The Antitrust Religion. Edwin S. Rockefeller

      Acknowledgment

      Robert A. Levy, Senior Fellow of the Cato Institute, provided substantial editorial assistance. His help is gratefully acknowledged.

      Introduction

      We aspire to a government of laws, not of men. The rule of law implies ascertainable, coherent rules for guiding and judging behavior. It is the thesis of this book that antitrust law is not consistent with our aspiration for a rule of law. There is no such thing as antitrust law. Antitrust is a religion. Antitrust enforcement is arbitrary, political regulation of commercial activity, not enforcement of a coherent set of rules adopted by Congress.

      Thurman Arnold, assistant attorney general for antitrust in the New Deal, described the origin of and need for the religion of antitrust in the following manner:

      Historians now point out that Theodore Roosevelt never accomplished anything with his trust busting. Of course he didn’t. The crusade was not a practical one. It was part of a moral conflict and no preacher ever succeeded in abolishing any form of sin. Had there been no conflict—had society been able to operate in an era of growing specialization without these organizations—it would have been easy enough to kill them by practical means. A few well-directed provisions putting a discriminatory tax on large organizations would have done the trick, provided some other form of organization were growing at the same time to fill the practical need. Since the organizations were demanded, attempts to stop their growth necessarily became purely ceremonial.… The actual result of the antitrust laws was to promote the growth of great industrial organizations by deflecting the attack on them into purely moral and ceremonial channels.¹

      This book’s thesis will be developed first by defining antitrust as a religious faith with an existence independent of the antitrust statutes. Chapter 2 describes the development of a cult of professional followers who serve as a priesthood to carry out the ceremonial function of antitrust. Chapter 3 contains a brief history of attempts at reform. Chapter 4 discusses the central element of antitrust faith— “market power” —an imaginary, hypothetical concept borrowed from economic theory and used by the antitrust community as though it describes something that actually exists when, in fact, the concept of market power is based on false assumptions about a future that cannot be known. Chapters 5 through 8 describe activities attacking supposed evils identified by the antitrust religion and point out the inconsistency of those activities with our aspirations for a society ruled by laws and not men. The final chapter draws the tentative conclusion that educating society about the unsoundness of the basic elements of the antitrust faith might lead to meaningful change.

      1. What Is “Antitrust”?

      Quasi-religious Faith Distinct from the Antitrust Statutes

      Section 4 of the Clayton Act of 1914 provides that any person “injured in his business or property by reason of anything forbidden in the antitrust laws” may sue for three times his damages plus costs and “a reasonable attorney’s fee.” Section 1 of the Clayton Act defines the term “antitrust laws” as including the Sherman Act of 1890 and the Clayton Act. These are referred to in this book as “the antitrust statutes.” Definitions are important for making sense of the subject. The antitrust literature provides little help. Most of it perpetuates confusion. Consider the following example from a basic textbook used at the Harvard Law School:

      Antitrust law implicitly but clearly takes a particular stance toward the economic problems to which it applies. On one hand, its very enactment indicates that Congress rejected the belief that market forces are sufficiently strong, self-correcting, and well-directed to guarantee the results that perfect competition would bring. On the other hand, antitrust’s domain is intrinsically limited.¹

      What are the authors talking about? Antitrust law? Antitrust? The antitrust statutes? Do they recognize any difference among those three terms? There are two antitrust statutes, the Sherman Act and the Clayton Act, adopted by Congress and found in the U.S. Code. You can look them up. The quoted passage does not refer to those statutes but begins with the undefined term “antitrust law,” which implies a coherent set of rules that “takes a particular stance.” The student is told that enactment of “antitrust law” shows that Congress rejected a belief that the market is self-correcting. But Congress did not enact “antitrust law.” It enacted two antitrust statutes, one in 1890 and another in 1914. What beliefs Congress entertained or rejected at either of those times is debatable.

      Next the student is introduced to an additional undefined term—“antitrust.” “Antitrust” has a “domain.” Authors Phillip Areeda and Louis Kaplow began with an imagined concept of “antitrust law” and then shifted to a discussion of “antitrust,” something different from “antitrust law” and even more distant from the antitrust statutes. Antitrust has an existence outside of the antitrust statutes. Antitrust not only exists but also does things. It is a formidable actor. The professors describe it thus:

      Antitrust supplements or, perhaps, defines the rules of the game by which competition takes place. It thus assumes that market forces—guided by the limitations imposed by antitrust law—will produce good results or at least better results than any of the alternatives that largely abandon reliance on market forces. Therefore, the perfect competition model can be viewed as a central target, the results of which antitrust seeks, but the conditions for which antitrust does not take for granted. Antitrust thus looks to perfect competition for guidance, but the analysis inevitably emphasizes the myriad and complex imperfections of actual markets.²

      Antitrust “supplements” or “defines.” The professors are not sure which. Antitrust “assumes” things. Antitrust “seeks results” but “does not take things for granted.” Antitrust “looks to perfect competition for guidance” to supplement the guidance that it has received from antitrust law’s limitations. Having extracted from the antitrust statutes an imagined concept of “antitrust law” and having pulled out of that hat a rabbit called “antitrust,” the professors conclude

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