Economics is Power, not Math: Why the Dems Should Attack MonopolyBreaking News
tags: economic history, legal history, Robert Bork, Monopoly, antitrust
BARRY C. LYNN is Executive Director of the Open Markets Institute. His most recent book was Liberty from All Masters: The New American Autocracy vs. The Will of the People (2020).
Storytelling is the essence of politics. In stable times, politicians can spend their hours detailing how they plan to put a fatter chicken in every pot. But in hard times, they need to craft narratives to explain why the pot is empty, to restore hope for better days, and to enlist people in a march toward reform. An especially well-fashioned story can create an entirely new sense of community and possibility.
Today’s Democrats have many policies that would make people better off. And I’m not talking only about all the admirable ideas that glitter in the wreckage of the first reconciliation bill. The Biden White House especially has introduced smart answers to the challenges of the day, from the seizing up of supply chains to the Russian invasion of Ukraine. What Democrats lack is a common story. And in these very dangerous times, that’s a big problem. Because absent a narrative able to explain and direct how people respond to the many grave crises we face, Democrats condemn themselves to playing supporting characters in other people’s dramas.
Our second task in sketching out a master narrative that explains today’s crises is to rebuild our understanding that economics is about power and politics, not math. And further, that the now-generalized belief that math explains political economics is a core component of someone else’s story, one designed 40 years ago precisely to block our ability to see and understand concentrations of power and control.
One way to start is to compare the main principles and rules of competition policy just before and after the election of Ronald Reagan.
From 1776 to 1980, Americans approached the governance of competition through an entirely political lens. They believed competition among people within society is inevitable, hence viewed political economics as the art of governing how people compete with, and exercise power over, one another. Put another way, they saw antimonopoly law as a way to extend the Constitution’s system of checks and balances into the political economy.
Practically, this meant intentionally structuring corporations and markets to promote the liberty and wellbeing of the individual, the ability of citizens to make wise decisions, and the security and prosperity of individuals and of the nation. The most immediate goal of antimonopoly law was to prevent any concentration of power or control that might restrict the liberty of individuals to make full use of all their properties—in the form of their ideas, skills, labor, personal businesses, personal capital, and capacity to reason.
Americans did so through the simplest of means. They established bright line rules to govern the number of competitors in any one market. That’s why, during America’s first two centuries, competition policy required only the simplest forms of math. One long-time rule—first codified under Franklin Roosevelt—held that no industrial corporation should control more than 25 percent of the national market for any specific industrial good. Another—the origins of which we can trace back more than a century—held that no retailer control more than 5 percent of any local market. Another—established in 1789 by America’s first Congress—aimed to break America’s farmland into parcels of no more than 160 acres.