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In their recovery of the democracy-of-opportunity tradition of constitutional argument, Joseph Fishkin and William E. Forbath make a powerful case in favor of the affirmative governance obligations created by the Constitution, particularly in the arena of economic life. Antitrust law is particularly ripe for this project: it is both central to the authors’ anti-oligarchy framework and has been totally remade in the modern era by the style of economic reasoning that, in general terms, they rightly criticize as the natural accompaniment of the hollowing-out of progressive constitutionalism. I offer here two suggestions for sharpening this aspect of their proposal and for choosing a slightly different fork in the road than the one taken by the Progressive and New Deal traditions from which (among others) they draw.
First, in order to broaden and clarify the registers in which economic reasoning can inform law and policy, we should be clear that aiming to recover the tradition of classical “political economy” is not enough. Classical political economy—the tradition of Adam Smith and John Stuart Mill, among others—is understandably appealing to many present-day legal thinkers because it encompassed the study of the institutional and legal constitution of markets and economic life, and for that reason was interpermeable with the study of law itself. But it also ultimately pioneered the strange brainworm that has infected our thinking about the economy ever since: the notion that competition or competitive forces can determine market prices and other key economic outcomes on their own. As I have argued elsewhere, the origins of the antitrust tradition itself, both in terms of common law antecedents and antimonopoly politics, are better understood in terms of the more diffuse and democratically accessible traditions of “moral economy”—in which economic coordination is assumed, and competition is never presumed to be self-governing—than in terms of the elite tradition of political economy.
When the institutionalist economist Walton Hamilton cataloged the relationship between schools of economic thought for the American Economic Review in 1919, he identified both the new neoclassical economics and institutionalist economics—the latter being the ally and consort of progressive legal thought—as heirs to the classical economics of the previous century. Indeed, neoclassical price theory can be understood as a refinement and formalization of the concept of the self-regulating market in classical economics, while institutionalism can be understood as a continuation of the classical focus upon elucidating the legal and social structure of markets. The institutionalists (and the progressives more broadly) had an ambivalent relationship to neoclassical theory—sometimes repurposing it, often criticizing it, sometimes (as Hamilton did) suggesting that each could exist in its own lane. As we now know, that did not end up being a stable settlement: neoclassical economics displaced institutionalism in the United States entirely, only to later resurrect a hollow version of it in the “new institutionalism” (associated with the study of “transaction costs” that played a key role in the Chicago School antitrust revolution) that prized a particular conception of efficiency above all other considerations.
We have many good reasons, intellectual and pragmatic, to make a clean break from the neoclassical framework. We know—thanks to work in heterodox economics and the empirical study of firms and markets more broadly, informed by close attention to the role of law—that competition alone does not govern market behavior. Coordination both within and often beyond business firms settles on parameters, prices (or price ranges), and more. These market settlements periodically change or are disrupted, but we cannot have an honest study of the economy and markets—and of the law that deals with those things—without grappling with their existence. Keeping these matters firmly in view is central to achieving one of Fishkin and Forbath’s goals: recapturing the democratic determination of economic life from narrow technocratic spheres.
Indeed, the contemporary legal and judicial consensus about the “constitutional” status of the Sherman Act and other antitrust statutes is not mainly built on the understanding that antitrust makes good on affirmative constitutional governance obligations to protect against oligarchy. It has rather become associated with deference to the very technocracy that the authors criticize. In other words, neo-classical law and economics itself has attained a kind of constitutional status, aided by judicial empowerment to make antitrust rules from the ground up. Fishkin and Forbath’s constitutional arguments are a rich resource for deepening the arguments of advocates who are pushing back on both judicial and neoclassical economic supremacy in antitrust, in favor of an expanded role for the administrative state in implementing antitrust’s broader egalitarian and democratic goals.
My second suggestion for extending the authors’ arguments is closely related to the first. Progressives’ ambivalence about emerging neoclassical theory was arguably intertwined with their optimism about the business firm as an engine of social and economic progress. With a few exceptions, they effectively assented to a kind of emerging legal hierarchy of economic coordination—led by the courts but mirrored in many reform efforts—with business firms as the gold standard. I call this the firm exemption because it entails an unwritten “exemption” not only from antitrust law—even as the terms of the “labor exemption” and other exemptions for more democratically constituted forms of economic coordination were being debated—but also from the competitive order of the neoclassical vision. Contemporary economic reasoning takes the firm as the basic unit of analysis, for many purposes treating it as a black box, on grounds of its alleged productive and technical efficiencies. But even if it were analytically coherent to trade off such efficiencies with the distinct concept of “allocative efficiency” that is deployed to undermine many other forms of economic coordination, regnant policy and legal frameworks do not consistently or fully entertain other forms of coordination that could also realize such efficiencies. As a result, these frameworks often cut off the ability of other forms of association to realize productive efficiencies.
When Robert Bork promoted a permissive posture toward mergers, he built upon an existing element in the structure of antitrust law as he found it. He pointed out, rightly, that firms were already preferred over equivalently sized cartels on the basis of their putative productive efficiency. From this vantage, the Chicago School selectively expanded the firm exemption through merger policy and the liberalization of vertical restraints. (The gig economy and other variants of the fissured workplace we know today are the direct results.) But the Chicago School didn’t invent the firm exemption. It was developed much earlier, with progressives’ assent.
To be sure, progressives wanted the firm to serve public ends and to become a locus of regulation. But they did not foresee that the baggage that came with the efficiency claims they had too credulously embraced would end up undermining their own regulatory aspirations. Too many progressives (Louis Brandeis was a notable exception) accepted highly generalized claims about “economies of scale” that, if they obtained at all, frequently did so not because of true technical efficiencies—more output for the same capital and labor put in—but because of behemoth firms’ greater leverage and power to squeeze more out of workers and out of smaller firms in their adjacent markets. These arguments, often framed in broad deductive terms, ultimately implicated not just firm size but also questions of how firms are internally organized by the law. As a result, these “economies of scale” arguments ultimately served to help fuel the hollowing out of not only antimonopolist aspirations but many other progressive regulatory aspirations as well.
The antimonopolists were never interested just in small firms, but more generally in forms of economic coordination that fostered genuine solidarity rather than control and dominance. Contemporary antimonopoly thinker Zephyr Teachout, whom Fishkin and Forbath cite, has said that antimonopoly is fundamentally about recognizing that it’s more effective to prevent concentrations of power in the first place rather than regulate them after the fact. A natural corollary of that insight—once we internalize the ubiquity of market coordination—is to frame democratic, egalitarian structures of economic coordination as goods in themselves, rather than as existing only to countervail existing concentrations of power (the best they will ever be without a clean break from current modes of law and economics thinking). Fishkin and Forbath help make legible a constitutional obligation to do so.
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