In 1933, four years into the Great Depression, Congress enacted the National Industrial Recovery Act (NIRA) in close cooperation with the Roosevelt administration. The central action of the statute was to facilitate price coordination across a given market or industry. Its rationale was to contain the destructive competition and below-cost pricing that were exacerbating the problems already roiling the economy as a result of the initial stock market crash, and subsequent cascading credit and liquidity crises. In addition to addressing the credit crisis directly through banking and monetary reform, the Roosevelt administration thus sought to buoy up purchasing power by stabilizing prices. NIRA also systematized and federalized the existing patchwork of legal support for collective bargaining between workers and business firms, in an effort to stimulate and stabilize wages. The idea of boosting demand and ultimately production through a floor on wages was not new; it had had currency for decades thanks to the influence of institutionalist economists, policymakers, and many business leaders. Still, NIRA at that time represented the most ambitious and broad-ranging effort to put that idea into practice.
In discussions of economic law and policy today, the “First New Deal” is understood as a major experiment in “planning” that displaced “markets.” This characterization is broadly endorsed by mainstream antitrusters, legal progressives, socialists, and most others too. Beyond that point of convergence, the normative valence attached to each—as well as the political meaning of “planning” within a broader political project—diverges, with some endorsing “markets” over “planning” or vice versa, and with some seeing “planning” as key to a broad emancipatory project, and others seeing it as simply a backstop for the continuation of a fundamentally inegalitarian economic system.
What these often bitterly divergent viewpoints have in common, though, is a failure to grasp just how intrinsic the activity of economic planning is to markets themselves. This is not in the mere sense of bare-bones public and legal market management mechanisms (such as contracts and property law), though indeed those mechanisms frequently enable significant degrees of economic planning that obviously displace competition (think for example of long-term output or requirements contracts). In Patrick Atiyah’s magisterial history of English contract law, he suggested that a major reason for the rise of contract law in the nineteenth century, and specifically for the modern emphasis on the will of the parties and on expectation damages, was that the legal form facilitated economic planning—and economic planning was necessary for the growth of markets and capitalism.