Recovering the Moral Economy Foundations of the Sherman Act
abstract. This Feature deepens and seeks to provide a foundation for the current broadening in the anti-trust debate and, ultimately, in adjacent areas relating to market organization. As normative reconstruction, it may help guide current reform efforts as well as the interpretation and implementation of the existing antitrust laws. The Feature traces a thread beginning with the “moral economy” origins of antitrust and the common law of restraint of trade; continues through the American antimonopoly coalition’s distinctive and egalitarian moral economy vision; and culminates in a reinterpretation of the legislative history of the Sherman Act, both as to affirmative purpose and as to judicial role. I propose a core prescription: the command to disperse economic coordination rights. This core prescription in turn implies three key tasks: taking affirmative steps to contain domination, to accommodate and promote democratic coordination, and to set rules of fair competition.
The normative thread traced here, culminating in an argument about legislative purpose, is interwoven with an argument about institutional roles. The widely held conventional wisdom is that the Sherman Act is the paradigmatic “common-law statute,” entailing a delegation of law-making power by Congress to the courts that spans the field of antitrust. The common-law-statute thesis is more than just the proposition that the courts should guide the application of the law as circumstances change. Instead, it has been understood as an effective “blank check” to federal courts to generate the foundational normative criteria according to which the statutory framework will function. But the legislative history of the Sherman Act undermines both the argument for judicial supremacy and the particular prescriptions with which the most pronounced, current episode of judicial lawmaking has been associated. Finally, the Feature briefly sketches the broad outlines of an alternative path for implementing antitrust’s core prescription, emphasizing the potential role of the Federal Trade Commission in administering the moral economy.
author. Assistant Professor of Law, Wayne State University. For their comments and insights, either on the draft or in related conversations, I am grateful to Ethan Leib, Blake Emerson, Jed Shugerman, James Brudney, Kathy Thelen, Luke Herrine, John Newman, Lina Khan, Jon Weinberg, Ryan Doerfler, Sandeep Vaheesan, Amy Kapczynski, Aditya Paul, Corinne Blalock, Alvin Klevorick, Steve Salop, Marshall Steinbaum, Nathan Tankus, and Ruchira Paul; and to Lead Editor Sam Hull and the other editors of the Yale Law Journal. I also thank participants in the East Coast Political Economy Colloquium and the LPE Project Conference, as well as audiences at Miami, Fordham, UC Irvine, and Florida. I thank all my colleagues in the LPE Project for ongoing conversations and support. Law librarians at Wayne State (particularly Jan Bissett), Minnesota, and Fordham contributed to this effort, as did the librarian in charge of the East Lothian Archives in Haddington, Scotland. Patrick Masterson, Daniel Backman, and Ann Sarnak provided superb research assistance.
Introduction
Antitrust law is at a crossroads.1 In recent years, a number of normative concerns—some of which dissenting voices have long pressed—have reentered the mainstream conversation: instantiating fair economic competition as a real-world process rather than a theoretical ideal;2 curbing vertical control3 as a mechanism of economic and market organization and replacing it with more horizontal forms of cooperation;4 ensuring substantively egalitarian economic outcomes;5 curbing the outsized influence of the economically powerful in elections and government;6 and reorienting consumer protection from a narrow view of consumer sovereignty to substantive goals of fairness and consumer protection.7
Building on earlier work reconceptualizing antitrust law as the legal organization of economic coordination,8 this Feature deepens and seeks to provide a foundation for the current normative broadening in the antitrust field and ultimately, in adjacent areas relating to market organization.9 As normative reconstruction, it may help to guide current reform efforts as well as the interpretation and implementation of the existing antitrust laws. As part of this reconstruction, I reinterpret the legislative history of the Sherman Act, both as to affirmative purpose and as to judicial role. I propose a core prescription: the command to disperse economic coordination rights. This core prescription in turn implies three key tasks: taking affirmative steps to contain domination, to accommodate and promote democratic coordination, and to set rules of fair competition. The notion that antitrust law can be governed by a scientific ideal that transcends contestation over values has understandable appeal but is not logically sustainable. That conclusion both clears the way for and requires particularized normative elaboration, which this Feature aims to provide.
This proposed antitrust prescription draws on a moral economy vision, which takes the
social coordination of markets as given, and embraces making and implementing
normative choices about market construction as a key regulatory task. This
vision runs through each of the three sources I primarily consider: the pre-enactment
common law of restraint of trade and its antecedents, nineteenth-century
antimonopoly politics, and the Sherman Act’s legislative history. The
common-law tradition generally viewed markets as socially and legally
constituted, rather than self-regulating: from this perspective, the key issues
were distinguishing between beneficial and deviant coordination, and enforcing
rules of fair competition—rather than punishing coordination as such, or
promoting competition as such.10 The
nineteenth-century antimonopoly political vision, grounded in a farmer-labor
coalition, offered an egalitarian interpretation of moral economy traditions.
This vision critically involved both cultivating democratic coordination and
containing domination11—or “power with”
rather than “power over,” as it would later be articulated in Progressive
thought.12 Within the moral economy perspective,
all markets are understood to be coordinated, and in the antimonopoly vision,
democratic coordination is the preferred mode.
The legislative record, too, is continuous with the moral economy framework, which makes sense of legislators’ actions better than an analytical framework that revolves around self-regulating markets. While recovery of legislative purpose in antitrust has recently not been in fashion,13 this account builds on an older literature that has shaped the law and broader thinking.14 I argue that the core prescription suggested by the legislative history is to disperse economic coordination rights.15 This prescription entails both containing domination and accommodating democratic coordination, while also carrying forward the emphasis on fair competition already present in the common-law tradition.
The normative thread traced here, culminating in an argument about legislative purpose, is interwoven with an argument about institutional roles. The widely held conventional wisdom is that the Sherman Act is the paradigmatic “common-law statute,” entailing a delegation of lawmaking power by Congress to the courts that spans the field of antitrust.16 The common-law-statute thesis is more than just the proposition that the courts should guide the application of the law as circumstances change. Instead, it has been understood as an effective “blank check” to federal courts to generate the foundational normative criteria according to which the statutory framework will function.17
This judicial power enabled the last major paradigm shift in antitrust law,18 associated with the Chicago School of antitrust thinking.19 Recent articulations of this judicial primacy reflect how closely connected it is to the substantive content of the legal developments it facilitated: “the Sherman Act can be regarded as ‘enabling legislation’—an invitation to the federal courts to learn how businesses and markets work and formulate a set of rules that will make them work in socially efficient ways.”20 A primary basis for judicial primacy in antitrust lawmaking is the notion that by adopting the phrase “restraint of trade” in Section 1 of the Sherman Act, Congress “invoke[d] the common law itself.”21 As a result, according to proponents, the Sherman Act “effectively authorize[s] courts to create new lines of common law.”22 But the legislative history of the Sherman Act undermines both the argument for judicial supremacy and the particular prescriptions with which the most pronounced, current episode of judicial lawmaking has been associated.23 As such, this Feature contributes to a growing literature that focuses on the institutional character of antitrust decision-making,24 and specifically builds upon an emerging conversation about the role and character of judicial lawmaking power in the field.25
Part I of this Feature addresses the common-law context of the statutory text “restraint of trade,” emphasizing its origins in the moral economy concepts of fair price and fair competition. Part II describes the social-movement context to which legislators were responding—namely, the antimonopoly coalition. Part III reinterprets the legislative history itself, arguing that it establishes an underlying decision rule to disperse economic coordination rights. Part IV argues that the strong form of judicial primacy in antitrust decision-making emerged in tandem with relatively recent legal developments, and that the canonical justifications for this approach rely on the normative economic views with which it is associated. Finally, Part V briefly sketches the beginnings of an alternative path forward for implementing the core antitrust prescription described herein.
William E. Kovacic, Root and Branch Reconstruction: The Modern Transformation of U.S. Antitrust Law and Policy?, 35 Antitrust 46, 46, 53 (2021) (noting the view of a former Republican chair of the Federal Trade Commission (FTC) that “the United States stands at the threshold of a major realignment of its competition policy regime,” which has the potential—though yet unrealized—to “restore the primacy of egalitarian values and mobilize sustained efforts to deconcentrate American commerce”); Lina M. Khan, The End of Antitrust History Revisited, 133 Harv. L. Rev. 1655, 1656 (2020). This moment is part of a larger one in which settled orthodoxies in many other areas of law and policy, particularly those that shape economic life, have been ruptured and new constructive projects have begun. For a transsubstantive survey, see Jedediah Britton-Purdy, David Singh Grewal, Amy Kapczynski & K. Sabeel Rahman, Building a Law-and-Political-Economy Framework: Beyond the Twentieth-Century Synthesis, 129 Yale L.J. 1784 (2020).
See, e.g., Nelson/Khan/Kiernan Nominations: Hearing Before the S. Comm. on Com., Sci. & Transp., 117th Cong. (2021) (statement of Lina Khan, Nominee for Comm’r of the FTC) (describing “fair competition” as a goal of law and as a defining purpose of the FTC); Eleanor M. Fox, Against Goals, 81 Fordham L. Rev. 2157, 2160 (2013) (positing concern with the “process of rivalry” as an antitrust concern left out by the Chicago Revolution); Harry S. Gerla, Restoring Rivalry as a Central Concept in Antitrust Law, 75 Neb. L. Rev. 209, 211-222 (1996) (arguing that competition was meant to be defined as rivalry between firms for customers).
See Brian Callaci, Control Without Responsibility: The Legal Creation of Franchising, 1960-1980, 22 Enter. & Soc’y 156, 178 (2020); Sanjukta Paul, Fissuring and the Firm Exemption, 82 L. & Contemp. Probs. 65, 67-72 (2019); Marshall Steinbaum, Antitrust, the Gig Economy, and Labor Market Power, 82 L. & Contemp. Probs. 45, 62 (2019).
Jonathan B. Baker & Steven C. Salop, Antitrust, Competition Policy, and Inequality, 104 Geo. L.J. Online 1, 10-13 (2015) (discussing the connection between antitrust and inequality); Marshall Steinbaum & Maurice E. Stucke, The Effective Competition Standard: A New Standard for Antitrust, 87 U. Chi. L. Rev. 595, 595 (2020) (emphasizing inequality as a consequence, in part, of the current antitrust regime).
Mary Parker Follett, Power, in Dynamic Administration: The Collected Papers of Mary Parker Follett 95, 101-07 (Henry C. Metcalf & L. Urwick eds., 1940); see also Domènec Melé & Josep M. Rosanas, Power, Freedom and Authority in Management: Mary Parker Follett’s ‘Power-With,’ 3 Phil. Mgmt. 35 (2003) (discussing Follett’s concepts of “power-over” and “power-with”); Blake Emerson, The Public’s Law: Origins and Architecture of Progressive Democracy 99 (2019) (discussing Follett); Amy J. Cohen, A Labor Theory of Negotiation: From Integration to Value Creation, 1 J.L. & Pol. Econ. 147, 175-76 (2020) (discussing Follett, and arguing that her thought advanced a “socialist theory” of negotiation, implying the democratic organization of productive enterprise); infra Part V (discussing Follett’s ideas in the context of the Sherman Act).
See infra Part IIICommentators on many sides of the debate have concluded that the legislative purpose is beyond grasp, and the argument herein contests this conclusion. See, e.g., Tim Wu, The Curse of Bigness: Antitrust in the New Gilded Age 32 (2018) (“Let us not spend any more time on the impossible task of trying to find the true original meaning of the Sherman Act.”).
The conventional wisdom is just beginning to come up for debate today. Daniel A. Crane, Antitrust Antitextualism, 96 Notre Dame L. Rev. 1205, 1206 (2021) (“This view is so widely entrenched in the legal profession’s understanding of the antitrust laws—including, it must be admitted, this author’s—that it seems presumptuous to claim that the conventional wisdom is wrong, or at least significantly overstated. But it is.”). For further discussion of the state of the current debate, see infra Part IV.
See infra Part IV (regarding the intertwined character of burgeoning judicial supremacy and the Chicago School revolution); see also Khan, supra note 1, at 1678 (“[T]he extraordinary latitude that courts enjoy in crafting antitrust policy helped account for both the relative swiftness with which Chicago’s descriptive and normative claims reoriented antitrust—as well as the stubbornness with which even now-refuted theories remain firmly embedded in case law.”).
For a general account of the normative content of the Chicago School revolution, see, for example, George L. Priest, The Limits of Antitrust and the Chicago School Tradition, 6 J. Competition L. & Econ. 1, 2 (2010), which notes:
Looking back on those efforts, law and economics, as developed by Director and Coase, was not exactly ideological, but derived from what might be called a deeply held belief system that political interference in market activities interfered with freedom and reduced societal welfare. The phrase “reduced societal welfare” is a modern, technocratic concept. The opposition of Director and Coase to governmental interference in market activities was much deeper.
Other accounts include Ariel Katz, The Chicago School and the Forgotten Political Dimension of Antitrust Law, 87 U. Chi. L. Rev. 413, 413 (2020); and Lina Khan & Sandeep Vaheesan, Market Power and Inequality: The Antitrust Counterrevolution and Its Discontents, 11 Harv. L. & Pol’y Rev. 235, 268-75 (2017).
Thomas C. Arthur is the only commentator on the topic of judicial power to address directly and somewhat extensively the legislative-history evidence in connection with the Sherman Act. Thomas C. Arthur, Farewell to the Sea of Doubt: Jettisoning the Constitutional Sherman Act, 74 Calif. L. Rev. 263, 272-91 (1986). While Arthur reaches a similar conclusion regarding Congress’s supposed delegation to the courts, in light of common-law precedent, his interpretive approach and its results as to the affirmative statutory purpose are very different than the one presented here. He expressly adopted a view of legislation as a “contract” between divergent interest groups and is skeptical of the notion of legislative purpose, a perspective that tends to undermine the effectuation of broad and underlying normative aims. Id. at 274; see infra Part III, Section IV.B. He also argued that Congress adopted the proscription of “loose combinations” (i.e., “cartels” or horizontal coordination beyond firm boundaries) as well as the “tight combinations” represented by the late nineteenth-century business trusts, which is not how I read the common-law precedent or Congress’s policy choices in light of the moral economy framework that shaped both. Arthur, supra, at 289; see infra Parts I, III.
Other, important discussions of open-ended judicial lawmaking in antitrust have not primarily or extensively focused upon how the legislative history of the Act bears on that question. See, e.g., Daniel A. Farber & Brett H. McDonnell, “Is There a Text in This Class?” The Conflict Between Textualism and Antitrust, 14 J. Contemp. Legal Issues 619, 641 (2005) (arguing that judicial supremacy in antitrust is contraindicated on textualist grounds, but noting that “without delving into the confusing legislative history of the statute or its surrounding political context, it seems fair to say that the Sherman Act was as much designed to stop unfair business methods as to promote competitive markets”); Crane, supra note 16, at 1217 (noting that “[a]lthough the Sherman Act’s legislative history may be too muddled to be of great help interpretatively, what themes can be gleaned from it are at best mixed” where an open-ended rule of reason, which Crane identifies closely with judicial power, is concerned). Thomas C. Arthur and Daniel A. Crane also identify the onset of judicial lawmaking power in antitrust as an earlier and broader phenomenon than this account does.
See, e.g., Daniel A. Crane, The Institutional Structure of Antitrust Enforcement (2011); Rohit Chopra & Lina M. Khan, The Case for “Unfair Methods of Competition” Rulemaking, 87 U. Chi. L. Rev. 357, 362-63 (2018) (“The exclusive [institutional] reliance on case-by-case adjudication” instead of rulemaking has the function of “depriv[ing] both the public and market participants of any real opportunity to participate in the creation of substantive antitrust rules.”); Sandeep Vaheesan, Resurrecting “A Comprehensive Charter of Economic Liberty”: The Latent Power of the Federal Trade Commission, 19 J. Bus. L. 645, 674 (2017) (arguing that “[t]he FTC must renounce the narrow efficiency paradigm and reembrace the broad vision of Congress” by changing its interpretation of the FTC Act’s prohibition on unfair methods of competition); Khan, supra note 1, at 1677-81 (discussing the inextricable connection between antitrust’s institutional structure and its normative goals); Justin (Gus) Hurwitz, Administrative Antitrust, 21 Geo. Mason L. Rev. 1191, 1240-48 (2014) (arguing for deference to administrative agencies); David A. Hyman & William E. Kovacic, Institutional Design, Agency Life Cycle, and the Goals of Competition Law, 81 Fordham L. Rev. 2163, 2166-69 (2013) (discussing how administrative agencies “must balance competing considerations in deciding how to implement the statutes [they are] charged with enforcing”); Rebecca Haw Allensworth, Amicus Briefs and the Sherman Act: Why Antitrust Needs a New Deal, 89 Tex. L. Rev.1247, 1284-91 (2011) (discussing the outsized role of amicus briefs as embodying the judicial reliance on outside economic expertise as a part of judicial decision-making in antitrust, and concluding that interpretation of the Sherman Act should be entrusted in the first instance to an administrative agency).
See, e.g., Arthur, supra note 23; Farber & McDonnell, supra note 23; Crane, supra note 16. Generally unlike existing accounts, the argument herein identifies the understanding and exercise of judicial power that arose with the substantive legal developments of the Chicago School revolution as sui generis, and as critically shaped by the latter’s analytic and normative commitments regarding the relationship of law to markets. See infra Part IV.