Hi,

Welcome to BIG, a newsletter about the politics of monopoly. If you’d like to sign up, you can do so here. Or just read on…

For those of you near D.C., I will be at Politics and Prose today at 7pm to do a book talk on Goliath: The Hundred Year War Between Monopoly Power and Democracy. More information is here.

Today’s issue will be about the Democratic debate, in which antitrust played a prominent role. Part of the story is that the Democrats are strengthening their own views on monopoly, and I trace the parallel to how Democrats operated in the late 19th and early 20th century, when they effectively demanded that the DOJ send John D. Rockefeller to jail, and did actually indict his brother William.

In the meantime, I had my own debate over monopoly versus automation on MSNBC yesterday with MSNBC anchor Stephanie Ruhle and political pundit Jason Johnson. Sparks fly!

The Crisis of Capitalism

It’s fairly obvious something is deeply wrong with our economy, a crisis of capitalism. There are many theories, but my basic view is that the problem is that monopolists have taken over everywhere. There’s concentration in big markets, everything from search and social networking to airlines and cable. There’s concentration in smaller markets, like peanut butter, syringes, bank software, and comic book distribution. Monopolization increases inequality and wage stagnation, reduces entrepreneurship, causes regional inequality, and corrupts our politics and corporations.

The Democratic Party is responding by getting more aggressive against monopoly power. In the Democratic debate in June, Democrats spent a few minutes on big tech and monopoly. This time, they did it again, with a twist. The moderators started by asking about Andrew Yang’s argument that automation, not monopoly power, is what matters. Pete Buttigieg has made this case as well, saying that automation, not offshoring via trading structures, led to job losses in the 2000s.

The counter-narrative is that problems in our economy are due not to trends that have existed since the 1700s, but to the central question of power. Elizabeth Warren, Amy Klobuchar, Bernie Sanders, and Cory Booker all took this side, arguing that monopolization in the business world is the key issue at hand. All of the major figures in the party, with the exception of Joe Biden, increasingly see our central economic challenge this way. Robert Bork came up twice in the debate, and Bork, while featuring prominently as a Supreme Court nominee, was an antitrust lawyer first and foremost.

Even Biden is sympathetic to antitrust. Biden himself is more driven by the environment around him, not any hard and fast principles, and he would like to rhetorically go after big tech and concentrations of corporate power if only because it sounds good. It doesn’t hurt that some of his main backers are from Comcast, and they hate Google. He’s reluctant, though, because one of his main advisors on antitrust, Terrell McSweeney, was on the Obama Federal Trade Commission, and she bears some responsibility for the lax antitrust record of the Democrats in that era. For example, while at the FTC, she supported a regulatory attack on the city of Seattle for trying to increase wages for Uber drivers. As it turns out, McSweeney’s view is causing tension on the Biden team. Nancy Scola of Politico writes as much, in a coded way, saying the topic is a “live issue” inside the campaign. But it’s what I’ve heard as well from multiple people close to Biden.

If you look at how Uber responded to California’s law probably mandating that it treat its drivers as employees, you’ll see why anti-monopolists are gaining strength. Uber general counsel Tony West basically responded to the California government with, ‘nahh, we’re not going to comply.’ And then threatened to spend $60 million on a popular referendum to overturn the law if California tries to enforce it. I wrote about this dynamic for Wired yesterday in a piece called Corporate America's Second War With the Rule of Law. As usual, we’ve been here before, this was the situation in the roaring 1920s.

There were bitter battles in the 1930s, because the rule of law is a political value that must be won. And in fact, going back through history, I found that the Democratic Party, for a hundred years until the Clinton administration, tried to do just that, particularly focused on the problem of monopolies. The party consistently got stronger on the problem of monopoly over time. From 1880-1988, there was something on antitrust or monopolies in the Democratic Platform. Here’s the Democratic platform in 1880.

“Free ships and a living chance for American commerce on the seas, and on the land no discrimination in favor of transportation lines, corporations, or monopolies.”

The language got more aggressive as farmers, merchants, and workers organized against railroads on the one hand, and as corporations became more powerful on the other. In 1900, in the midst of the first great merger wave that created modern corporate America, the platform said “private monopolies are indefensible and intolerable” and were “robbing” the people and small businessmen. As problems in the corporate world got worse, Democrats became even more assertive. Think Democratic attacks on the FTC for its weak $5 billion settlement for Facebook was aggressive? When the antitrust division under Taft broke up Standard Oil and American Tobacco, Democrats in 1912 said this was a pittance, demanding that enforcers effectively send John D. Rockefeller to jail.

We condemn the action of the Republican administration in compromising with the Standard Oil Company and the tobacco trust and its failure to invoke the criminal provisions of the anti-trust law against the officers of those corporations after the court had declared that from the undisputed facts in the record they had violated the criminal provisions of the law.

When Democrats took power later that year, they acted. In 1912-1913, Congressman Arsène Pujo led the first great Congressional investigation into corporate power, the ‘money trust’ hearings. When Woodrow Wilson became President, the DOJ started indictments. In the case of the J.P. Morgan dominated transportation conglomerate The New Haven Railroad, which was sort of the Uber of its day, the antitrust division indicted the *entire board of directors,* which included such luminaries as William Rockefeller and Theodore Vail, the President of AT&T.

Wilson also broke up AT&T for the first time, established the Federal Trade Commission to stop anti-competitive practices, and appointed Louis Brandeis to the Supreme Court in 1916. Democrats were on the cusp of a New Deal, a genuine attack on monopolists. Unfortunately, World War One interrupted, delaying the restructuring of the American political order for another twenty years.

Today we’re in a similar situation as we were in the early 1900s, on the cusp of a major policy revolution. The wind is blowing strongly. From 1992-2012, antitrust didn’t warrant a mention in the Democratic platform (thank you Bill Clinton!) And then, in 2016, because of the new anti-monopoly movement, Democrats finally put something into their platform again. I was actually part of the group who worked to insert a provision; we tried to get something about big tech and data in there, but the Clinton campaign, which did inch towards antitrust, wouldn’t go that far. They wanted to focus on airlines and cable, the rumor was Sheryl Sandberg would be in Clinton’s cabinet.

By the 2020 debates, it is now axiomatic that we have to address the crisis of big tech. And the leading Democrat, Elizabeth Warren, wants to do that with a series of break-ups. In fact, she put that idea out there in March, and it has since become a normalized idea across the enforcement community. The right question isn’t whether what Warren suggested is too aggressive. The right question is when break-ups will become the moderate option. In fact, I wouldn’t be surprised to hear calls for jail time for some of the richest men in the country. The Sherman Act, after all, is a criminal statute.

Thanks for reading. And if you liked this essay, you can sign up here for more issues of BIG, a newsletter on how to restore fair commerce, innovation and democracy. If you want to really understand the secret history of monopoly power, buy my book, Goliath: The 100-Year War Between Monopoly Power and Democracy.

cheers,

Matt Stoller

P.S. Here's a snippet about sloth and waste from one corner of the world, the electric utility industry.