America’s 40-year experiment with big business is over

America’s 40-year experiment with big business is over

America’s 40-year experiment with big business is over

On Friday, President Biden signed a broad executive order aimed at curbing corporate dominance, improving business competition, and giving consumers and workers more choice and power. The order features 72 initiatives that vary widely on themes: net neutrality and cheaper hearing aids, more scrutiny of big tech, and a crackdown on the high fees charged by ocean carriers.
The president called his order a return to the “antitrust traditions” of the Roosevelt presidencies at the beginning of the last century. This may have come as a surprise to some listeners, as the order does not offer an immediate call for the breakup of Facebook or Amazon, none of the trust hunting that is the hallmark of antitrust.
But Biden’s executive order does something even more important than break trust. It returns America to the great antitrust tradition that has animated social and economic reform almost since the nation’s founding. This tradition is less concerned with technocratic issues such as whether concentrations of corporate power will lead to lower consumer prices and more with broader social and political concerns about the destructive effects that big business can have on our nation.
In 1773, when American patriots threw tea from the British East India Company into Boston Harbor, they were protesting not only an unfair tax, but also the granting of a monopoly by the British crown to a favorite of the people. cut. That sentiment flourished in the 19th century, when Americans of all stripes saw concentrations of economic power that corrupted both democracy and the free market. The abolitionists relied on the antitrust spirit when they denounced the slave power, and Andrew Jackson sought to dismantle the Second Bank of the United States because it upheld the privileges of an Eastern business and financial elite.
Threats to democracy became even more pressing with the rise of giant corporations, often called trusts. When Congress passed the Sherman Antitrust Act in 1890, its author, Senator John Sherman of Ohio, declared: “If we do not support a king as a political power, we should not support a king for the production, transportation, and sale of any of The necessities of life. “Forty-five years later, President Franklin Roosevelt echoed that sentiment when he denounced the” economic monarchists “who had” created a new despotism. “He saw concentrated industrial and financial power as an” industrial dictatorship “that threatened the democracy.
Standard Oil and other trusts became the target of antitrust lawsuits not only because they crushed competitors and raised consumer prices, but also because they corrupted politics and exploited their employees. Dividing these giant companies into smaller units could help, but few reformers thought that government antitrust initiatives offered the primary solution to the power imbalance increasingly prevalent in modern capitalism. What was needed was more government regulation and powerful unions.
In the progressive era, the courts ruled that a wide variety of companies and industries “affected by a public interest” could be subject to the kind of government regulation, covering prices, products and even labor standards, which in recent years has been restricted to a large degree. to electricity and transport companies. Two decades later, the New Dealers sought to challenge the power of the monopoly not only by renewing antitrust litigation, but also by encouraging the growth of unionism to create an industrial democracy within the very heart of the corporation.
That antitrust tradition faded after World War II, collapsing into a dry discourse that only posed one question: Would preventing a merger or company breakdown lower consumer prices? Conservative law professor Robert Bork and a generation of like-minded lawyers and economists convinced the Reagan administration, as well as the courts, that antitrust was blocking the creation of efficient and consumer-friendly forms of business. Even liberals like Lester Thurow and Robert Reich considered antitrust irrelevant if American companies were to compete abroad. In 1992, for the first time in a century, no antitrust plan appeared on the platform of the Democratic Party.
Mr. Biden has now correctly stated that this 40-year “experiment” has failed. “Capitalism without competition is not capitalism,” he proclaimed at the signing of the executive order. “It is exploitation.”
Perhaps the most progressive part of the executive order is its denunciation of the way in which large corporations suppress wages. They do this both by monopolizing their labor market (think of the wage-setting pressures Walmart exerts in a small town) and by forcing millions of their employees to sign non-competitive agreements that prevent them from having a better job in the same occupation or industry. .
The president and his antitrust cabinet have reversed an important aspect of traditional business competition. For too long, advocates for increased competition between companies have offered employers an order to cut wages and benefits, as well as outsourcing services and production. But Biden envisions a world in which companies compete for workers. “If your employer wants to keep you, it should make it worthwhile to stay,” Biden said Friday. “That’s the kind of competition that leads to better wages and greater dignity at work.”
The nation’s antitrust tradition emerges once again.

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