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Office of Legal Policy

March 16, 1988

106. 8 R15 1988


GL depo-U.S.A. 15-89

Office of the Attorney General

Washington, D.C. 20530


In June, 1986, it was my pleasure to host the Attorney General's Conference on Economic Liberties at the Department of Justice in Washington, D.C. This conference provided an opportunity for a candid exchange of the very different views held by prominent legal scholars on the scope of constitutional protections afforded to economic rights. The conference served as a catalyst for increased discussion of these issues both within the Department and outside it.

The present study, "Economic Liberties Protected by the Constitution," is a further contribution to that discussion. was prepared by the Justice Department's Office of Legal Policy, which functions as a policy development staff for the Department and undertakes comprehensive analyses of contemporary legal issues. The report examines both the original meaning of constitutional provisions which address economic freedoms and current scholarly literature on the topic.


This study does not purport to establish ultimate conclusions on the issues presented. It was written in recognition of the fact that there are no easy answers to economic liberties questions, and that reasonable people can take several points of view on those questions. The study will generate considerable thought on a topic of great national importance, and will be of interest to anyone concerned about a provocative and informative examination of the issues.

Edwrn Mease II

Attorney General

Executive Summary

Several provisions of the Constitution prohibit government encroachment on individual economic liberties. In recent years various scholars have advocated that the courts apply those provisions and strike down laws that restrict economic freedoms.

This Report examines the original meaning and surveys the case law development of those constitutional provisions that have been invoked in defense of economic liberties, evaluates scholarly analyses of economic liberties issues, and proposes possible standards that might be applied in analyzing two important constitutional provisions that protect economic liberties: the just compensation clause and the contract clause. The analysis set forth herein is merely tentative. The standards developed in this Report reflect our best assessment of the economic liberty clauses' original meaning; we do not attempt to achieve "desirable public policy results” at any cost. Furthermore, we take no position on the desirability from a public policy standpoint of the results we derive. This Report should be read with the knowledge that principled interpretivists differ (and may well continue to differ) as to the scope of constitutional protection afforded individual economic liberties. Principled analysis of the Constitution's "economic liberties” provisions generates no easy answers. Further discussion and debate is necessary, however.

The founders of the Constitution clearly were concerned with shielding individual economic liberties from governmental assault. They placed special emphasis on protecting property rights, which had been undermined by state special interest laws enacted immediately following the American Revolution. The founders' interest in promoting economic liberties is made manifest in a host of constitutional clauses. The two clauses that explicitly protect particular economic rights are the contract clause and the Fifth Amendment's just compensation clause.

A. The Just Compensation Clause

The Fifth Amendment's just compensation clause forbids the taking of private property for public use without just compensation. Read in a manner consistent with its original meaning, this clause appears to require that individuals be fully compensated for all diminutions in the value of their property rights caused by government action. The Supreme Court has interpreted the Fourteenth Amendment as making the just compensation clause applicable to the states.

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