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The Role of Courts in American Political Economy


Brian Highsmith (@bd_highsmith) is an academic fellow in law and political economy at Harvard Law School and a Ph.D. candidate in government and social policy at Harvard University.

Kathleen Thelen (@thelenkathleen1) is Ford Professor of Political Science at MIT and co-editor of The American Political Economy: Politics, Markets, and Power.

Earlier this year, the Supreme Court sided with a consortium of business groups and red-state governments in their challenge to the Occupational Safety and Health Administration’s vaccine-or-test mandate. At issue in this case was whether our federal government has the authority to require basic public-health measures in large private workplaces during a pandemic that already has killed more than 800,000 Americans. In striking down this workplace safety rule and inviting challenges to future agency action, the Court continues a longstanding pattern wherein our judiciary regularly intervenes into the democratic process to empower corporate interests and hobble the state’s regulatory capacities.

This distinctive feature of the American political economy is the focus of recent chapter from one of us (Thelen), who—writing with K. Sabeel Rahman—described a decades-long, multi-front campaign by organized business interests to use interventionist federal and state courts to advance their policy goals. Courts in the United States have served to secure key victories that have shaped the trajectory of American capitalism. Strategic interventions have allowed organized business interests to enhance corporate power (e.g., Citizens United), weaken countervailing forces (e.g., Janus), and undermine the state’s own regulatory capacities (e.g., Business Roundtable v. SEC). One notable example among many is the way in which business interests harnessed the power of the courts to sanction the expanded use of mandatory arbitration clauses to undermine consumer, labor, and civil rights. 

That business interests have used the judiciary to tilt the playing field to their advantage will not be news to most readers of this Blog. The LPE movement owes its origin to an acute understanding of precisely this dynamic. But scholarship on American courts, including both legal academic and political science research, does not always emphasize the degree to which the outsized role played by courts in our system stands out as a comparative outlier. The tremendous—and practically unreviewable—power that is routinely exercised by our judiciary is unique among peer countries, as a matter of both constitutional design and historical practice.  

As Rahman and Thelen document, “Compared to other rich democracies, the American judiciary is more powerful, more politicized, and more directly involved in shaping outcomes in the political economy.” In the UK, for example, the principle of “parliamentary sovereignty” means just what it says—that, as the country’s supreme legal authority, the laws passed by Parliament cannot be struck down by the courts. In other rich democracies, regulatory issues that in the United States are litigated in the courts are instead managed by professional bureaucracies or government-appointed expert bodies, or are settled through corporatist negotiations. Far from being an essential feature of stable democracies, or necessarily implied from the structure of a constitution allocating power among separated branches, our strong form of judicial review reflects one choice among many available institutional arrangements—and a comparatively unusual one, at that.

But it is not simply the power of courts in our system that stands out as anomalous among peers: our judiciary also is unique in its institutional design, in ways that have significant consequences for economic and political outcomes. Most other advanced democracies contain mechanisms designed to avoid the politicization of the judiciary, as for example in Germany where appointment to the Federal Constitutional Court requires a supermajority (2/3) vote in both houses of parliament. By contrast, our constitutional appointment mechanism for federal judges provides final say to a malapportioned Senate where representation is skewed toward the sparsely populated states dominated by white rural voters. The United States also stands alone in guaranteeing judicial tenure until death or choice, which gives judges the opportunity to select which political party will have the opportunity to appoint their successor. And no other rich democracy replicates the United States’ system of politicized judicial elections at the state and local levels—which invites the participation of moneyed interests affected by their rulings.

American Political Economy

Rahman and Thelen’s chapter is part of a new volume exploring the distinctive features of the American Political Economy (APE) in cross-national perspective. That volume, in turn, is intended to introduce a larger intellectual project within the field of political science—one that largely mirrors, both substantively and as an academic endeavor, the work of legal scholars working under the banner of Law and Political Economy. Just as the LPE framework challenged us to investigate “the means by which economic power translates into political power and how law structures, or could restructure, these channels of influence,” this new APE volume similarly emphasizes “the interplay of markets and politics” while inviting researchers to “focus on institutional configurations and their effects on the distribution of power.” Both initiatives seek to challenge dominant paradigms within their respective disciplines about the boundaries and relationship between politics, law, and markets—and to shift academic inquiry towards a new focus on power, institutions, and the structural drivers of observed inequality.

We believe that researchers contributing to each literature have much to learn from their colleagues working in the other disciplinary tradition—particularly about the consequences of courts’ asserted role in the United States’ political system. Although APE scholarship emphasizes the importance of institutional design, existing work on the development of economic policy tends to focus on the legislative and executive branches. While APE researchers have incorporated lessons from LPE scholarship in areas like antitrust, labor, and housing, the potential insights that a courts-focus offers extend well beyond the development of legal doctrine. For example, political scientists can benefit from placing courts into the same analytic framework as is used to identify the effects of myriad veto points and countermajoritarian features of political systems.

As Nathan Kelly and Jana Morgan’s contribution to the APE volume underscored, the negative relationship between the number of institutional veto points and redistributive effort in post-industrial democracies is among “the most robust findings in comparative political economy research.” But the American judiciary is not simply one more veto point among others. Situated within the broader institutional framework of the American political economy, courts emerge as a critical node because of how judicial power—uniquely—can be leveraged to constrain or enable other forms of state power and to unilaterally empower or disempower whole classes of political actors, from corporations and unions to class-action litigants.  

The distinctive features of the American judiciary thus help to explain how it came to function as a forum for organized business—and any political party that represents their interests—to re-litigate legislative losses in a more favorable venue. Consider the legal challenges to Affordable Care Act, the most significant expansion of our social welfare state in a generation, which together reflect a shared strategy that one of us (Highsmith) has termed “partisan constitutionalism.” These successive challenges successfully eliminated the coverage gains achieved through its mandated Medicaid expansion—resulting in, according to one study, at least 15,000 premature deaths owing to lack of health coverage—while also, each time, garnering votes from conservative justices to overturn the law in its entirety.

The ACA is, of course, hardly the only example: similar challenges were brought against nearly all of President Obama’s major initiatives, in policy areas including oversight of the financial system, environmental regulation, and immigration. By channeling high-salience retrenchment efforts through the courts, opponents of all forms of government regulation enjoy important advantages that are overlooked in existing accounts. Perhaps most important is that legal strategies do not require either executive power or legislative majorities, and they often rely on highly technical rules and legal procedures that the public cannot follow. While the process for enacting legislation requires multiple successive moments of consensus from different actors, there are very few practical constraints that limit what five determined justices can do on a court of nine that acts with the powers of review that ours has assumed for itself.

By outsourcing the task of retrenchment to the judiciary, organized interests can concentrate their efforts on a known handful of committed loyalists serving lifetime appointments, whose decrees are practically unreviewable by the political branches and who will bear most of the blame for unpopular retrenchments. Indeed, courts may represent something of a one-way ratchet in many areas: well-positioned to preemptively halt or retroactively unwind a health care coverage expansion or redistributive tax change, but—for reasons explored in other accounts—unavailable as avenues for achieving such policies in the first instance.

And this institutional veto—unlike the others of traditional focus—cannot be voted away even through landslide majorities. To be sure, courts’ countermajoritarian function is not only well-understood but also often defended as a normative good, by legal theorists and comparative political economists alike. But an emerging literature of critical legal scholarship provides an alternative perspective. As Niko Bowie recently testified, “as a matter of historical practice, the Court has wielded an antidemocratic influence on American law, one that has undermined federal attempts to eliminate hierarchies of race, wealth, and status.” In the same vein, Amy Kapczynski recently observed about courts in our system: “We want them to be protectors of the weak, but they more often protect the strong.”

This central tenant of LPE reflects a critical perspective that, for too long, has been overlooked by comparative political economy scholarship. And if LPE scholarship can help correct this oversight, so might APE tools help illuminate some of the institutional dynamics that explain why courts in our system so often have played this role. By studying American courts from a comparative perspective, an important truth emerges: that we might best understand our judiciary as as “structurally conservative,” due to its aggrandized role in our political process and comparatively distinctive features of its institutional design.