AMRI Academy

Unpacking the Anti-Monopoly Toolkit I: “The Progressive Tradition of Antimonopoly & Public Utility”

week three Faculty: William Novak

Week 3 begins to explore in more detail the LPE anti-monopoly and regulated industries toolkit. This week covers the public utility idea, a key legal innovation in the Progressives’ fight against monopoly power in the early twentieth century. Public utility regulation is characterized by requirements of nondiscrimination, reasonable rates, access, and sufficient service and supply. According to William Novak, the concept of a public utility or public service corporation emerged as part of a broader Progressive movement for the “social control” of American business. Progressive economists, lawyers, and reformers built upon common law doctrines, state corporate law, emerging regulatory approaches, and institutional economics to exert democratic control over a variety of industries. As Professor Novak recounts, industries subject to public utility regulation at the state or federal level by the early 1900s included not just those with characteristics of natural monopolies, but “an almost endless number of economic activities” that provided social necessities or that threatened exploitation by private providers. Public utility regulation was therefore a central tool in the New Deal, as seen in then-candidate Franklin Roosevelt’s campaign address on the need for public utility regulation of hydro-electric power.

Building upon that history, the readings also discuss how public utility’s potential as part of a broader toolkit to address monopoly power in the twenty-first century. Sabeel Rahman discusses public utility regulation as an important tool—alongside antitrust and public options—for the regulating the internet and combatting platform power. Similarly, Lina Khan argues for an anti-monopoly approach that looks beyond antitrust to other regulatory tools.

In the recorded lecture, Professor Novak discusses the “radicalness” of the Progressives’ reforms and their origins in the decades after the Civil War. The Progressive movement, he describes, centered on combating (1) private corporate power, (2) corruption of politics by those powerful corporations, and (3) rising socioeconomic inequality. From these concerns, Progressives crafted a social-democratic agenda that spanned antitrust, public utility regulation, labor law, social insurance, and more. Based on this history, Professor Novak challenges the conventional wisdom that the American economy before the New Deal was primarily laissez-faire; instead, economic regulation was ubiquitous. Finally, Professor Novak discusses the reach of public utility regulation, its impact on the law more broadly, and how law and economics undermined the public utility approach.