Abstract: The Economics and Ideology of American Fair Trade: Louis Brandeis and Open Price Associations, 1911-1919
In the first decades of the twentieth century, a widespread trend emerged in the Western world that questioned the basic assumption of classical economic theory, that economic competition fostered the common good. Propelled by the First World War and the rise of "institutionalist" economics, leading American scholars and public intellectuals initiated a movement for "new competition" that embraced inter-firm cooperation to stabilize and standardize market processes and prices. This experiment in "managed competition" allowed trade association combinations to determine prices, allocate markets, and facilitate ongoing consultation among members. The American Fair Trade League (AFTL), one of the most prominent and persistent supporters of the "new competition," advocated the liberalization of antitrust laws to promote inter-firm cooperation, rather than consolidation, and to foster market stability by eliminating "cut-throat competition" and "over-production." The "institutionalist" school provided necessary fodder for the AFTL and other trade organizations by explaining the viable, if not preferable, alternatives to pure market competition. The influence of this intellectual movement in economics and management has been largely excluded from the secondary literature explaining interwar competition policy.