TABLE OF CONTENTS INTRODUCTION I. ANTITRUST'S ANTI-FASCIST TURN AND ITS DEMISE A. The Lost Concern of the Post-War Congress 1. Investigating Germany's Monopolies and Cartels 2. The Anti-Fascist Roots of the Celler-Kefauver Amendment to Section 7 of the Clayton Act 3. Post-War Antimerger Enthusiasm and Its Demise B. Fascism and European Ordoliberalism II. German Industrial Concentration and the Nazi Regime A. The Cartelization and Consolidation of German Industry from Bismarck to the Third Reich B. German Heavy Industry's Support for the Nazi Regime C. Concentration and Nazi Facilitation in Three Principal Industries 1. Chemicals 2. Electricity 3. Armaments III. CAUSATION, MECHANISMS, AND QUESTIONS OF SCALE AND POWER A. Four Analytical Questions B. The Mechanisms by Which Industrial Concentration and Cartelization Enabled Nazism 1. Monopoly Profits and the Faustian Bargain 2. Organizational Structure, Industry-Wide Mobilization, and Dissemination of Propaganda 3. Cartelization and Political Control 4. National Champions and the Military-Industrial Complex 5. Decline of Democracy Within the Firm IV. WHAT SORT OF ANTITRUST REGIME WOULD HAVE PREVENTED THE INDUSTRIAL CONCENTRATION AND CARTELIZATION THAT FACILITATED HITLER'S RISE? CONCLUSION INTRODUCTION
"The Decartelization Branch ... should, therefore, make every effort to teach the German people that political democracy cannot long survive the disappearance of economic democracy ...
--U.S. Office of Military Government Decartelization Branch, March 28, 1946
In the wake of the Second World War, the United States Congress enacted reform antitrust legislation to halt the "rising tide of economic concentration" in the American economy. (1) The framers of the 1950 Celler-Kefauver Act advanced a stark claim about dangers of undue concentrations of economic power: industrial "monopolies ... brought Hitler to power," and the same could happen in the United States. (2) Congressman Celler and Senator Kefauver's claim arose from extensive reports by the U.S. Army's Decartelization division (operating in Germany from 1945 to 1949), which concluded that German industrial monopolies and cartels in key fields such as chemicals, armaments, steel, and electricity had played a key role in Hitler's rise to power and the atrocities of the Nazi regime. (3)
After a period of intensive antitrust enforcement against mergers and monopolies in the 1950s, '60s, and early '70s, the antitotalitarian rationale for antitrust enforcement was lost in the tectonic shift in antitrust policy begun by the Chicago School. (4) Despite occasional reminders that antitrust has a "political content," antitrust law became concerned near-exclusively with the promotion of consumer welfare. (5) Debate over antitrust law and policy continued, but it was largely closeted within an establishment clique of lawyers and economists operating within the antitrust profession. (6)
The insulated, technocratic decades of antitrust may be coming to a close. In the last several years, antitrust law has achieved a political saliency that it has not experienced since its formative years around the turn of the twentieth century. From right to left, the top tiers of the political class have returned to antitrust as a popular political issue, a potential holding place for a wide variety of problems and anxieties, from wealth inequality to Big Tech's power over data and privacy. (7)
There are growing signs that, in the nascent challenge to the reigning consumer welfare regime, concerns over monopoly's effects on liberal democracy may come again to the fore, as they did at the end of the Second World War. Voices on the Democrats' progressive wing like Senator Elizabeth Warren have been warning that "[c]oncentration threatens our markets, threatens our economy, and threatens our democracy." (8) The influential Open Markets Institute argues that the Progressive obsession with the Supreme Court's Citizens United (9) decision ignores the equally antidemocratic effects of corporate consolidation brought about by lax antitrust. (10) The critique has migrated to the political center, with the congressional Democrats asserting that "concentrated market power leads to concentrated political power." (11) Centrist policy groups like the Brookings Institution argue that stronger antitrust is necessary to prevent large tech firms from "wield[ing] excessive influence in our democracy." (12)
These critiques are not limited to the political left or center. On the right, President Trump warns that allowing deals like AT&T-Time Warner "destroy[s] democracy." (13) Even staunch defenders of the consumer welfare standard, like Republican Senator Orrin Hatch, have recently trumpeted the importance of antitrust as a political institution--"the magna carta of the free enterprise system" and "the capitalist answer to the siren song of the central planner." (14) Along the broad political continuum, there appears to be a consensus forming--at least a rhetorical one--that antitrust is an important institution of democracy, not merely a tool for extracting lower prices for consumers. At this potentially generative moment in antitrust history, antitrust's relationship to democracy is back on the table for reexamination.
As the relationship between monopoly and democracy seeps back into popular discourse, attention is naturally reoriented to the post-War moment when that relationship was last squarely on the table. Across a variety of political, popular, and scholarly platforms, a debate has ignited about the role of industrial monopolies and cartels in enabling Hitler's rise to power and wars of aggression. (15) The political stakes in characterizing German heavy industry's support for the Nazi regime are presentist and significant: establishing that industrial concentration contributed to the rise of fascism and that industrial concentration is on the rise in the United States lends support to those pushing urgently for a return to aggressive antitrust. On the other hand, advocates of a less interventionist antitrust regime tend to dismiss the assertion that industrial concentration was a significant factor in Hitler's rise to power, noting that many social and political factors other than industrial organization explain Nazism and that big business did not support Hitler until he was already in power. (16)
My purpose in this Article is to provide a fresh examination of the historical record on the relationship between monopoly power and the rise of the Nazi regime and to assess that relationship using concepts from contemporary economic learning and antitrust analysis. More particularly, in order to sharpen the ongoing debate over fascism and monopoly, I ask the following research questions: (1) Did industrial concentration facilitate the rise of German fascism; (2) was the problem overly large industrial organizations (i.e., "the Curse of Bigness") or rather organizations with excessive market power; (3) by what mechanisms did monopoly facilitate fascism; and (4) what manner of antitrust regime would have been necessary and sufficient to prevent the unholy relationship between big business and Nazism from developing? To foreshadow the answer to each of these questions briefly, I find: (1) industrial concentration did facilitate the rise of Nazism and, particularly, its consolidation of power; (2) although it is not always possible to separate the effects of large business firms from that of market power, market power did play a distinct role in facilitating Nazism; (3) the concentrated and cartelized structure of the Weimar economy contributed to the consolidation of Nazi power through several distinct mechanisms, including a Faustian bargain exchanging regime support for a privileged monopoly position, lending organizational infrastructure to the regime, and steering entire industries to the regime's bidding through expansive and coercive cartel structures; and (4) application of contemporary consumer welfare-oriented antitrust norms would have prevented most of the paths of economic power concentration that facilitated Hitler's rise and wars of aggression.
The organization of the remaining portions of this Article is as follows: Part I sets the stage by reviewing the record of political reform efforts in antitrust that grew out of perceptions that fascism ascended on the backs of monopolies. In particular, it reviews the work of the U.S. occupation authorities to document and diagnose the role of monopolies and cartels in Hitler's rise to power and consolidation of totalitarian control, the influence of this learning on the Celler-Kefauver Act of 1950 and the subsequent period of aggressive antitrust enforcement, and the demise of this antitrust enthusiasm in the 1970s. It also surveys the influence of anti-Nazi thinking in the formation of Ordoliberalism, an influential school of European antitrust in the post-War period.
Part II examines the historical record on the relationship between the concentration of economic power in Weimar Germany and the subsequent concentration of political power in the Nazi regime. Section A surveys the increasing consolidation and cartelization of the German economy from unification under Bismarck at the end of the nineteenth century up to Hitler's ascension to power in 1933. Section B considers the extent to which German heavy industry supported the Nazi regime, showing that the large industrial firms were generally reluctant to support Hitler prior to 1933 but provided critical support to the Nazi regime from 1933 forward. Section C conducts case studies of three leading industries--chemicals, armaments, and electricity--showing both heterogeneity and significant common threads in the attitudes and relationships of German heavy industry with respect to the Nazi regime and the roles that different kinds of concentrated economic power played in facilitating Hitler's consolidation of political power.