Neo-Brandeisianism’s Democracy Paradox

Abstract

Neo-Brandeisians, including the current heads of the U.S. antitrust enforcement agencies, have declared contemporary antitrust a failure. Among their chief complaints is that prevailing antitrust doctrine has failed to protect democratic values because it has allowed business enterprises to amass excessive economic power. Such economic power, they assert, breeds undue political power as large firms have the resources to sway policymakers and may thereby thwart majority will. Outside the political realm, Neo-Brandeisians say, massive industrial concentration undermines effective self-governance by rendering citizens beholden as consumers, suppliers, and laborers to a small group of powerful firms. To preserve democratic values, defined both narrowly in terms of actual democratic functioning and broadly in terms of economic self-governance, Neo-Brandeisians press for a fundamental reordering of the antitrust enterprise. Key components of this reordering are (1) abandonment of antitrust’s consumer welfare standard (exemplified by the U.S. Federal Trade Commission’s replacement of its 2015 enforcement policy on unfair methods of competition with a multi-goaled enforcement policy) and (2) a move toward ex ante conduct rules in lieu of enforcement via adjudication under ex post standards (exemplified by the Commission’s recent proposal to ban worker noncompete agreements). The combined effect of these two moves, however, would be to centralize political power, weaken democratic accountability, and reduce individual freedom. Because promotion of democratic values is Neo-Brandeisianism’s reason for being, Neo-Brandeisianism is “a policy at war with itself.”

Keywords: antitrust, Federal Trade Commission, democracy, Neo-Brandeisianism, consumer welfare standard, competition, rulemaking

JEL Classification: K00, K10, K21, K23, L4, L5, L40, L44, L51