Speak Your Piece: Antitrust Law Perverted

[imgbelt img=Party94.jpeg]The worries about the power of Wall Street have their roots in rural America. More than 120 years ago, rural Grangers and Populists were warning about concentrations of business power. Maybe it’s time we listened to our rural forebears.

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Wow! Rural Americans are now voicing many of the same concerns. Occupy Wall Street activitists have a similar mantra.

The Farmers Revolt and the Grange became the precursor to the People’s Party, the Populists. The Populist notion of antitrust took hold in response to the “robber barons” — resulting in the Sherman Antitrust Act in 1890, the Clayton Act in 1914, court-ordered divestiture of the meat-packer cartel in 1920, the Packers & Stockyards Act (PSA) in 1921, and the Capper-Volstead (agricultural cooperative) Act of 1922 that made agricultural cooperatives a limited exception to antitrust so farmers and ranchers could cooperate to countervail market power.

The Populist notion of antitrust law focused on broad goals emphasizing “free and fair competition.” The intent was to protect “the people” from bigness and from fraudulent, unfair business practices. 

The Populist need for antitrust laws was based on common sense economics. 

Industry tends to become highly concentrated and integrated when giant firms have lower unit production costs than smaller firms, or when giant firms can use predatory market power to gobble up smaller firms. 

Concentrated economic power often leads to concentrated, disproportionate political power. 

Disproportionate political power may be used to influence legislation or subtly influence court interpretation of existing law in favor of the powerful. 

Monopoly power can thus be strengthened and further entrenched, leading to monopoly inefficiency and a widening chasm between income and wealth of the powerful few and the rest of society, the people. Populists backed legislation to enact antitrust laws intended to keep a democracy from being turned into a corporatocracy.

In the first substantive decision interpreting the 1890 Sherman Antitrust Act, Supreme Court Justice Peckham wrote:

[I]t is not for the real prosperity of any country that such changes should occur which result in transferring an independent business man . . . into a mere servant or agent of a corporation … having no voice in shaping the business policy … and bound to obey orders issued by others.”

Poultry growers have become precisely what Justice Peckham opined the laws were intended to prevent, servants of corporations. Many other agricultural industries have travelled far down “The Road to Serfdom.”

During the past century, the broad goals of antitrust have been stripped away, layer-by-layer. Chicago economist and Federal Judge Richard Posner’s view that “the only goal of anititrust law should be to promote efficiency in the economic sense” now dominates case law. 

Yet, the word “efficiency” is not to be found in the Sherman and Clayton Acts or the PSA. Not once. The word “fair,” which appears in the law numerous times, has been ignored. One wonders how some judges made it through law school and onto the bench with such poor reading skills.

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