Abstract

"Antitrust Law and Democratic Capitalism: What the Historical Meanings of Market Power Reveal about the Antitrust - Democracy Nexus"

Laura Phillips-Sawyer, University of Georgia (lphillipssawyer@uga.edu)

This paper analyzes the relationship between antitrust law and democracy. Antitrust law, or competition policy, governs how firms compete in the marketplace. Its objective is to promote market competition by curtailing anticompetitive restraints on trade, monopolization, and anticompetitive mergers. That objective has democratic roots and it serves democratic purposes by guarding against real and potential abuses of market power by private actors. The anticompetitive effects have included higher prices and reduced output as well as undue political power over ordinary citizens. American antitrust law, however, does not provide a clear blueprint for applying the law—the original statute is notoriously vague. Yet, antitrust law has changed remarkably since the 1940s, despite there having been very few statutory interventions. As a result, we are left to ask: why has antitrust law changed so considerably over time? Answering that question should inform the ways in which we think about revising or reforming antitrust law for the present moment.

My intervention into the antitrust-democracy nexus is to historicize the meanings of market power across the second half of the twentieth century—from structuralism in industrial organization economics, through the Chicago law and economics revolution, to the New Brandeis Movement today. Antitrust law relies on presumptions about market power, or the ability of a firm or firms to raise prices without suffering substantial loss of market share. In this essay, I argue that a historical examination of the meanings of market power demonstrates how and why social scientists have served as the binding glue between antitrust and democracy. In responding to contemporary problems in the real economy, social scientists in law and economics (among other disciplines) have reoriented their research agendas and provided the necessary fodder for changing antitrust law.