By Marnie Khaw | May 1, 2025
When you knock on your neighbor’s door to buy a fresh cream pie and pay in cash, the transaction feels pure. Voluntary. Human. Free. But today, that simple act is illegal in most states unless your neighbor has a license, a certified kitchen, and a stack of state paperwork. Even in Oklahoma—where the Home Bakery Act gives some grace—there are restrictions and prohibitions laced into the statute. Because the pie has cream, because it isn’t shelf-stable, because there’s no label.
We’ve drifted so far from the idea that two adults can make a promise and shake on it without the state inserting itself. But this drift has a name: the death of the liberty of contract.
And it was codified not by a single statute, but by a long retreat from a bold doctrine of freedom—a doctrine once blessed by the U.S. Supreme Court under the banner of the 14th Amendment’s Due Process Clause.
The Rise and Fall of Contractual Freedom
In Lochner v. New York (1905), the Court famously struck down a law that capped bakers’ working hours. Writing for the majority, Justice Rufus Peckham insisted that the Constitution protects the “liberty of contract,” and that the government may not interfere with consensual economic arrangements unless doing so was a legitimate use of police power to protect health or safety.
The baker’s shop—small, immigrant-owned, and passed down through sweat—became the symbol of liberty against an overreaching state. But by West Coast Hotel Co. v. Parrish (1937), that era ended. The Court abandoned economic liberty in favor of New Deal priorities, prioritizing regulation over autonomy.
Since then, liberty of contract has been sidelined. In Williamson v. Lee Optical (1955), the Court upheld nonsensical regulations because they were “conceivably” related to a public interest—even if obviously unwise.
So when you buy from an unlicensed baker today, you are not engaging in a constitutionally protected act of free exchange. You are a violator. The state will not protect your right to transact, but it will punish you for attempting to.
Why This Matters—And How It Can Change
Most legal theorists accepted the death of liberty of contract as necessary to protect vulnerable parties. But what if that very protection has become the new form of control? A shield turned sword?
Yes, the Lochner Court erred by declaring economic liberty as unqualified. But modern jurisprudence errs in the opposite direction—assuming the citizen incapable of judgment and always in need of oversight. This infantilizes adults, centralizes power, and builds an administrative behemoth that no one truly voted for.
This is where Fatal Hubris enters the frame. Our hubris was in thinking that government, distant and bureaucratic, could regulate the particularities of life better than local communities, families, and voluntary associations could.
Lochner didn’t fail because freedom is dangerous. It failed because freedom was divorced from accountability. But that doesn’t mean the answer is authoritarian paternalism. It means we need a new scaffolding for contract—one rooted not in state licensing but community verification.
The Path Forward: Community-Based Governance and GOOOH
Let’s imagine a world not just of deregulation, but of decentralized trust. Where a network of 150—the Dunbar’s number—serves as the social unit of law. Within these groups, governance is personal, and so is accountability. This is the framework of community-based governance. No faceless bureaucrat decides whether you can bake and sell a pie—your neighbors do. And they do so because they know you, they’ve eaten at your table, and they trust your kitchen.
To scale this principle politically, we turn to systems like GOOOH (Get Out of Our House), a nonpartisan model for selecting citizen legislators by peer vetting. It’s an audition-based framework where individuals are chosen by fellow community members based on integrity, competence, and accountability—not campaign cash or party loyalty. Every representative is accountable not to donors but to their local node.
Now imagine this model for contract law: instead of requiring a state license, your community could establish a certification board made up of locals. It could be voluntary, reciprocal, and governed by mutual respect. An online dashboard could list certified bakers, builders, mechanics—all peer-reviewed. And if something goes wrong? Your community holds you to account, not an opaque agency.
Changing the Rules of the Game
So how do we make this shift?
Local Nullification: Start with home rule and municipal pushback. Communities can pass ordinances recognizing cottage contracts as legitimate even if they defy state licensing schemes.
Reciprocal Registries: Create peer-to-peer certification programs that build reputation systems outside state licensing. Think Yelp with teeth—and consequences.
Model Statutes: Draft legal frameworks for Freedom of Contract Zones, where consenting adults may transact with lower regulatory burdens, provided they disclose their uncertified status.
GOOOH-style Vetting for Oversight: Elect oversight boards from local Dunbar groups, not political parties. This keeps decision-makers close and prevents capture.
Judicial Reinvigoration: Encourage strategic litigation to challenge irrational economic regulations under a revived interpretation of the 14th Amendment, especially where health risks are speculative or pretextual.
From Control to Consent
We don’t need to resurrect Lochner whole-cloth. But we do need to reclaim its insight: that human beings flourish when they are allowed to act freely, with dignity, and within a moral fabric of mutual responsibility.
As John Stuart Mill wrote, “The worth of a state in the long run is the worth of the individuals composing it.” And as the Lochner dissenters feared, the worth of the individual is buried when the state assumes he cannot think for himself.
Let us propose instead a new kind of liberty of contract—one that is not libertine, but communitarian; not deregulated, but re-rooted in community judgment.
You should be able to buy a pie from your neighbor. Not because the state says you can, but because your community knows she bakes with clean hands and a good heart.
And that—unlike the 14th Amendment jurisprudence—is not a right that should ever be taken away.
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