There’s an article in the Atlantic talking about the decline of populism in the Democratic party. Most of it concerns the replacement of broad “anti-monopoly” doctrines with something narrowly focused on consumer prices.
On the right, a finance-friendly school of libertarian intellectuals known as the Chicago School targeted Brandeisian competition policy. Michael Jensen, a Milton Friedman-influenced financial economist, argued that “our form of political democracy” threatened the large corporation. Government rules, labor power, and antitrust policies were scaring businessmen into not investing. This type of thinking became known as the “capital shortage” argument: A lack of investment capital caused a lack of goods and services and, thus, inflation. Inflation then destroyed more capital, worsening the shortage. The corporation, to Jensen, was property—not FDR’s public trust—and inhibiting the use of that property by shareholder owners was the reason for economic malaise.
Another Chicago School libertarian, George Stigler, argued a theory of regulatory capture. It wasn’t Wall Street or corporate corruption that broke America’s transportation system, he said, it was the incompetence of New Deal regulators themselves, acting in the interests of the industries they were supposed to be regulating. The answer was to shield the corporation from inept regulators and deregulate. Essentially, Jensen and Stigler offered a restoration of the pre-FDR view of property rights.
Inserting democracy into the commercial arena with competitive markets was “a charade” and “the last eruption of the exhausted mind.”
And the most important architect of this intellectual counterrevolution, the one who engaged in a direct assault on traditional anti-monopoly policy, was the libertarian legal scholar Robert Bork. His book The Antitrust Paradox undermined the idea of competition as the purpose of the antitrust laws. Monopolies, Bork believed, were generally good, as long as they delivered low prices. A monopoly would only persist if it were more efficient than its competitors. If there were a company making super-charged monopoly profits, bankers would naturally invest in a competitor, thus addressing the monopoly problem without government intervention. Government intervention, in fact, could only hurt, damaging efficient monopolies with pointless competition and redundancy. In an era of high prices, a theory focused on price seemed reasonable.
