Economics or Populism? The Battle for the Future of Antitrust
Mainstream antitrust policy is grounded in economics and views the protection of competition as antitrust’s singular goal. But the populist “antimonopoly movement” believes that antitrust should focus less on economic issues and more on the political influence of large firms. While the courts have long embraced the economic approach to antitrust, antimonopolists have recently gained some support in politics. This battle of ideas is therefore poised to determine the future of antitrust.
Antitrust law currently suffers from a number of problems, but the antimonopoly movement does not offer serious solutions. On the contrary, by deemphasizing tangible economic harms in favor of abstract political concerns, it would cause immense economic damage—higher prices, reduced innovation and growth, and fewer jobs. Antitrust populism is grounded in the moralistic belief that large companies are inherently detrimental to society, overlooking the fact that most big firms attained their success by providing significant economic benefits to the public, such as better products or lower prices. Rather than punishing bigness for its own sake, antitrust should focus on proscribing anticompetitive behavior and ensuring that all firms can compete on a level playing field.
As for the populist movement’s political objectives, they are too vague and too remote to provide any guidance on real-world competition issues. And they rest on an empirically unsupported link between firm size and political influence. Laws that directly regulate political activity (e.g., campaign finance laws) are far better suited to address these concerns. Reducing market concentration is also unlikely to curb firms’ political influence. Firms have a constitutional right to collectivize their political advocacy, which enables even small firms to aggregate political power through trade organizations.