A conservative argument for antitrust

For a long time I’ve been curious about conservative support for antitrust laws. “Vigorous and intelligent antitrust enforcement is a cornerstone Republican principle,” wrote Rep. Henry J. Hyde several years ago, expressing views shared by many conservatives (such as Sen. Orrin Hatch, and Sen. Chuck Grassley). What interests me is the contrast between (1) conservatives’ reputation as defenders of free enterprise and property rights and (2) their support for antitrust laws that allow courts to break up firms, dictate business practices, impose multi-million-dollar fines, even put executives in jail.

I’ve been reading a book published by the American Enterprise Institute, a conservative bastion. The Antitrust Laws: A Primer, now in its fourth edition, was written by John Shenefield, a former head of the Antitrust Division of the U.S. Department of Justice, and Irwin Stelzer, an economist and contributing editor to The Weekly Standard. On the very first page, the authors announce their goal: “This book is intended to replace the businessman’s fear and loathing of the antitrust laws with a basic understanding of what they are about and to acquaint students with these important legal and economic precepts.”

Clearly, then, businessmen are the target audience—businessmen who have a “fear and loathing of the antitrust laws” stemming, no doubt, from the omnipresent threat those laws pose to companies as they pursue profits and market share (see here, here, here, here and here, plus this antitrust timeline). How can the authors hope to persuade these frightened executives? What can they say to give businessmen a broader view? Here’s the payoff—according to these authors, the antitrust laws

make it unnecessary for the government to arrogate to itself the function of deciding what gets produced, where, and by whom. They make it unnecessary for the government to set prices. They make it unnecessary for the government to assign raw materials to this or that factor or to attempt to pick technological winners.

Okay, let’s stop and clearly identify this dismal alternative to antitrust that Shenefield and Stelzer project. Its elements are:

• Government decides what gets produced
• Government decides where everything is produced
• Government decides who gets to produce what
• Government sets all prices
• Government allocates raw materials
• Government decides among rival technologies

That’s a pretty clear description of a centrally planned, socialist economy, right? In the authors’ view, that’s just the kind of nightmare needed to awaken a businessman from his slumber. In effect, the authors are saying: “Don’t you see that a few antitrust rules are a small price to pay for fending off socialism? The only way to preserve capitalism is to appease those who would destroy it. Unless you are willing to play nice with your competitors, by keeping their welfare and viability in mind while you pursue profits, the state may someday displace you and take over all your functions.”

There is much more to this book’s argument, but I just want to stop and focus on the idea that we have essentially two choices: (1) a market regulated by antitrust laws, or (2) a fully socialist system. On one level, of course, it helps explain the conundrum with which I started. If a conservative accepts these two as the only choices, then being pro-business naturally means accepting—indeed, embracing—antitrust law.

In fact, however, there is a practical (and moral) option here that Shenefield and Stelzer’s account ignores: laissez-faire capitalism, the social system Ayn Rand called an “unknown ideal”—a system entirely free of antitrust laws.

Under laissez-faire, there are no monopolies, no companies that can forcibly prevent competition and raise prices without paying attention to the market. By necessity (since government is the only institution that can lawfully deploy physical force), all coercive monopolies are creations of government. Example: the U.S. Postal Service, which holds a coercive monopoly on delivering first-class mail. To eradicate them permanently, one must simply repeal all laws that establish them.

By contrast, when markets are free, no competitor is blocked from entering any business, or from offering more attractive values in markets they are already in. A company can dominate a market, yes, but only by consistently offering the best values as judged by those who pay to purchase them.

In the absence of antitrust laws, businessmen enjoy full freedom to act in their own economic self-interest, with no obligatory regard for the welfare or viability of their competitors. Under laissez-faire, businessmen need not endure or appease any threat of coercive restraint on their production and trade—either in the watered-down form of antitrust restrictions, or the full-strength poison of socialism.

Instead of learning to love antitrust under the guidance of Shenefield and Stelzer, businessmen should learn to love freedom under the guidance of Ayn Rand.