Dylan Matthews posted a fascinating interview with law professor Barak Orbach yesterday, which goes a long way toward explaining the current withered state of antitrust law.
Robert Bork, more than any other individual, is responsible for the transformation of anti-trust law from one of the most important checks against consolidated economic and political power into an area of modest consumer protection laws. As Orbach stated, "Antitrust was defined by Robert Bork. I cannot overstate his influence."
Bork’s position, outlined in The Antitrust Paradox: A Policy at War with Itself, was that the legitimate function of antitrust was to protect individual consumers rather than to ensure competition or limit the power of private sector actors. As a thinker who was deeply immersed in Chicago School economics, Bork’s critique of the antitrust of his era was rooted in assumptions that markets are highly competitive and that successful firms are successful because they are more efficient than their competitors. Because it challenged the decisions of market actors, Bork thought that antitrust revealed “an anticapitalist and authoritarian ethos.”
The implication of those beliefs—and the thesis of his book—was that antitrust was hostile to the “normal” function of the market and should be replaced with what he called a “consumer welfare prescription.” His solution, in other words, was to inject free market ideology into the heart of antitrust law. He suggested that the goal of ensuring competition should be replaced with a variation of the libertarian harm principle that only takes consumers, and not competitors, into account. According to his view, focusing on fair competition was at best superfluous, and at worst, contrary to the goal of maximized efficiency.
The book was, as Randy Picker observed on twitter, “the rare book that stands as serious, careful scholarship & yet was also very influential in its real-world domain.” Bork’s consumer welfarist view found sympathetic ears on the Supreme Court. His belief in self-regulating markets resonated with Reagan’s broader deregulatory project, and by the early 1980s, both Congress and Reagan’s DOJ had taken Bork’s views to heart. As Barry Lynn summarized in this interview with Chris Hayes on the development of antitrust law:
Where [antitrust] really saw a major, radical, revolutionary change was when Reagan came to power in 1981. One of the very first things the Reagan administration did was they went to Congress and said: “We are changing the way we enforce the anti-monopoly, antitrust laws. No longer are we going to seek to have competition for the sake of competition. No longer are we going to seek to distribute power to prevent the concentration of power. What we’re going to do now is we’re going to allow people to concentrate power because it’s going to be more efficient and it’s going to help the consumer in this country.
Lynn notes that neither Clinton nor Obama has done much to restore antitrust law to the broader mandate of the Sherman Antitrust Act.
There’s a strong case to be made that antitrust needs to get back to its core purpose of ensuring competition and preventing consolidation. Paul Krugman recently speculated that the U.S. might be seeing “a sharp increase in monopoly power.” And Susan Crawford has recently released a book on the absence of competition among telecom and internet services providers and the systemic problems this has produced. But perhaps the single most pressing case for a revitalized antitrust regime comes from the too-big-to-fail banks that helped bring about the worst financial in eighty years and ended up becoming more powerful and more consolidated than they were before the crash.
Making sure that private political power does not go unchecked has long been another core purpose of antitrust enforcement. Since its modern origins under Theodore Roosevelt, antitrust law has been concerned with limiting concentrations of political—and not just economic—power. Former FTC Commissioner Thomas B. Leary, for instance, recognized that “dispersion of political power, wealth transfer effects, and various social considerations” have all at various times served as the basis of antitrust enforcement. Rather than viewing consumer harm as the be-all and end-all of antitrust, the market- and democracy-distorting effects of concentrated power must also be taken into consideration.
All of this is being prevented by an ideological belief that market outcomes are somehow more legitimate than democratically arrived at choices. There is a pressing need for a more sustained response to Bork’s theory of antitrust and to the perceived naturalness of free markets that characterizes the Chicago School more generally. The harms that large, unregulated businesses impose on the public go far beyond questions of consumer satisfaction. Antitrust has been one of the only public tools powerful enough to take on corporate power, and it's in desparate need of reconstruction.