Nowhere is the 1 Percent Court’s bias in favor of the wealthy and powerful more blatantly revealed than in its radical rewrite of antitrust laws. Totally ignoring more than a century of clear and consistent legislative enactments, the Court’s right wing has made the task of enforcing these laws very difficult except in the most egregious cases. In the process, these justices have ignored the reasons the laws were enacted and the goals they were intended to achieve.
As Jefferson emphasized two centuries ago, political democracy presupposes economic democracy. Although we are no longer a nation of farmers and small tradesmen, Jefferson’s truth still holds, as the legislators who enacted our antitrust laws understood.
The first major antitrust law, the Sherman Act, which condemned agreements in restraint of trade and attempts to create a monopoly, was enacted in 1890 because, as former President William Howard Taft later explained, many “great and powerful corporations…intervened in politics and through use of corrupt machines and bosses threatened us with a plutocracy.” Similar reasons were the impetus for the 1914 Clayton and Federal Trade Commission acts, which struck at abusive distribution practices, corporate mergers and other unfair trade practices. And in 1950, after government investigations revealed that industrial concentration was growing dangerously, Congress passed the Celler-Kefauver Act, strengthening the Clayton Act’s anti-merger provisions.
Of equal concern, in 1890 and since, has been the preservation of small-business independence. The 1936 Robinson-Patman Act, which prohibited sellers from unfairly discriminating in price among competing customers, was adopted for that purpose. It was also one reason that, in 1975 and 1984, Congress reinforced a ban on resale price maintenance (an agreement between a seller and a customer on the price at which the latter could resell a given item), which was first announced by the Supreme Court in 1911. As Judge Learned Hand wrote in U.S. v. Aluminum Co. of America (1945), Congress was not “actuated by economic motives alone. It is possible, because of its indirect social or moral effect, to prefer a system of small producers, each dependent for his success upon his own skill and character, to one in which the great mass of those engaged must accept the direction of a few.”
This is not to say that the law’s authors had no interest in economic goals such as lower prices, reduced costs and product innovation. It was assumed, however, that these would be achieved naturally if huge concentrations of economic power were prohibited and free competition encouraged. But it was also made clear by Congress and the courts that, as the Supreme Court said in 1897, “corporate aggrandizement [is] against the public interest,” even if it produces economic benefits—and until 1977, this view prevailed.
In interpreting and applying these laws, the courts have followed two tracks. The first is the “per se rule”: imposing a flat ban on certain activities considered illegal on their face, so that the only issue is whether the activity in question took place. The other is the “rule of reason,” which calls on the court to balance the benefits of a restraint on business against the harms, taking into account the history and nature of the industry, the purpose and effect of the restraint, the nature and effect of the proposed remedy and much else that economists consider relevant. Prediction and guesswork are inevitably involved.