Roughly a week ago, as Joe Biden announced his landmark executive order aimed at cutting the dominance of big business in the US, I tweeted that the speech would be remembered as a turning point in the battle against corporate monopoly in America. I now think the many measures to tackle big company power that the White House unveiled will amount to something even bigger — the end of the neoliberal era in Washington.
As Barry Lynn, the founder of Open Markets and perhaps the most influential figure in the American antitrust movement, wrote to his funders and supporters after the president’s speech:
“The revolution . . . was not so much in the specifics of the 72 actions President Biden ordered. Rather it was in the words Biden spoke, as when he said that Robert Bork’s 40-year-old ‘experiment’ in antitrust had ‘failed’. The revolution was in the order in which Biden listed the harms of concentrated power; he spoke of workers, businesses, farmers and entrepreneurs, and only then of ‘consumers’. The revolution was in Biden making clear that ‘liberty’ and ‘democracy’ depends on fighting monopoly everywhere, including the threat that it poses to the free press.”
Very well said. On the first point, about consumers, this is so key. The idea that consumer welfare is the main, even the only, kind of welfare that matters has been the core tenant of antitrust policy since 1978, when Robert Bork published The Antitrust Paradox. Bork held that the major goal of antitrust policy should be to promote “business efficiency”, which from the 1980s onwards came to be measured in consumer prices. It was a shift that took the US away from antitrust policy predicated on the welfare of the “citizen”, towards one that prioritised the “consumer.” It was a shift that clearly served the laissez-faire politics of Ronald Reagan’s administration. But that definition is increasingly irrelevant in an age in which the most powerful companies in the world offer products and services for “free” in exchange for personal data, as I’ve explained in past columns.
But Biden is pointing to something even bigger than this. The entire American economy has been driven for the last half-century by neoliberal policies that are designed to drive down the cost of consumer goods, but not to actively prop up wages. The problem is that despite the minor uptick in inflation (which as I explain in my latest column is likely to be a short-term phenomenon), the price of the things that we need to make us middle class — housing, healthcare and education — have been rising three times as fast as anything else, including our salaries. That is down to the combined effect of globalisation, financialisation and technology-based job disruption that has been part and parcel of the neoliberal system.
This president is looking to fundamentally shift that dynamic. As Heather Boushey, a member of Biden’s Council of Economic Advisers, told me last week, this White House thinks of the economy as a three-legged stool, made up of land, labour and capital (for more from her, look out for my upcoming Economists Exchange with Boushey). The idea is that for too long, the stool has been lopsided, with capital having too much power in comparison to either land or labour. As I’ve written in Swamp Notes past, that’s the fundamental problem of the neoliberal era — global capital, and the global economy has been able to run much too far ahead of the concerns of national voters (for an interesting look at some of the characters behind this shift, with a minor appearance from me, see this New Yorker piece.
We’ll be parsing the particulars of the Biden proposals for some time to come — but Peter, do you agree with me that this is an important line in the sand? And does it hearten you, as it does me?
Catch up on previous Swamp Notes on FT.com.
Catching up with my FT Weekends, I came across this wonderful Lucy Kellaway cover story from a few weeks back that I’d missed the first time around. I’d agree that reinvention is difficult, but so worthy.
Totally agree with Jonathan Holloway that a year of national service for the young would be a way to bring the country together in a troubled time.
If the tragedy of the Surfside tower collapse doesn’t make people rethink living by the water in Florida, I don’t know what will.
And if you are looking for a summer beach page-turner, I can’t think of anything better than The End of October by Lawrence Wright, which all but laid out the details of the Covid-19 pandemic before it happened.
Peter Spiegel responds
Rana, I think you’re right that Biden’s speech is part of a shift in the way Washington will enforce antitrust law, back to a more traditional view that it should be used to increase competition and not just lower prices. But I’m not entirely sure whether Biden’s remarks will be remembered as the turning point you make it out to be. As much as it pains me to say this, the shift in thinking probably has its origins in the presidency of his predecessor.
Because almost everything done under Donald Trump was decided and implemented in such a chaotic and (to put it mildly) idiosyncratic manner, it’s hard to ascribe any real philosophical underpinnings to Trumpism. And the fact remains that antitrust enforcement at the Department of Justice and Federal Trade Commission almost evaporated during the Trump years.
But rhetorically, (and that’s all Biden’s initiative is thus far: rhetoric), the assault on corporate concentration — and the need to respond using competition law — was given its first full airing on the national political scene by Trump himself, and by some of his more anti-corporatist aides.
Frequently, Trump’s opposition to economic concentration was self-serving; much of his anger, for instance, was aimed at media deals such as Comcast’s takeover of NBC Universal and AT&T’s acquisition of Time Warner. His opposition was most likely fuelled by critical coverage from NBC News and Time Warner-owned CNN. Still, he wasn’t wrong to call out the dangerous effects of media concentration.
I also think that Trump’s attitudes, and the growing number of Republicans who have publicly opposed anti-competitive corporate behaviour, make it all the more likely that Biden will succeed in his new crusade. If there’s an emerging bipartisan consensus that Bork’s “40-year-old experiment” was a mistake, all the more reason to believe it could be coming to an end.
Edward Luce is on leave and will return later this week.