The Finance Curse. Nicholas Shaxson

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СКАЧАТЬ geographical iniquities. “If we would not submit to an emperor,” declared Senator John Sherman, after whom the act was named, “we should not submit to an autocrat of trade.”¹¹ The act was fairly broad and blunt, but its teeth were sharpened with new laws added over the coming decades.

      The biggest wave of antitrust actions to date happened in the 1930s with Franklin D. Roosevelt’s New Deal, a sweeping package of progressive political reforms in response to World War I and the great crash of 1929, which helped shift economic and political power away from finance and large corporations toward ordinary folk. The New Dealers created a carefully calibrated system of government checks and balances to mediate between competing social priorities, regionally and nationally, breaking up concentrations of power in different parts of the economy. Their flagship legislation was probably the Glass-Steagall Act of 1933, which forced banks to separate their commercial banking activities from the more speculative investment banking, breaking up the banking behemoths.

      At every stage it was understood that this was not so much about economics as political power and protecting democracy. Economic efficiency was exactly the wrong goal; the point of antitrust laws, as the antitrust lawyer Louis Brandeis explained, “was not to avoid friction, but by means of the inevitable friction incident to the distribution of the government powers among three departments, to save the people from autocracy.”

      While Hayek and the neoliberals saw government as the agent of tyranny, with the post–World War II Soviet Union as the prime bogeyman, the anti-monopoly crusaders argued that large concentrations of private power bred tyrannical government, especially fascism. For them, Nazi Germany was the prime exhibit. “The liberty of a democracy is not safe if the people tolerate the growth of private power to a point where it becomes stronger than their democratic state itself,” Roosevelt said in a landmark address to Congress in 1938, as war loomed in Europe. “That, in its essence, is Fascism—ownership of Government by an individual, by a group, or by any other controlling private power.” The Nazi state, the corporatist Fascist Italian state, and the imperial Japanese economic system were all heavily cartelized; in fact the Nazis in 1933 had actively encouraged the formation of big industrial cartels as a way of enforcing top-down control, eliminating foreign competitors and juicing up profits for big firms backing the war effort. As trust-busting US congressman Emanuel Celler put it, “The monopolies soon got control of Germany, brought Hitler to power and forced virtually the whole world into war.”¹²

      When the war ended, a victorious America began to spread its doctrine of benevolent antitrust around the globe like a democratizing shock wave. The United States inserted anti-monopoly principles into the constitutions of the defeated aggressor countries as one of its “four Ds” for postwar governance: denazification, deconcentration, democratization, and decartelization. European countries adapted in their own ways. Britain took all this rather seriously too, though in its own way. For Britain’s financial sector, run by an old boys’ network that had grown fat off the profits of empire and had been protected from international competition, the problem was less about monopolizing giants and more about gentleman’s agreements to carve up turf, restrict competition, and pocket the resulting profits.¹³ After the war, Britain’s bloodied workers were in no mood for compromise, and the new economic regime that began to emerge wasn’t so much about breaking up giant corporations as about full-scale nationalization, bringing the energy industries, the railways, the coal mines, and iron and steel under government control. And on the European Continent the 1957 Treaty of Rome, which laid the foundations for the European Economic Community, contained strong antitrust provisions modeled on the Sherman Act.¹⁴

      But with the growth of the offshore Euromarkets in London, the steady resurgence of finance, and the rise of neoliberalism, the pendulum began to swing back again. US regulators began to notice British intransigence. “There was always a lot of trouble across borders,” said the antitrust lawyer Jack Blum. US laws in this area were supposed to apply internationally, but “the British fought us tooth and nail on that proposition,” he said. “That was with regularity. The UK passed laws to prevent the US investigating.”¹⁵ Yet these were minor difficulties when compared to the devastating blows that were to come, especially at the hands of Director’s dinner guests, most obviously Robert Bork.

      Bork was a cranky lawyer who had been growing steadily more agitated about impending moral collapse. He blamed America’s ills on feminists, multiculturalists, gays, pornographers, fearmongering “race hustlers,” and most especially leftist professors. He once asserted that “homosexuals, American Indians, blacks, Hispanics, women, and so on” had only “allegedly” been subjected to oppression, and that the list of victim groups “is virtually endless, including at one time everybody but ordinary white males.”¹⁶ The answer to modern moral turpitude, he said, was censorship.

      With eyes alternately hooded and bulging, and sometimes both at the same time, if you can picture that, Bork was beefy, physically imposing, and, to many people, terrifying. One television critic said he “looked and talked like a man who would throw the book at you—and maybe the whole country.” As US solicitor general, Bork fired the courageous special prosecutor in the Watergate scandal that would eventually bring down President Nixon in 1974, a dismissal that was later ruled illegal. Years later Senator Edward Kennedy would denounce him in these terms:

      Robert Bork’s America is a land in which women would be forced into back-alley abortions, blacks would sit at segregated lunch counters, rogue police could break down citizens’ doors in midnight raids, schoolchildren could not be taught about evolution, writers and artists would be censored at the whim of government, and the doors of the federal courts would be shut on the fingers of millions of citizens for whom the judiciary is often the only protector of the individual rights that are the heart of our democracy.¹⁷

      Bork denied these charges and his record was a bit more nuanced than Kennedy’s picture suggests but there is no doubting it: he was a piece of work.

      His colossal contribution to the game at hand was a little firecracker of a book published in 1978 called The Antitrust Paradox. This built on work by Richard Posner and Ronald Coase, shifting the focus of antitrust law even beyond Coase’s emphasis on “efficiency” to something simpler and narrower: prices for consumers. “The only legitimate goal of American antitrust law,” he said, “is the maximization of consumer welfare.” Channeling his guru, Aaron Director, he made some astonishing arguments based on the assumption that markets behave efficiently. Predatory pricing—in which players in a market collude to extract profits by restricting competition—was “a phenomenon that probably does not exist,” he said, because monopolists making large profits would be instantly undercut by “entrants who would arrive in sky-darkening swarms for the profitable alternatives.” It was “all but impossible” for actors to corner markets by buying up competitors, he asserted. (Try telling that to anyone who has tried going head-to-head with Amazon or Google.) If monopolies did persist, Bork said, it was only because they were more efficient, and if monopolists did raise prices, this was just fine because monopolists were consumers too! Traditional antitrust concerns, he argued, were “nonsense … mechanisms the law has imagined.” The book was, as the US antitrust expert Gerald Berk put it, “vehemently anti-constitutional democracy.” What is perhaps oddest about this episode is what Bork eventually became most famous for: arguing that the US Constitution should not be interpreted according to prevailing democratic spirits but instead should be taken literally, just as the founding fathers had originally intended, however much the country had moved on. Yet his arguments on consumer prices as the sole lodestar for antitrust were exactly contrary to what the framers of the constitution had intended. Indeed, the words ‘consumer prices’ don’t appear anywhere in any of America’s antitrust laws.¹⁸

      What mattered to Bork was not reality but elegant models of reality. Boil everything down to price, ignore all this leftist claptrap about laws and rights and power, and efficiency would follow. Instead of regulating preemptively by focusing on the structure of markets and whether any players have too much power in those СКАЧАТЬ