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Today the neo-Brandeisians are trying to overthrow U.S. antitrust policy, as they decry big business, call everything a monopoly and work to break up big companies for the sine of being big. Often this movement is called populist. In fact, it is anything but, at least to the extent it derives its animating philosophy from its patron saint, Justice Lewis Brandeis.
Brandeis started his legal career in the 1890s defending small firms against large firms, and in the process, he developed a distinct animus toward large corporations. For him, the only reason firms sought bigness was to exploit monopoly power, and the only way they attained bigness was through cheating. As the economic historian Thomas K. McGraw writes, “Early in his career, Brandeis decided that big business could become big only through illegitimate means. By his frequent references to the ‘curse of bigness,’ he meant that bigness itself was the mark of Cain, a sign of prior sinning.”
Moreover, Brandeis went to great pains to try to paint small firms as being as efficient as large ones, declaring in testimony before the U.S. Senate in 1911, for example, that “a corporation may well be too large to be the most efficient instrument of production and of distribution.” Indeed, he had to make this claim, for the vast increases in efficiencies (and resulting living standards) that large corporations were bringing to America was the Achilles heel of Brandeisianism. He knew that if people understood that big companies were more efficient, they would also understand that breaking them up would hurt workers and consumers. Today’s neo-Brandeisians make the same argument as Matt Stoller did when he tweeted that “I’m increasingly convinced the biggest con in business history is the notion of ‘economies of scale.”
Far from defending freedom and democracy for ordinary Americans against plutocracy, Brandeisianism served the selfish economic interests and social prestige of the “local notables” or petty oligarchs of rural and small-town America, particularly in the South and Southwest and Midwest. The very regions that were the most supportive of the anti-chain store and unit banking laws that preserved local monopolies for local oligarchs (of which Brandeis was a champion) also tended to be the regions of the country most hostile to laws protecting African Americans, organized labor, women’s rights, anticensorship reforms, and sexual and reproductive rights. Those reforms all enlarged individual freedoms but threatened the provincial elite’s domination of the social order.
When they spoke of freedom, the antimonopolists of the Brandeis school did not mean political and civil freedom for nonwhite Americans, or the economic freedom for consumers to buy goods at the lowest price from the greatest number of producers or distributors, or the freedom of borrowers to obtain credit at the lowest possible rates. No: when Brandeis spoke of freedom, he meant freedom from competition that could undermine the income and social status of small-town merchants and small-town bankers.
As McGraw writes:
In the last analysis, Brandeis’s emphasis on bigness as the essence of the problem doomed to superficiality both his diagnosis and his prescription.… It meant, finally, that he must become in significant measure not the ‘People’s Lawyer’ but the mouthpiece for retail druggists, small shoe manufacturers, and other members of the petite bourgeoisie. These groups, like so many others in American history, were seeking to use the power of government to redress or reverse economic forces that were threatening to render them obsolete. And in Brandeis they found a great advocate.”
Alas, it’s no different today. Today’s self-proclaimed antitrust populists also want to shift value from consumers to the petite bourgeoise, as Barry Lynn demonstrates in recent House testimony: “the idea that the only purpose of antimonopoly policy is to drive prices down is a grotesque myth.” In other words, the new Brandeisians want to keep prices high (by limiting competition that small businesses face) so these business owners can make higher profits. That may be Brandeisianism, but it’s the opposite of populism.