Why has antitrust enforcement declined in the United States since the 1970s? Is it due to the preferences of voters, business influence, or an alternative explanation altogether? In this symposium, Jonathan Baker, Eleanor Fox, and Herbert Hovenkamp discuss the findings of Filippo Lancieri, Eric Posner, and Luigi Zingales’ new paper, “The Political Economy of the Decline of Antitrust Enforcement in the United States.” In this article, Posner responds to the discussants’ critiques and comments.

The responses of Jonathan Baker, Eleanor Fox, and Herb Hovenkamp helpfully focus the terms of the debate in my new paper with Filippo Lancieri and Luigi Zingales. But none of them challenges our key claim that starting in the 1970s, big business seized upon, funded, and advanced antitrust skepticism that emanated prominently from the Chicago School, and more broadly from economic ideas and habits of mind.

Let’s go over the five main claims in our paper.

1. Antitrust enforcement has declined between the early 1970s and today, in part because of changes in the law and in part because of changes in enforcement priorities of the antitrust agencies: the Federal Trade Commission and Department of Justice Antitrust Division.

2. This decline has been harmful to the public.

3. The decline in enforcement was never sanctioned by public opinion or democratic institutions but was orchestrated mostly by political appointees whose views about antitrust were rarely subjected to serious public or political scrutiny before they were appointed.

4. The decline was not the result of ideas alone and also included, for example, the advance of economic wisdom applied to policy by neutral technocrats, though ideas did play a role in rationalizing antitrust skepticism, analogous to the way tobacco companies used science to oppose evidence of that harms caused by smoking.

5. The decline has largely been driven by business interests, in large part through their influence on appointments and budgets behind the scenes.

Baker, Fox, and Hovenkamp agree on #1. Hovenkamp alone appears to reject #2. Fox rejects #3; Baker and Hovenkamp do not express a view. Fox and Baker think that ideas played a role (#4). As for #5—the main claim of the paper—all three seem to agree was largely driven by big business, although Baker thinks that other interest groups played a role in moderating the impact of business, Fox thinks we understate other factors, and Hovenkamp emphasizes the role of small businesses and professionals in using litigation and lobbying to protect themselves from competition.

As to #1, an important ambiguity relates to the meaning of decline, which has both descriptive and normative valences. One might recognize that antitrust enforcement of the Robinson-Packman Act has declined and celebrate this decline, as Hovenkamp does, while thinking that the decline of merger enforcement is lamentable (#2), and acknowledging that neither development occurred with the sanction of public opinion or Congress (#3). If one thinks that antitrust enforcement has declined (in amount) but improved (in quality), then we suppose that credit should go to big business for improving policy. But the weight of empirical research shows that markups have increased. If concentration is the relevant concern, the evidence shows that concentration has increased.  Declining antitrust enforcement is a plausible culprit in both cases.

Fox thinks the public never held a view on antitrust law, and that its representatives in the senate supported the appointment of justices who weakened the law. It’s not clear whether she means that the decline of antitrust enforcement was democratically legitimate or democratically irrelevant. Our focus was different. We sought to bolster the business theory by eliminating alternative theories, including a democratic story. We don’t think that the public always has inherent preferences over policy; elites must see a reason to put a policy on the public agenda and only then may public preferences be elicited or formed. By way of contrast, elite-led deregulation in the late 1970s received democratic sanction in the form of public discussion, political debate, and congressional action. Nothing comparable occurred with antitrust despite its importance for the deregulation agenda. In the last few years, elites have moved antitrust back onto the public agenda by arguing that market concentration is responsible for the degradation of internet platforms, bias in social media, higher prices for goods and services, stagnant wages and economic growth, rising inequality, and much else.

Baker’s settlement theory sees antitrust enforcement as the result of big business compromising with other interests—consumers, workers, farmers, small businesses. But we never claimed that big business was the only influence on antitrust enforcement. We sought to explain the decline of antitrust enforcement, not its level at any given point. Big business mobilized in the 1970s as it perceived threats to its interests in the ideological transformation of the 1960s. It overwhelmed its opponents but it did not eliminate them. Baker attributes the decline of antitrust to a shift in the ruling coalition from center-left to center-right. He is vague about what caused that shift—when surely a large part of it was due to business influence.

One can always characterize the configuration of political forces at any time as a settlement or equilibrium. The question is what to make of it. In Hovenkamp’s view, that equilibrium improved as small businesses lost influence over antitrust and big business gained. No business likes competition, and small businesses as well as large businesses benefit from suppressing it. Hovenkamp’s anecdotes (mostly taken from before our period) are resonant, but small businesses are at a significant disadvantage to big business in the war of anecdotes. No small business can hope to influence policy except by combining with others, an inherently public act. Large businesses can fund, lobby, and influence behind the scenes (as Hovenkamp elsewhere acknowledges), the very claim of our paper. In any event, the divide between small and big business is hazy. Both types of business share an interest in extracting rents from consumers and workers, and so share an interest in undermining antitrust law that advances competitive markets. The relative influence is obscure but we are not sure it matters. The implicit assumption of Hovenkamp’s view is that economies of scale are big relative to the competitive harms of concentration, so policies that advance big business at the expense of small should be celebrated. But the evidence indicates that concentration has resulted in higher markups without an offsetting increase in productivity.

Baker also claims that the business theory cannot account for what he calls the “not-insubstantial influence on antitrust developments” of post-Chicago economics. We do not say that post-Chicago economics, or economics generally, had no influence on antitrust law. We argue that businesses appropriated the language and scholarship to promote its agenda. If you compare the impact of Chicago in demolishing theories of vertical harm in the 1970s and the impact of post-Chicago in reviving theories of vertical harm in the 1980s and 1990s, there is no contest. While courts have recognized the post-Chicago theories, they hardly ever rule in favor of plaintiffs on the basis of them.

In the traditional academic account of the development of antitrust enforcement, politics (Congress supposedly pandering to populists, and rent-seeking by small businesses) shape the law from 1890 to 1970, and then all of a sudden economists and economically minded lawyers set the law on a public-spirited path of maximizing consumer welfare—while stupefied by the force of their arguments, regulators and judges acquiesced in the new wisdom. This account looks increasingly naïve and self-serving with every passing day, and it is time to put it to rest.

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