The Economics and Ideology of American Fair Trade: Louis Brandeis and Open Price Associations, 1911-1919

Business and Economic History 9 (2011)

10 Pages Posted: 5 Jun 2013 Last revised: 11 Jun 2013

See all articles by Laura Phillips Sawyer

Laura Phillips Sawyer

Harvard Business School; Political Theory Project, Brown University

Date Written: 2011

Abstract

In the first decades of the twentieth century, a widespread trend emerged in the Western world that questioned the basic assumption of classical economic theory, that economic competition fostered the common good. Propelled by the First World War and the rise of “institutionalist” economics, leading American scholars and public intellectuals initiated a movement for “new competition” that embraced inter-firm cooperation to stabilize and standardize market processes and prices. This experiment in “managed competition” allowed trade association combinations to determine prices, allocate markets, and facilitate ongoing consultation among members. The American Fair Trade League (AFTL), one of the most prominent and persistent supporters of the “new competition,” advocated the liberalization of antitrust laws to promote inter-firm cooperation, rather than consolidation, and to foster market stability by eliminating “cut-throat competition” and “over-production.” The “institutionalist” school provided necessary fodder for the AFTL and other trade organizations by explaining the viable, if not preferable, alternatives to pure market competition. The influence of this intellectual movement in economics and management has been largely excluded from the secondary literature explaining interwar competition policy.

Suggested Citation

Phillips Sawyer, Laura, The Economics and Ideology of American Fair Trade: Louis Brandeis and Open Price Associations, 1911-1919 (2011). Business and Economic History 9 (2011). Available at SSRN: https://ssrn.com/abstract=2274308

Laura Phillips Sawyer (Contact Author)

Harvard Business School ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

Political Theory Project, Brown University ( email )

Box 1860
Providence, RI 02912
United States

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