This fall, we’re running a new series – From the Vault – where we dip into the archive and highlight some of our favorite posts on a particular topic. For new readers, it’s an opportunity to discover important insights from our ever-growing back catalogue. For longtime readers, it’s a chance to see how LPE thinking has developed over these past seven(!) years.
To kick off the series, we’re starting with antitrust, a subject that is near and dear to our heart. This is not only because antitrust law represents a vital tool for confronting undue market power and top-down domination in our economy, but also because such problems have been exacerbated by the narrow conception of antitrust that has prevailed in recent decades—a regime singularly focused on consumer welfare, with little concern for the original pro-democracy, anti-monopoly goals enshrined in legislation. Indeed, as one erstwhile blogger and future FTC Chair wrote in these very pages, “a true renewal of our anti-monopoly tradition will require not just stricter enforcement but a shift in philosophy.”
In service of that noble goal, we’ve designed an entire open course around Anti-monopoly and Regulated Industries. And the blog has published dozens of posts on the topic. Across the eight pieces we highlight below, you’ll see a few consistent themes: that promoting competition is an insufficient goal; that we should move away from concentrated, vertical, hierarchical forms of economic coordination to relatively dispersed, horizontal, democratic forms; that the antitrust regime that has prevailed in recent decades has ignored legislative history; and that the times they are a-changin’, as the FTC reclaims its rightful authority to prevent mergers, police unfair methods of competition, and enforce the full gamut of antimonopoly statutes passed by Congress.
The Functional Logic of Antitrust: Oligarchy vs. Democracy – Sandeep Vaheesan
In the late 1970s, the Supreme Court initiated a radical reinterpretation of the antitrust laws. What the Court had described as “a comprehensive charter of economic liberty” in 1958 was reinvented as a “consumer welfare prescription” in 1979. This reinterpretation of antitrust, Vaheesan argues, has not resulted in bountiful consumer welfare, but oligarchy unleashed. This is, in part, because in implementing this vision, the Supreme Court and the antitrust enforcement agencies adopted a highly tolerant posture on corporate mergers, which contributed to high levels of concentration in many markets and had detrimental effects on productive capacity, as firms eliminated “redundant” capacity and failed to invest in productivity-enhancing internal expansion. During the same period, the Supreme Court and the antitrust agencies treated coordination among rivals, even among professionals or independent contractors, as categorically harmful, which thwarted their efforts to organize and build power. To limit domination and disperse power, Vaheesan argues, a reimagined antitrust law should restrict consolidation of business assets and permit certain forms of coordination among small actors.
The Dawn of Antitrust: An Egalitarian Interpretation of the Sherman Act – Sanjukta Paul
Drawing on the legislative history of the Sherman Act, Sanjukta Paul shows that, from its very origins, antitrust law was meant to target the concentration of economic power, rather than coordination among workers and other small producers. Conventional interpretations have obscured this fact by reading opposition to concentrated power as a corollary or even an afterthought to maintaining competitive markets in the abstract. When this opposition is instead read as part of a particular moral economy vision, the purpose of antitrust looks quite different. Seen from this vantage, democratic economic coordination becomes the natural companion to the goal of containing domination, rather than a special exception to a general anti-coordination rule. Indeed, as Paul shows, the farmer-labor political constellation that spurred federal antitrust legislation favored both containing domination and cultivating democratic coordination. And lawmakers were moved to almost entirely re-write the initial piece of legislation because they were concerned it would penalize farmers and smaller producers of all kinds.
The Antitrust Case Against Gig Economy Labor Platforms – Marshall Steinbaum
In the fight to regulate the gig economy, unions, workers, and their allies have only fought half the battle: they have tried to defend the definition of employment against technology-enabled erosion. What if, instead, we took the platform businesses at their word and truly conceived of gig workers as independent? In that case, we should reconceive the gig economy business model as reliant on vertical restraints to inhibit competition between platforms in service of higher profits, and we should deploy antitrust remedies to secure the independence of the self-employed. As Steinbaum shows, platforms set the prices for these putatively independent transactions, require vendors not to offer their services at a lower price on other platforms, and use non-linear pay structures and minimum acceptance rates to induce workers to accept unprofitable gigs.
The Allocation of Economic Coordination Rights – Sanjukta Paul
Even as our understanding of economic competition evolves to take better account of corporate power, our thinking about competition retains a fundamental blind spot. Simply, the boundaries of the business firm insulate many instances of economic coordination that would be deemed anti-competitive if they were to take place between firms or individual persons. As Sanjukta Paul argues, the regulatory discrepancies that flow from this fact tend to entrench existing distributions of advantage, power, and opportunity rather than to balance it. For instance, consider the case of Uber. Present antitrust law is unable to make sense of the fact that Uber, as a labor contractor with a great app, has effects on the market that are indistinguishable from any effects that a “cartel” of drivers engaging in direct, horizontal price coordination might have, for example if drivers coordinated their rates through a hiring hall. Yet the latter is illegal on the current, conventional interpretation of antitrust law: the labor exemption to antitrust is limited to the (legal) category “employment,” which excludes an increasing number of workers and individual service-providers who may be labeled independent contractors, freelancers, or something else.
Fair Competition Policy Without a Fair Competition Philosophy – Sandeep Vaheesan
Assessing President Biden’s Executive Order on Promoting Competition in the American Economy, Sandeep Vaheesan highlights the many laudable enforcement and policy recommendations, while noting that, as a statement of philosophy, the order is a disappointment. Despite using the language of “fair and unfair competition” repeatedly, the order does not articulate what conduct constitutes fair or unfair competition, let alone the underlying principles that should guide competition rules. And at times, it falls back on the language of “anticompetitive conduct” and “promoting competition,” familiar from the dominant yet unhelpful mode of antitrust discourse. Beyond lacking substantive content, these terms mistakenly fall prey to what Vaheesan has previously dubbed the cult of competition—the idea that competition is an unqualified good, rather than something that should be promoted selectively. Despite these limitations, however, the executive order offers a foundation from which to build, as the task of moral exposition falls to cabinet secretaries and agency leaders.
The Limits of Anti-Monopsony Antitrust – Brian Callaci
The Biden administration’s antitrust policy has been the most pro-labor in decades. And yet, the response from labor advocates and the labor movement to these developments has been rather muted. Why the disconnect? As Brian Callaci argues, there is a significant difference between the Biden administration’s progressive antitrust approach—which seeks to combat “monopsony power” and raise wages to the level that would prevail in a state of perfect competition—and that of labor progressives. When it comes to wages, for instance, workers do not think they should be paid their “competitive wage,” but rather a fair wage. And when it comes to employer power, labor progressives are concerned with the authority of employers in the workplace itself, which arises even in competitive labor markets. Fortunately for the future of progressive competition policy, there is another tradition in antitrust that is more suited to finding common ground with labor’s needs than economic models of perfect competition. That is the concept of fair competition enshrined in the antitrust laws, particularly Section 5 of the Federal Trade Commission Act, which gives the FTC the authority to regulate “unfair methods of competition.”
Seven Reactions to the FTC’s Policy Statement on Unfair Methods of Competition
Speaking of which, in November 2022, in response to the FTC’s new policy statement regarding the prohibition on unfair methods of competition under Section 5 of the FTC Act, we asked seven experts for their initial reactions. Luke Herrine saw the move as part of a broader paradigm shift about what counts as “unfair” commercial conduct. Sandeep Vaheesan noted the FTC’s reliance on the text and purposes of the antitrust statutes was a welcome shift from the Supreme Court’s forty-year practice of re-making the law on the basis of “economics.” And Sanjukta Paul observed that the move highlighted the mismatch between our real world understanding of competition and a neoclassical one, since the latter simply assumes away most managerial or entrepreneurial activity that we might understand as a method of competition. If you want to know the rest, you’ll have to smash that hyperlink.
Taking Stock of the New Antimonopoly Movement – John Mark Newman
How has the FTC’s attempt to revitalize antitrust fared so far? Near the end of 2023, a handful of skeptics and media outlets hungry for clicks tried to gin up a new attack on the agency: going after its win–loss record. After pointing out that such takes have aged like milk — the agency went on a heater in late 2023 and early 2024 — John Mark Newman explains why “wins” is a misguided metric by which to judge agency enforcement. Instead, Newman outlines how the agency has been broadening its analytical firepower; how it has been enforcing the full gamut of antimonopoly statutes; and how it has been making antitrust more accessible to the public through a concerted effort to solicit public comments. Change takes time, and the new wave enforcers are pushing against a highly funded, well-organized reactionary opposition that spent decades embedding itself into every corner of academia, the think-tank industrial complex, and the halls of power in Washington. But even so, Newman believes they’re making significant progress.
