BOOK REVIEW: Edwin S. Rockefeller, The Antitrust Religion (Washington, D.C.: Cato Institute, 2007), 123 pages. $9.95 (hardcover).
When Ayn Rand
published Alan Greenspan’s criticism of the antitrust laws in 1966, there were relatively few critics of antitrust, and certainly few lawyers and economists among them. Now there are many: mostly university professors, Austrian School economists, and writers for libertarian think-tanks. However, there are very few critics who are pillars of the U.S. antitrust bar. So it is quite significant to hear a rejection of the entire notion of antitrust from someone who is a former chairman of the American Bar Association’s Section of Antitrust Law with more than fifty years of practice in the field. Edwin S. Rockefeller is a venerable member of the antitrust establishment. For this, if for no other reason, his critique, The Antitrust Religion
, is significant.
Here it is important to define the practicing lawyer’s role, lest one identify the lawyer with the law. The fact that a lawyer defends a client from prosecution under a law does not necessarily mean that the lawyer subscribes to the necessity or wisdom of that law. And the fact that he might build a career defending clients against unjust, unwise, and unnecessary laws does not mean that he endorses their zealous enforcement or their existence. But, Rockefeller notes, the antitrust bar is unlikely to advocate repeal of antitrust laws: “Anyone dealing closely and continuously with antitrust is busy profiting from the status quo,” a comment that could easily apply to a wide variety of laws and regulations whose time, if ever, has come and gone.
"[A]ntitrust is mystical collection of persistent beliefs..."
Rockefeller explains that antitrust law is an array of statutes, but “Antitrust, as distinguished from the statutes…is a mystical collection of persistent beliefs, not necessarily based in either law or fact or subject to the control by Congress.” Rather, according to Justice Abe Fortas, it is “a general sometimes conflicting statement of articles of faith and economic philosophy.” It has become a religion. Its principal concepts are not objective, and its policy goals (if any) are inconsistent and ever-changing: “Lacking any coherent, ascertainable rules in the written antitrust statutes, judges and other governmental officials make arbitrary decisions using antitrust doctrines based on faith not easily overcome by reason, logic or empirical data.”
Using frequent references to publications of the antitrust bar, noted antitrust scholars, and judges, Rockefeller’s book has brought together the many criticisms of antitrust in a succinct evaluation that contains a thoroughgoing critique of the faulty logic underlying the basic goals, theories, and concepts of antitrust. After reading the book, even a seasoned antitrust lawyer will have difficulty refuting Rockefeller’s arguments, except to fall back on old populist fears about the greedy and powerful and the shibboleths about standing up for fairness and protecting the weak from the strong. They will have to go deeper.
In this regard, one dimension is missing from Rockefeller’s critique: the moral dimension. He fails to address the moral assumptions underlying the antitrust laws—that profit is bad, that business people and their investors are not entitled to the fruits of their honest labors and risked capital, and that rough-and-tumble competition is not part and parcel of individual freedom. In that regard, the book is about jurisprudence and not ethics. He identifies very handily the flawed economic logic of antitrust and the injustice that is manifest in vague legal concepts and arbitrary enforcement. But he leaves the underlying moral premises untouched.
Rockefeller reports that the current hobgoblin of antitrust is “market power.” The Federal Trade Commission and Justice Department call its creation or enhancement the “core concern of the antitrust laws.” In attempting to define market power Justice John Paul Stevens called it “a special ability…to force a purchaser to do something.” Rockefeller effectively attacks the entire notion of market power on a variety of levels—economic, conceptual, and logical. Many erudite antitrust scholars overlook or conveniently ignore one argument in particular that Rockefeller presents, an idea that needs to be repeated often and which, he notes, is “not difficult to absorb.” That is the simple distinction between force and voluntary trade:
“Market power” is the imagined power that a seller might have if an assumed future, in which all other things remain unchanged and which cannot be verified, were to occur. Government forces citizens to pay taxes. That is real power. Business firms cannot force citizens to pay for anything. Power cannot be achieved by high sales volume. No one can be forced to buy. Antitrust believers derive—out of circular assumption—a miraculous power of some sellers to force sales on buyers.… The only real power a seller has is derived from satisfying buyers. Absent government coercion, it is only the buyer, not the seller, who has any power.
Rockefeller submits that “the ‘market power’ label is used to provide a façade for subjective decisions” and bestows “on antitrust decision makers the power to make arbitrary decisions based on hunch or whim disguised as reason.”
In his opinion, “Although today’s antitrust community is alive and well, antitrust is atrophying. It is becoming a relic, an anachronism, the irrelevant debris of past demagoguery.” And it could be dissolved, he says, by educating “judges, government officials, law professors and journalists.”
But demagoguery is alive and well. And current popular calls for more regulation of business in the face of massive economic failures caused by government mismanagement reveal a climate that might not be receptive to Rockefeller’s optimistic suggestion—unless we shine the light of day on the moral premises of antitrust proponents. Nevertheless, this book is persuasive and a handy source of arguments for change. It deserves wide distribution to those who might be concerned with the integrity of the market, the civil liberties of businessmen, objective law, and the elimination of arbitrary government power.
CATO Podcast with Edwin S. Rockefeller
What do terms like "price-gouging" and "predatory pricing" really mean?