Two decades into the 21st century, capitalism is huge and getting huger. Three-quarters of all industries became more concentrated between 1997 and 2012. About 10 pharmaceutical companies control the production and sale of the world’s medicine; three chemical firms dominate the supply of seeds and pesticides, and thus global agriculture; and one combined corporation produces nearly every non-craft beer for sale on the planet. At the same time, tech giants Facebook, Google and Apple dominate their markets, controlling not just commerce but access to news and our personal information.

As Tim Wu argues in “The Curse of Bigness: Antitrust in the New Gilded Age,” global economic concentration is now at levels unseen in more than a century — since the early days of industrial capitalism. A policy advocate and law professor at Columbia University, perhaps best known for coining the term “net neutrality” in 2003, Wu offers a vital diagnosis: America has abandoned its rich tradition of anti-mon­opoly, or antitrust, law. And while the very term “antitrust” may strike many as dreadfully dry, Wu manages to make this brisk and impressively readable overview of the subject (the entire text runs about 140 pages) vivid and compelling.

AD

AD

America’s antitrust history began with the Sherman Antitrust Act of 1890, passed “as a reaction to the rising power of monopoly trusts.” The law lay dormant for a decade until “activated” by President Theodore Roosevelt against J.P. Morgan’s Northern Securities railroad company and John Rockefeller’s Standard Oil. Despite his trustbuster image, Wu argues, Roosevelt had little problem with bigness itself. He even offered Rockefeller the chance to keep his monopoly as a public trust, subject to government supervision. What’s more, during his campaign to reclaim the White House in 1912, Roosevelt argued (unsuccessfully) for “regulated monopoly” — a system in which “commerce would be controlled by a small group of monopolists, who would be, in turn, controlled by government.” It was a model later implemented by Italy and Germany in the 1930s.

The standout figure in antitrust was jurist Louis Brandeis, the architect of the vision that did triumph in 1912: Woodrow Wilson’s “regulated competition.” Born in Louisville to immigrant, small-business-owning parents, Brandeis cut his legal teeth defending small-business clients in Boston and emerged as a leading opponent of monopolies in the two decades before Wilson named him to the Supreme Court in 1916. For Brandeis, industrial size was the chief problem. Large companies, whether strictly monopolies or not, thwarted individual initiative, restricted competition and thus innovation, and used their size to obscure economic inefficiencies. Most important, large corporations could not be reconciled with democracy and liberty, either for small businesses trying to compete or workers out to make a living. The biggest threat, Brandeis wrote in 1914, was “the suppression of individual liberty, indeed of manhood itself.”

The view that fighting monopoly meant defending democracy triumphed after World War II with what Wu calls “Peak Antitrust.” Democratic Sen. Estes Kefauver minced no words linking a competitive economy with political freedom. “Through monopolistic mergers the people are losing power to direct their own economic welfare,” he said. Putting such power in too few hands, he continued, “results in a Fascist state or the nationalization of industries and thereafter a Socialist or Communist state.” Passed in 1950, his Anti-Merger Act gave the Justice Department and the Federal Trade Commission new authority to prevent anti-competitive mergers, nipping industrial giants in the bud.

AD

AD

Peak Antitrust endured through the 1970s, culminating in the breakup of AT&T in 1982 after eight years of litigation. The end of that regulated monopoly led, in Wu’s view, to a proliferation of advances in communications technology, including modems that linked home computers over a network, thus “producing the Internet revolution.”

Even as the AT&T case made its way through the courts, however, a conservative backlash undercut the antitrust movement, principally by severing the intellectual and moral link between monopoly and democracy. Beginning in the 1960s, conservative scholars at the University of Chicago argued for applying economic analysis, particularly theories about prices and allocative efficiency, to legal questions like antitrust. Most influential was Robert Bork, who argued that the original Sherman Act intended to deal with only a specific problem: higher prices for consumers. Historians largely discount Bork’s interpretation, which Wu condemns as “laissez-faire reincarnated,” albeit “clad in the costume of economic rigor.” It appealed, Wu asserts, by oversimplifying complex problems and presuming economic rationality — that “the existing structure is the efficient structure.”

Yet Bork’s narrow interpretation of Sherman transformed antitrust. First published in 1966 and elaborated in a book called “The Antitrust Paradox” in 1978, Bork’s thesis reshaped how antitrust was taught in law schools and practiced by judges. Despite pushback by liberal legal scholars in the 1990s, the “judiciary continued to drift toward Bork,” and antitrust had entered a “deep freeze” by the George W. Bush presidency. The denouement came in 2004, when Supreme Court Justice Antonin Scalia argued that monopoly power was not only legal but a positive good. “The opportunity to charge monopoly prices . . . induces risk taking that produces innovation and economic growth.”

AD

AD

Wu is an unreconstructed Brandeisian, and his book — whose title comes from Brandeis — sees America’s last hope in a robust antitrust policy. His agenda calls for enforcing the 1950 Anti-Merger Act as its authors intended, by preventing anti-competitive moves like Facebook’s acquisition of Instagram and Google’s purchase of YouTube. When that fails, he calls for vigorous prosecutions of companies whose size and influence block competition, erect barriers to entry or otherwise hurt the general welfare. Such a case tradition was once at the core of Sherman Act enforcement but has gone unused since AT&T’s breakup more than 35 years ago.

Finally, Wu challenges the legal community to invest the energy to make those judgments and to repudiate the too-easy solutions offered by Bork and the Chicago School, as well as the false notion that capitalism self-regulates in the public interest. Real political freedom and economic justice demand it.

The Curse of Bigness

Antitrust in the New Gilded Age

By Tim Wu