Speedy Fred Taylor and the Ironies of Enterprise Liability

John Fabian Witt
2003 Columbia Law Review  
Neither the academic literature nor the tort reform lobby has observed a deep irony in the American law of enterprise liability. The intellectual roots of enterprise liability lie in a late nineteenth-century movement to reengineer the workplace, a movement whose best known exponent was scientific manager Frederick Winslow Taylor. Along with a generation of managerial engineers, Taylor popularized broad ideas about managerial responsibility for the operations of enterprise-ideas that when
more » ... on the decentralized institutions of American tort law ultimately found one of their strongest expressions in the law of enterprise liability. Enterprise liability thus stands as one of the great twentieth-century examples of the unanticipated consequences of social action. This Article is a modest study in what sociologist Robert Merton famously labeled "the unanticipated consequences of purposive social action."' Half a century ago, scholarship relating to this phenomenon was closely associated with intellectual skepticism of the totalizing aspirations of twentieth-century bureaucratic nation-states.2 The common theme in the unanticipated consequences literature was the notion that the interactions of millions of individuals in a modern society were simply too complex to model for purposes of centralized social planning. Classic examples thus included (in sociology) the unanticipated results of the Tennessee Valley Authority, whose commitment to working through local organizations seemingly hindered its pioneering conservation efforts,3 or * Associate Professor of Law, Columbia Law School. Many thanks to 1 COLUMBIA LAW REVIEW (in economics) rent control legislation that was said to harm the very people it was intended to assist.4 In each of these cases, and in many more, a dizzying array of social interactions made central planning an apparently quixotic, even foolhardy project.5 Attempts by the state to reengineer social life, in short, inevitably tripped over what Milton Friedman (apparently following professor-turned-congressman Dick Armey) called government's "invisible foot."6 This article inverts the state-to-society trajectory typical of the heyday of unanticipated consequences studies. The mid-twentieth-century unanticipated consequences literature focused on the complex and unpredictable effects of state action in civil society. I am interested instead in the unforeseen consequences of rationalized planning in civil society-and in particular in the nature of the firm-when filtered through the sheer complexity of the decentralized institutions that make up the American legal system. More specifically, my aim is to focus on late nineteenthand early twentieth-century scientific management of the firm, which was among the United States's leading contributions to twentieth-century totalizing institutions.7 I want to suggest that the rise of scientific management is linked to a later development familiar to today's tort lawyers, and bitterly opposed by the managers who carry on Frederick Winslow Taylor's legacy: the emergence and expansion of"enterprise liability" during the second half of the twentieth century. By "enterprise liability," I mean the theory that business enterprises should pay for injuries they cause because they are in the best position to avoid causing such injuries, and because they are better able to spread the costs associated with them. Scholars disagree, to be sure, over the precise contours of the rise of enterprise liability.8 Moreover, it seems See Richard A. Posner, Economic Analysis of Law 167-72 (lst ed. 1972); see also Cass R. Sunstein, Free Markets and Social Justice 282-83 (1997) (listing rent control and an array of other regulatory measures that are said to have self-defeating consequences). Armey, then a professor at North Texas State University, won a contest held by Friedman in the latter's Newsweek column for the best phrase to describe the harms caused by government intervention. 7. The penitentiary was among the United States's leading nineteenth-century rationalizing institutions; its subsequent morbid progress places it among the U.S.'s leading contributions in the twentieth century as well. See David J. Rothman, Behavior Modification in Total Institutions, in American Law and the Constitutional Order 293, 293 (Lawrence M. Friedman & Harry N. Scheiber-eds., enlarged ed. 1988) (1978). 8. Some argue that the rise of enterprise liability represented a shift toward absolute or strict liability. E.g., Guido Calabresi &Jon T. Hirschoff, Toward a Test for Strict Liability in Torts, 81 Yale LJ. 1055, 1056-61 (1972); John G. Fleming, The Role of Negligence in Modern Tort Law, 53 Va. L. Rev. 815, 837-40 (1967); Charles O. Gregory, Trespass to Negligence to Absolute Liability, 37 Va. L. Rev. 359, 382-97 (1951); George L. Priest, Can 2 [Vol. 103:1 SPEEDY FRED TAYLOR clear that the enterprise liability "revolution" has stopped short of the successes once envisioned for it. Yet virtually everyone agrees that tort liability expanded dramatically after 1960 in fields such as products liability, medical malpractice, and landowner and occupier liability.9 This expansion of liability has made enterprise liability among the most significant developments in tort doctrine over the past half century. The central ideas of enterprise liability found their first significant expression not in the decisions of mid-century torts judges, nor in the programs of Progressive Era reformers (let alone in the advocacy of the plaintiffs' bar), but rather in the efforts of late nineteenth-and early twentieth-century engineers to remake the firm. The postmodern view of the firm sees it not as a hierarchical planned institution but as a nexus of contracts, a kind of horizontal marketplace in which labor and capital come together for productive ends.10 But it is no coincidence that this current interpretation of the firm vies with an older, high-modernist conception of the firm as a hierarchical, authoritarian alternative to contracting in the market."l The older tradition found its pure type in the idea of scientific management, a notion that was exceptionally vigorous in the United States, and indeed has long been identified as an American phenomenon. As formulated by early managerial engineers such as Taylor, scientific management's basic aim was to establish breathtaking new powers over the management of the firm, and indeed over workers themselves, and to persuade employees and the public that managers were properly responsible for even the most minute details of the production process. Absolute Manufacturer Liability Be Defended?, 9 Yale J. Reg. 237, 253-54 (1992) [hereinafter Priest, Absolute Manufacturer Liability]; George L. Priest, Modern Tort Law and Its Reform, 22 Val. U. L. Rev. 1, 7, 10 (1987). Other appraisals contend that the transformation of tort law stopped short of becoming a regime of strict liability, but eliminated many of the doctrinal obstacles to plaintiff recovery from negligent defendants. 3 12. I argue elsewhere that the gender specificity of the workmen's compensation statutes is important in understanding a movement aimed in large part at supporting the family wage structure of male wage earners and dependent wives and children. See John Fabian Witt, The Accidental Republic (forthcoming fall 2003) (on file with the Columbia Law Review) [hereinafter Witt, Accidental Republic]. leading thinkers in the Anglo American tradition viewed the incentives provided by free labor as vastly more efficient than the compulsions and coercions of unfree labor alternatives.20 By the 1880s, however, observers of the American economy had begun to question the efficiency of competitive markets in the spheres of both exchange and production. Competition among firms seemed to be causing harmful price cutting and overproduction. Railroads found themselves having built hundreds, even thousands of miles of duplicative track in competition with one another.21 Shippers in St. Louis and Atlanta, for example, as Gabriel Kolko pointed out in his controversial 1965 book on railroad regulation, "had the option of twenty competitive routes between the two cities."22 Charles Francis Adams, president of the Union Pacific Railroad and former chairman of the Massachusetts Board of Railroad Commissioners, argued that "unhealthy railroad competition" and the "present competitive chaos" needed to give way to "some healthy control" or an "orderly, confederated whole."23 Similarly, in steel and iron production and in the Pennsylvania anthracite coal fields, wasteful overproduction by newly mechanized firms with unprecedented production capacities forced industry-wide price cutting and appeared to be driving firms to the brink of bankruptcy.24 "As prices fall and profits shrink," observed economist David Ames Wells in 1889, competitors engaged in ever-downward cycles of further price slashing in order to retain markets and customers "until gradually the industrial system becomes depressed (excoriating "rapid increase in the pressure of competition" in machine production). fi [Vol. 103:1 2003] SPEEDY FRED TAYLOR 7 and demoralized, and the weaker succumb (fail), with a greater or less destruction of capital and waste of product."25 Yet in important respects, market mechanisms reached into midnineteenth-century firms. Many mid-nineteenth-century firms adopted management practices that relied on the preservation of a skilled workforce.26 Such firms did not engage in the de-skilling and hierarchical rule making that characterized industrial work in places such as the New England textile mills. At the Baldwin Locomotive Works in Philadelphia, for example, management espoused a producerist ethic that linked managers and workers together in a roughly, though of course not wholly, egalitarian partnership in the skilled work of producing custombuilt railroad locomotives.27 Nearby textile mills in Philadelphia adopted a similar strategy of reliance on skilled operatives in whom the mills vested significant discretion.28 Moreover, even as some employers sought to impose new forms of discipline in the industrial workplace, many workers actively resisted their attempts and were often able to retain considerable discretion in the direction of their own labor. Practices such as the inside contract system, under which manufacturers contracted with skilled workers inside the firm on a task basis, permitted skilled workers to take charge of particular production projects.29 In iron rolling mills, for example, workers collectively contracted with their employer on only a tonnage rate and controlled among themselves the division of labor and the allocation of pay.30 For other skilled craftsmen such as coal miners, steel workers, and machinists, specialized skills and knowledge often
doi:10.2307/1123701 fatcat:eymg5rq5zfbwxjfcbasdpkeb2q