ And he would be right.” In fact, Sanders had the wrong historical analogy: Roosevelt did not want to break up the banks; he wanted to regulate them instead. It was Brandeis and Wilson, not Roosevelt, who wanted to break up the banks, but Brandeis abhorred the big government regulatory bodies that Roosevelt and Sanders embrace. Sanders has also attributed his vision of Democratic Socialism to Franklin D. Roosevelt’s First New Deal, expressed in his 1937 inaugural address. Here, Sanders’s analogy is historically accurate. But as Arthur Schlesinger noted, “The First New Deal breathed the spirit of the New Nationalism of Theodore Roosevelt and Herbert Croly; the Second New Deal, the spirit of the New Freedom of Woodrow Wilson and Louis D. Brandeis. First New Dealers saw economic concentration as inevitable and national planning as desirable; Second New Dealers wished to restore a competitive marketplace.”

The First New Deal created the alphabet soup New Deal federal agencies that Brandeis voted, as a Supreme Court justice, to invalidate. He much preferred the Glass-Steagall Act, which was inspired by his writing. Glass-Steagall separated commercial from investment banks by prohibiting banks from selling stocks. The law helped maintain financial stability until it was dismantled in 1999. Some economists argue that the dismantling of this law led to the creation of banks that were too big to fail and the crash of 2007, which Brandeis might have predicted.

Hillary Clinton has pledged, like Wiliam Howard Taft, to strengthen antitrust enforcement. But, like Sanders, she supports large regulatory bodies that Brandeis would have distrusted. Donald Trump has endorsed the Brandeisian Volker rule, which prohibits banks from proprietary trading on their own accounts. But his disdain for the press, the judiciary, and separation of powers, as Adam Liptak writes in The New York Times, has led libertarians and conservatives to criticize him for disregarding the Constitution. In addition, he supports restrictions on immigration Brandeis would have deplored—as the leader of the American Zionist movement, the justice was the world’s most prominent advocate of cultural pluralism; he railed against the British for not allow more Jews to emigrate to Palestine.

Libertarians and conservatives, such as Senator Ben Sasse, the Republican from Nebraska, have denounced both Trump and Sanders for unleashing populist forces that threaten constitutionalism and limited government. One way to reconcile economic populism with constitutionalism—that is, the view that the government has limited powers granted by the Constitution and constrained by the Bill of Rights—would be for presidential candidates on both sides of the aisle to recognize the widespread revulsion against the role of money in politics. (A poll last year found that 80 percent of liberals, conservatives, and moderates disapprove of the Citizens United decision.) Politicians could also resurrect the crusading anti-corporate populism Brandeis embodied. That would require the libertarian right to accept an overturning of Citizens United, which Brandeis likely would have deplored. (“He would not have been a fan of Citizens United, not at all,” Justice Ruth Bader Ginsburg told me.) It also would require the progressive left to accept limits on big government as well as big business—Brandeis, for example, might not have been a fan of the Affordable Care Act, preferring health insurance created by the states.

Given Brandeis’s high reputation on the current Supreme Court—all eight of the current justices have invoked his landmark opinions defending free speech, privacy, and judicial restraint—it may seem surprising that he has not been more openly embraced in the 2016 campaign. On the Sanders left, critics of big business are not similarly suspicious of big government and hasten to embrace the top-down regulations Brandeis would have deplored. Progressives today are just as interested in expanding equality for minorities and women as they are in restraining financial oligarchy. Many have spurned the tradition of Jefferson, Jackson, and Brandeis—white Southerners who had a blind spot when it came to race. Some progressive today believe that from health care to the environment, only big government is powerful enough to restrain big business.

Meanwhile, thinkers on the libertarian right once lionized Brandeis. Albert Jack Nock dedicated the reprint edition of his1926 biography of Jefferson to Brandeis, praising the president as “the great libertarian.” The justice reciprocated Nock’s tribute by requesting that a copy be distributed to every student in Kentucky. Today, however, some libertarians have been reluctant to embrace Brandeis because of a general aversion to the reforms he championed during the Progressive era, including the Sixteenth Amendment, which authorized a federal income tax, and the Seventeenth Amendment, which authorized the direct election of Senators. (Months before he died, I heard Justice Scalia criticize the Seventeenth Amendment at the Union League in Philadelphia as the end of federalism and states’ rights.)

As libertarians and civil libertarians come to know the Jeffersonian Brandeis better, perhaps they will be more willing to embrace him. Both groups have invoked his vision of intellectual privacy in their shared opposition to warrantless surveillance by the National Security Agency. In a poll of leading libertarian and civil-libertarian scholars and judges by Reason magazine, the libertarian journal of ideas, four out of the 14 respondents identified Brandeis as their favorite Supreme Court justice. Brandeis was devoted to free speech, privacy, and pro-immigration diversity, showing that anti-monopoly populism is perfectly compatible with constitutionalism as long as it is rooted in a mistrust of both big government and big business. At a time of intense polarization between conservatives and libertarians, who prefer small government and free enterprise, and liberals and progressives, who advocate a more energetic regulatory state, Brandeis is the historical figure who best represents and blends both of these competing ideals. For him, the greatest threat to liberty was an inert people and self-government was only possible on a human scale.

Note: This article first appeared at TheAtlantic.com and is based on Rosen's new book Louis D. Brandeis: American Prophet.