If You Read One Article on Antitrust This Year. . .
make it Maurice Stucke’s Better Competition Advocacy, 82 St. John’s L. Rev. 951 (2008). In this work, he convincingly argues that “The goals of antitrust law enforcement are subsumed by, but not necessarily co-extensive with, the goals of competition policy.” Stucke’s article not only extends an impressive line of work on competition law, but also offers some insights on the dangers of over-specialization for legal scholars generally. I’ll offer some excerpts now, and try to apply the piece to some current controversies later this week.
Stucke addresses four main questions in his article:
Prevailing competition advocacy glosses over four fundamental questions: First, what is competition? Second, what are the goals of a competition policy? Third, how does one achieve, if one can, the objectives of such desired competition? Fourth, how does one know if the economy is progressing toward these goals?
Stucke argues that conventional competition policy based on the work of the Chicago School answers all these questions in narrow and unsatisfying ways.
After surveying considerable diversity of opinion on the definition of “competition,” Stucke argues that it cannot be an “end in itself,” but might better be thought of as “a policy tool to achieve broader government objectives for the economy.” These objectives include much more than gross measures of “consumer welfare” or “wealth maximization.” The goals of competition policy are necessarily diverse–only an ideologue would try to subordinate all its objectives to one overriding end:
Other than for an idealist, competition policy cannot be reduced meaningfully to a single goal. “It is the essence of the economic problem that the making of an economic plan involves the choice between conflicting or competing ends–different needs of different people.” Competition officials, ultimately, must recognize the existence of multiple goals and values.
The challenge for the socialist or the dogmatic laissez faire [idealist] is (1) to discount the means proposed by her opponents, or (2) to define an end that is sufficiently narrow in scope to preclude any means other than the idealist’s. . . . [M]uch to the idealist’s frustration, others may not share the idealist’s narrowly defined goal or its urgency. . . .[F]aced with opposition, the idealist, whether a socialist or laissez faire adherent, may seek to remove competition policy from the legislature, other federal or state agencies, the generalist courts, or the general population and place it in the hands of policy experts who share her ideal and abhor seeing their shared conception of competition debased.
Stucke realizes that there is a symmetry between the implausibility of dirigiste socialism and libertarianism here. Would that conference organizers who routinely “balance” panels with a libertarian and, say, a Galbraithian Democrat, realize that true balance would probably mean including a member of the Scandinavian left!
Stucke then concentrates on all the pressing social issues that conventional, scientistic antitrust analysis misses:
Competition policy cannot be beyond the judgmental. Behind allocative efficiency’s façade of positivism lie such moral questions as:
Given utilitarian welfare economic theory’s ambivalence about distributional effects, does economic efficiency necessarily produce the just outcome? If not, what must the state do?
Is a vibrant market economy antagonistic or conducive to society’s moral progress, as measured by its tolerance, support of the poor, etc.?
Is the market’s “socio-political function” to “minimize[e] the necessity of resorting to internal ethical constraints on human behavior and/or external legal-governmental-political restrictions[?]”
Is there a “social mortgage” on private property, in that “the very existence of the institution of private property is to ensure that the basic needs of every [individual] are met and sustained[?]”
Stucke knows the counterargument of the laissez-faire ideologue: that distribution is better accomplished directly via the tax system, rather than through legal rules. But he adds to Sanchirico’s classic rebuttal of that old chestnut a very important comment on the parochialism evidenced by the very act of pressing that case:
[T]his “not-my-job” mentality promotes parochialism. Much has been praised about the division of labor. No doubt, such specialization enables the ever-increasing complexity in the manufacturing and services sectors. But the leading attorneys in the twenty-first century will not be those with the greatest mastery in their narrow field of expertise. Rather, they will be problem solvers, identifying issues across disciplines, and assisting their clients in finding answers to those problems. Similarly, competition authorities cannot furrow deeper in their field, ignorant of the issues or concerns in other fields. Instead, when “pressing problem[s]” arise, “current individual disciplines [may] prove inadequate to solve that problem.” Even if the specialist feels confident that her specialized knowledge can provide the answer, other specialists may disagree, believing that their disciplines carry the solution.
Of course, the economic rewards for such parochialism can be high. Perhaps that is one reason why its adherents have been relatively blind to the problems of inequality that helped inspire the Sherman Act, and which Stucke contends should be a concern of antitrust policy:
Although neoclassical economic theory may be indifferent to [many] distributional effects, one concern underlying the Sherman Act’s passage in 1890 was the growing disparity in wealth. . . . Senator Sherman identified this inequality of condition, of wealth, and opportunity as the greatest threat to disturbing social order: This inequality “has grown within a single generation out of the concentration of capital into vast combinations to control production and trade and to break down competition.”
The disparity in income, based on the index of income concentration or Gini coefficient, decreased between 1947 and 1968, but increased thereafter, accelerating notably during the Reagan Administration, which . . . severely cut back its antitrust enforcement. According to another measure, the disparity in wealth in recent years is higher than when the Sherman Act was promulgated. Other measures show the ever-widening salary gap between the average CEO and the average worker, and between the richest one percent and the average worker. The traditional response is to invest in educating skilled workers. But how does one reconcile another signpost that the earnings of the average United States worker with an undergraduate degree have not kept up with the gains in productivity in recent years?
Stucke insists that antitrust policy mavens need to let us know “how they will keep us apprised with measurable signposts to ensure that [competition policy is] indeed heading in the right direction.” Unfortunately, as Dupre & Gagnier have noted, “most economists believe that the core of economics can be developed with no assumptions at all about what an economy should aim to provide.” Let’s hope that those with influence on antitrust policy start recognizing the types of social goals (like equality of opportunity) that Stucke mentions.