Erik Peinert explores the paradoxical relationship between economic concentration and democracy, where economic concentration compromises the democratic process and democratic backsliding also gains momentum by taking advantage of concentrated market actors, whose political power is now impotent, to capture civil society.
This article is part of a symposium that explores the relationship between democracy and antitrust. In theory, Congress passes laws, the antitrust agencies implement them through rules and policies, and the courts assure these rules and policies accord with the relevant statutes and Constitution. In practice, Congress is catatonic, the agencies are commonly left to reinterpret the means and ends implied in decades old laws and apply them to an entirely different world, and the courts have historically shown their own willingness to interpret and reinterpret the meaning of the laws, belying the impression that there is always an obvious and objective singular understanding and application of the antitrust laws. Can the agencies make the case for reinterpretation by testing the limits of their rulemaking? Is that bad enforcement or a legitimate form of governance that acknowledges that the creation of new rules and interpretation of old laws are a messy and tortuous process? Often lost in all of this is a meaningful connection between policy and public opinion. Is there a legitimate place for more direct public engagement with antitrust, and what would that look like? Commentators often pit the desires of the public against the expertise of the government bureaucracy. What is the role—and democratic limit—of bureaucrats in setting the antitrust agenda and its goals? You can read the symposium articles from Barak Orbach, Sean Sullivan, Erik Peinert, Yunsieg Kim, and Reed Showalter as they are published here.
This symposium asks many important questions about antitrust and democracy. Should the public have direct input into antitrust enforcement? Has antitrust lost its way, either by handing over control of policy to disconnected experts, or by inviting public and highly politicized influence into antitrust enforcement? However, as a political scientist who primarily studies antitrust at a moment when both antitrust and democracy itself appear to be crumbling in the United States, I feel compelled to address far broader questions than, say, whether the intricacies of vertical merger enforcement should be left to qualified economic experts. Rather, to what degree does democracy require antitrust? What would we mean by that? Does the system we have now “do the job,” so to speak?
I’m going to contend that there is a paradox at the core of this question between antitrust and democracy. On one side, there are the familiar arguments that concentrated private economic power will, invariably, undermine democracy, as the extreme concentration of private wealth and power is intrinsically inimical to any public democratic life, where average citizens will have little voice. On the other side of this paradox, only now perhaps becoming apparent, is that in the face of direct threats to democracy’s institutional foundations—elections, rule of law, etc.—all of that private economic power is for naught. The titans of industry, so influential under the rules of the democratic game, have quickly been brought to their knees in the face of threats from a would-be authoritarian.
Recognizing the threats from each side of this paradox, I propose a form of explicitly political antitrust—one that completely sidelines questions of competition, economic fairness, efficiency, or consumer benefits—and instead aims to much more explicitly break apart the web of cross-ownership that appears to have created a political and economic system vulnerable to strongman democratic erosion. Merely an idea built at this stage on only an emerging understanding of recent events, it is meant to recognize that the dual political threats from economic power are not simply the result of insufficient or unfair economic competition, nor can they likely be sufficiently addressed only through the economic content of antitrust.
Democracy’s paradox of private economic power
In 1945, philosopher Karl Popper articulated the “paradox of intolerance”: a tolerant society must retain the right to deny the extension of that tolerance to those who hold intolerant views, lest they use society’s openness to undermine it. Writing as fascism was being defeated, and with full awareness that its leaders saw democracy’s openness as a weakness to exploit, Popper mostly looked to issues of social tolerance, equal protections, and citizenship. However, in the economic sphere, just as an open society aims to allow citizens to pursue their own aims freely in their private lives, it also introduces the possibility of, without public intervention, inequalities and the accumulation of vast fortunes. In short, a democratic society must retain the right to decentralize private power, lest the concentration of wealth and economic influence undermine the ideals that make democracy valuable.
There are, simply put, far too many ways that wealth and power are privately concentrated, and even more ways that the political influence of that power can seep into the democratic process. Business can generally win policy disputes when the public isn’t actively paying attention. Wealth inequality itself has meant that the ultra-wealthy have more money to push into politics, either through illicit means, or by pushing to create legal means to do so. Once representatives of private economic power are many among public officials, then their private social networks become another way that the state is twisted toward their interests. This was a core concern of early antimonopolists, with Louis Brandeis saying, “We can have democracy in this country or we can have great wealth concentrated in the hands of a few, but we cannot have both.” More recently antimonopoly advocates most often have made their claims about antitrust and democracy by reference to this understanding.
In a democratic system and under democratic rules of the game, there are competing political parties, different interest groups variously aligned with those parties (or not), upstart and outside candidates, and local, state, and federal politicians and bureaucrats all jockeying for influence. In such a system, a giant company, or a very wealthy person owning many companies, can effectively use all of those points of influence to play various groups and parties off one another, framing their interests differently to different parts of the state, all for their own private gain. Put simply, if democracy is a game, a large and diversified company is good at it.
The sprawling scale of many American and multinational companies today gives them an enormous number of contact points with which to influence the course of democratic politics, akin to octopus depictions of Gilded Age monopolies. Through inside lobbying, Amazon was almost able to grab a $10 billion contract from the Department of Defense with no competition. Healthcare monopolies like UnitedHealth have successfully lobbied the government to continuously pay them more and more for Medicare Advantage, despite already being wildly overpaid, in part because they are the primary insurer for so many Americans across so many levels of our health system. Rideshare companies, employing a range of strategies including direct lobbying, fear tactics toward consumers, and threats to leave certain markets, have successfully avoided regulation or penalties for misclassifying employees as independent contractors and thus avoiding paying the benefits and pay owed to full-time employees. Other companies use similar tactics. Even beyond individual companies, Elon Musk’s ownership of Tesla and SpaceX and his later acquisition of Twitter (rebranded to X) all mutually reinforced each other to put him in a position of influence prior to and during Trump’s second term. Jeff Bezos’ ownership of the Washington Post, even if the paper ostensibly kept editorial independence for a time, gives him another avenue to influence public opinion. Common ownership of a range of public companies by the likes of Vanguard or Blackrock likely gives their management a host of other contact points to influence politics, separately from the indirect economic harms.
Authoritarianism’s paradox of private economic power
This brings us to the other side of the paradox: whereas all that power is a threat to democracy under the democratic rules of the game, it all appears to be flipped on its head, as an even deeper source of vulnerability, in the face of actual democratic erosion with a strongman, would-be authoritarian. There is a relevant episode from Germany in 1933, a few weeks after the passage of the Enabling Act giving Adolf Hitler dictatorial powers over the country, and a month before the March 1933 elections, that solidified his hold on power. A few dozen business leaders, representing giants like IG Farben, Krupp, and Vereinigte Stahlwerke, were invited to the home of Hermann Goering, a leader of the Nazi Party who would serve as supreme commander of the Third Reich air force. Frustrated with the left-wing parties and dysfunction of Weimar democracy and likely anticipating a discussion of economic policy for the country, the business leaders were instead regaled with a nationalistic speech by Hitler, followed by demands by Hjalmar Schacht, who served previously as president of the central bank and would do so again for Hitler, for business contributions to the party’s election fund. The contributions were forthcoming, from there and for years, even as the regime put worsening controls on business to their eventual devastation. German industry had rapidly consolidated over the 1920s.
Back in contemporary America, not only were Silicon Valley executives falling over themselves to donate to Trump’s inauguration fund earlier this year, but corporate America generally has caved astonishingly quickly, along with other parts of civil society dependent on or influenced by corporate leaders. This persists even as the broader American public is incensed against this administration’s authoritarian moves. Long so powerful under the democratic game, Silicon Valley CEOs have overnight been turned into sycophants to a personalist strongman who cares little for their interests and shares only the common goal of limiting criticism from the left, particularly on issues like antitrust. With Trump feeling freed from checks and balances, at least for the remainder of this congressional term, corporate America is now shackled to the whims of Trump, and must sink or swim with his choices, as harmful as those might be for their interests.
Tech, communications, media, and service companies have derived so much political influence from their dozens of contact points with the federal government, but they are now finding that those same contact points are leverage for the Trump administration to bring various parts of civil society to heel. Tech companies like Amazon, Google, Meta, and Microsoft have so many intertwined connections and public contracts, such that threats to any one of them can be used as leverage against the entire company. The Washington Post, a paper of record with little dependence on the federal government on its own, caved to the incoming Trump administration by reducing its criticism of Trump and removing endorsements of his political opponents. This is possibly because its owner, Jeff Bezos, was far more worried about retaliation against the rest of his economic empire, with billions tied up in aerospace and cloud computing government contracts. Amazon similarly backed down from its plan to label tariff costs after a call from Trump, likely aware of how many other points of leverage the federal government had over the company. Google, another company with vast control over American media, communication, and civil society, has multiple government antitrust cases, many public contracts, and the possible threat of billions in liability from the TikTok ban all hanging over its head. It caved with no issue to the most absurd of Trump’s decrees, including updating Google Maps to reflect Trump’s controversial renaming of several landmarks. Meta caved to demands about its content moderation policies before inauguration. The company’s social media sites do not depend on government contracts, but its other lines of business, such as its artificial intelligence offerings, do.
More broadly, the boards of trustees of most major American universities are populated with corporate executives who have many points of contact with the federal government. This political exposure is in addition to higher education’s significant dependence on public research funding. All of these overlapping connections and dependencies, and many more than I can think of (though I’m not here to give anyone ideas), can all be points of leverage and cross-pressure for an authoritarian state to bring the private sector into compliance.
Should I be correct about this—that the concentration and cross-cutting nature of control over the private sector enables private power over democracy but is vulnerable to political co-option during a shift towards authoritarianism—it is worth considering what this episode of democratic erosion might look like if control were not so concentrated. Simply put, a strongman would not be able to go after the several dozen oligarchs and major companies with influence over most parts of economic life. Rather, the strongman might end up playing an endless game of whack-a-mole with different parts of business, civil society, and the media, as each would be more inclined to respond to its own priorities: profits, market performance, journalistic integrity, credibility with the public, or institutional reputation. Without consolidated actors, there would be fewer overlapping vulnerabilities for the state to capture and leverage.
But in the world we actually live in, actors are consolidated into large companies with multiple points of dependency on the state. This gives the state a lot of power to pressure them with the most feeble, offhand threats, for fear of retaliation. Think for example, of how quickly Disney’s broadcast property ABC fired late night show host Jimmy Kimmel in response to an offhand podcast comment by Trump’s Federal Communications Commissioner criticizing Kimmel’s on-air jokes. Disney, a $200 billion market cap firm, has a substantial presence in almost every corner of the American media environment. What looked like unassailable private power under normal democratic politics becomes deeply fragile on the road to authoritarianism.
Yet, corporate America’s loss of influence does not mitigate the usual harms of corporate influence. Personalist state leaders rather prefer a close inner clique of contacts over whom to exercise control via the dispensation of favors and the overhanging threat of punishment. So, having the private economy concentrated in the hands of a few dozen people likely suits this administration’s strongman impulses. And among those favors to reward loyalty can be things like approving deeply harmful mergers.
Explicitly political antitrust
Considering the paradoxical relationship between private economic power and politics, I turn back to antitrust. Right now, economic concentration is formally controlled via rules about economic competition. Just as current antimonopoly advocates do, the drafters of the antitrust laws framed their concerns in terms of both economic and political threats, but when it comes to enforcement, the question comes down to the economics. This puts us in the awkward position where the government might be fighting against some of the largest media mergers of all time, which would put control over public information, mass culture, and political news in an increasingly small set of hands, but officials have to fight it by arguing, for example, that the efficiencies gained from vertical integration are outweighed by the anticompetitive costs in terms of price or choice to the consumer. Or simply being entirely unable to oppose Musk’s acquisition of Twitter, for example, because it does not harm competition. The mismatch between the tools and the priorities can be staggering.
So, with corporate power arguably both undemocratically strong within the democratic game and toothlessly weak against democratic erosion, I propose the consideration of explicitly political antitrust law. Whereas “political antitrust” often is a way to refer disparagingly to a preference for mom-and-pop business, the political antitrust I would propose would be to ban conglomerate ownership—or even private common ownership via other means—so as to ensure that it would take thousands of individual actions, veiled threats, and coercion, to try to bring civil society and the private economic sphere into compliance. This would need to be particularly aggressive in the industries that are most essential to democracy: legacy media, information distribution, web search, social media, etc. But at the same time, there might need to be strict limits on common ownership across different lines of business that have a separate dependence on government funding or contracts.
In the collective political imagination, antitrust has political content that is fundamental to democracy. Content that is over, above, and separate from its merits on economic issues. Once upon a time, American antitrust laws and other regulatory schemes may have served this function implicitly. Mergers were denied so routinely on the basis of simple rules of thumb and industries like telecommunications regulated such that today’s concentration would be impossible. Then, the divide between the political and economic content of antitrust was less stark. But today’s merger enforcement regime and the regulatory system over the relevant industries are deeply inadequate for both the economic and political aims of antitrust. And while those often overlap, our antitrust laws should not be constrained such that those political ideals only matter when they overlap with economic problems for consumers or competitors.
Author Disclosure: The author reports no conflicts of interest. You can read our disclosure policy here.
Articles represent the opinions of their writers, not necessarily those of the University of Chicago, the Booth School of Business, or its faculty.
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