The Economic Philosophy of Anti-Trust Legislation

• DOI: 10.1177/000271623014700103
• Published date: 01 January 1930
• Date: 01 January 1930
• Author: Myron W. Watkins
• Subject Matter: Articles

The Economic Philosophy of Anti-Trust Legislation
By MYRON W. WATKINS
Professor of Economics, New York University; Member, Research Staff, National Industrial
Conference Board, New York City
TO some, no doubt, this title will pressed in the Sherman Act, these
suggest a contradiction in terms.
critics are generous enough to allow;
How, it will be asked, can laws which
but they do this only in order to pro-
throttle business enterprise, which
vide themselves with a straw target for
arrest the economic development of the
their shafts of ridicule. The economic
country, which subvert well established
philosophy of anti-trust legislation, ac-
economic principles by interfering with
cording to them, is an eighteenth cen-
the voluntary efforts of enlightened
tury philosophy evolved from handi-
self-interest to adjust supply to de-
craft industry and local markets. It
mand, how can an economic philosophy
is based upon an assumption of robust,
be justly ascribed to such laws? Are
up-standing individualism.
It as-
they not rather an expression of the
sumes, in other words, that all, or
very negation of any &dquo;philosophy,&dquo; of
most, persons are equally endowed
any love of wisdom whatsoever? The
mentally and physically for carrying on
critics of the anti-trust laws who take
the economic struggle, and equally
this extreme attitude see in them only a
resolute to succeed. It takes for
sop of politicians to their constituents.
granted, moreover, these critics con-
They profess to believe that the laws
tend, a freedom of opportunity such as
regulating business have not been en-
prevailed only under frontier conditions
acted in response to any valid griev-
when an abundance of natural resources
ance, but only in order to delude the
awaited the exploitation of any ener-
general public into the supposition that
getic hand. Upon the straw target of
something is wrong and that the pro-
this fancied philosophy of simple in-
fessional vote-catchers have sagely pro-
dividualism the critics of this stamp are
vided an effective remedy. Such crit-
prepared to impale all who express
ics would not hesitate to offer a parody
either sympathy or tolerance for anti-
on our title, as &dquo;The Political Philoso-
trust legislation.
Anticipating their
phy of Anti-Trust Legislation.&dquo;
objections to our title, it might be
But there are others who will also
paraphrased as &dquo;The Uneconomic
challenge the title as self-contradictory,
Philosophy of Anti-Trust Legislation.&dquo;
though from a different standpoint.
I
How, they will ask, can laws which not
only provide for no consciously cobrdi-
ALTERNATIVE PUBLIC POLICIES
nated control of the productive process,
Between those critics who can see no
but which actually prohibit under
guiding principle in the attempt of
penalty collective efforts to abate the
government to regulate business and
most grievous wastes of competition
those who can see in it only the ex-
and to establish system and order in
pressions of a misguided economic phi-
place of planless confusion, how can the
losophy, there is a wide chasm. In
philosophy behind such laws be justly
essence, the former are reactionary;
characterized as economic? That there
they condemn the law because it im-
is an economic philosophy of a sort ex-
poses too great restrictions. Contrari-
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13
wise, the latter are revolutionary; they
offensive sally does ally us, in so far, with
attack the law because it does not pro-
the citadel-holders, the expedition may
vide enough restriction. The former
be interpreted as a direct challenge,
look to a restoration of the unchecked
nevertheless, to their evident strategy
liberty of the private trader to cure the
of passive defense. Almost inevitably
ills from which business is alleged to
citadel-holders seem to become ob-
suffer under the anti-trust laws. The
sessed with the idea that their position
latter look to the governmental as-
is impregnable, that all they have to do
sumption of still further regulatory
is to let attacking parties beat their
powers over private business as the
malign heads and menacing fists upon
solution of the problems of waste and
the unyielding walls. But the rule of
maladjustment engendered by the lax-
military strategy which declares an
ity of the present purely negative policy
attack the best defense might find
of regulation.
proper application, we suggest, in the
It is obvious that these two classes of
debate over public economic policy
critics, though not in agreement upon
now going on in the United States.
the question of whether an economic
II
philosophy underlies the anti-trust
laws,
FORWARD VIA BACKWARD
are alike in this respect, at least,
that each has an economic philosophy
The economic philosophy of those
of its own. Both speak from a definite
who criticize the anti-trust laws for
theoretical standpoint, and both hold
their excess of regulation is the philoso-
their respective standpoints on account
phy of laissez faire. This is the system
of certain assumptions, certain articles
of economic thought which, as has been
of faith, if you will. Perhaps the best
shown above, is mistakenly imputed to
way to determine the nature and sound-
the sponsors of the public policy de-
ness of the economic ideology implicit
clared in the Sherman Act.’ It springs
in the anti-trust laws, therefore, will be
from a theory of private (natural)
to examine somewhat critically the
rights, and it minimizes the inequalities
philosophies of its most severe critics.
of economic condition which result
At least as a preliminary to the consid-
from free enterprise and unrestricted
eration of the main topic it will do no
opportunity in trade. In so far as
harm, in view of the atmosphere of
these disparities of fortune are recog-
heated controversy which has come to
nized, they are attributed to wilful
envelop it, to take a reconnaissance of
difference in ambition or to ineradicable
the battlefield and get a fair estimate of
differences in talent. But it is only fair
how the attacking forces are deployed
to the critics of the economic policy of
and what is their strength. An ag-
the anti-trust laws who, consciously or
gressive foray of this nature need not be
unconsciously, make the natural rights
interpreted as a definitive alignment
-laissez faire-theory their point of
with the forces defending the citadel,
departure, to state that most of them
i.e., the Sherman Act. We should
today give a new version to an old
much prefer the role of innocent non-
theory. They are far less inclined
combatants caught between the op-
than some of their nineteenth century
posing lines and determined to test for
predecessors to base their argument
ourselves the basic factors upon which
upon dogma. The &dquo;rights&dquo; of which
the ultimate victory (or stalemate?)
1
Cf. Trade Associations: Their Economic
will depend. But if, for the purpose
Significance and Legal Status. National Indus-
and for the moment, undertaking this
trial Conference Board, 1925, ch. XXII.



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14
they speak are more in the nature of
protest they evoke in some quarters,
constitutional rights founded upon
actually have an appreciable effect of
social utility than of imprescriptible
curbing the overreaching greed and cu-
rights founded upon a &dquo;natural&dquo; order.
pidity of a certain class of business
They emphasize less the beneficence of
men.
competition than the advantages of
PROFESSIONAL RESPONSIBILITY
liberty. They put their trust not so
much in the providential outcome of an
It is undoubtedly true that there is a
industrial &dquo;trial by combat,&dquo; as in the
growing sense of professional responsi-
piercing foresight and prudent self-
bility in the management of great
restraint of enlightened self-interest.
businesses.2 The more vast the re-
Laissez faire is not for them a war of
sources and the more far-flung the
each against all. It is an economic
interests of the huge organizations
policy which allows the widest freedom
which have been formed in response to
to the gifted few to organize and oper-
the technical and commercial advan-
ate industrial enterprises for their own
tages of large scale, integrated opera-
good. It assumes that they will mini-
tions, the more imperative has become
mize the wastes of conflict and guide
the practical necessity of conducting
the productive process in the right
these enterprises as though they were
direction and at the proper pace, all in
public trusts. A quasi-fiduciary re-
their own private interest. The affairs
sponsibility has been enforced upon the
of the ungifted many are expected to
business executives charged with the
prosper better under the genius of the
management of such concerns in their
few for managing things smoothly than
relationships to consumers, creditors,
they would under the haphazard ar-
customers, and even stockholders and
rangements of individual self-direction.
employees. The very breadth of vision
This is the philosophy of the contem-
and range of judgment required in
porary critics of anti-trust policy who
their day-to-day transactions foster a
would abate the governmental restric-
long-run point of view in the formula-
tions on business distinguished from
tion of business policies. Such enter-
the school of thought represented by
prises cannot be run upon the principles
Herbert Spencer and...