Kevin Frazier writes that the Neo-Brandeisian movement’s focus on bigness as a harm to society in itself neglects the true focus of antitrust policy—protection of individual liberty, as envisioned by Thomas Jefferson. He argues that a Neo-Jeffersonian approach would clarify antitrust’s goals and produce more appropriate government intervention in markets.
“I hope we shall crush . . . in its birth the aristocracy of our moneyed corporations, which dare already to challenge our government to a trial of strength and bid defiance to the laws of our country.”
Those aren’t the words of Louis Brandeis, the patron saint of a rejuvenated approach to antitrust adopted by some on the American left. Nor is the quote from Lina Khan, the chair of the Federal Trade Commission (FTC), who has become a standard-bearer for the Neo-Brandeisian movement in her adoption of an aggressive effort to rein in big business. These aspirational, inspired words are attributed to Thomas Jefferson.
A Neo-Jeffersonian approach to antitrust is necessary now more than ever. It acknowledges the Neo-Brandeisian’s concerns with big business’ domination of many markets while emphasizing that the focus of government intervention should not be on “bigness” per se but on instances where bigness impedes liberty.
The Founding Founders did not account for the possibility of corporations like Amazon, Apple, and Alphabet—businesses that operate across state lines, overseas, and, seemingly, above the laws of the government. Corporations at the founding of the United States were very much creatures of the state. They were small in number. They were subject to specific charters issued by state legislatures. And, they had finite geographic reaches. In short, they existed within the broader constitutional order and, therefore, did not presently represent a threat to individual liberty.
Nevertheless, so great was Jefferson’s concern about liberty that he emphasized a proactive posture toward market regulation. He called for efforts to prevent the ascendancy of an “artificial aristocracy.” Jefferson feared that a group of Americans who accumulated excessive wealth or privilege could chip away at the authority of government. Such an outcome would imperil the sovereignty and liberty of the people, who delegated their power solely and completely to the government.
So while Jefferson never had the opportunity to outline an antitrust doctrine, which the United States would not promulgate until the end of the 19th century, he had plenty to say about the best ways to maintain individual liberty in the face of public and private threats. His approach focused on empowering individuals, a strategy that would produce the sort of citizens upon which a republic thrives: citizens with economic independence, extensive ties to their community, and strong morals. He reasoned, “Cultivators of the earth are the most valuable citizens. They are the most vigorous, the most independent, the most virtuous, & they are tied to their country & wedded to its liberty & interests by the most lasting bond.” The cultivators of yesteryear—small farmers—are the entrepreneurs and small business owners of today.
Antitrust policy that embraces Jeffersonian ideals would pivot away from the current focus on attacking any big business based on its size alone. Briefly, a “big is bad” approach does not realize Jeffersonian ideals. Take, for example, the recent Department of Justice suit against Visa. The DOJ alleges that Visa is leveraging its market power to squeeze out competition in the debit card market. Many economists seem skeptical of that conclusion or, at a minimum, that disrupting the business model used by Visa, Discover, and the like will meaningfully empower consumers, entrepreneurs, and the little guy writ large.
If the DOJ realizes its goals, small businesses might suffer. There’s a possibility that small businesses would never learn of smaller alternatives and, “even if [a smaller competitor] did offer payment on that network, the odds that a bank would issue a card enabled for that exact network are relatively small.” Simply put, it is not surprising that consumers and small businesses seek out and benefit from the most popular and widely accepted cards. The merits of spending scarce enforcement resources in this sector is all the more questionable given that at least four companies are engaged in fierce competition in this industry, as pointed out by the Congressional Research Service.
Some consolidation in the debit card market is likely beneficial to the creation of the sorts of citizens that Jefferson hoped for. According to R.J. Lehmann, senior fellow at the International Center for Law and Economics, extensive payment networks operated by Discover and Visa, to name two, may “expand access to free checking accounts with no minimum balance requirements to a wider range of low-income consumers.” He adds that such networks “could offer debit cards with cashback to lower-income consumers who would not qualify for credit cards. The benefits for this important underserved community could be enormous.” In other words, some consolidation in the debit card market may empower those American citizens who are least well off and enhance their economic independence.
Bigness should be subject to antitrust regulation when it imperils individual liberty. This analysis is highly context specific and should turn on consideration of the core rights that the Founders aimed to protect, including, but not limited to, “free right to the unbounded exercise of reason and freedom of speech,” “free exercise of his industry, and the fruits acquired by it,” and right of self-government. Put differently, antitrust should strive not to punish ingenious business strategies that result in societally beneficial goods and services but rather to eliminate artificial barriers to entry that quash the entrepreneurial spirit that is at the heart of our constitutional order.
This conception of antitrust would moor doctrine to the aspirations of Jefferson and other Founders—it would also be consistent with the chief goals of Brandeis. Brandeis “believed that the social development of the individual, neglected in a concentrated economy, would be fostered by an atmosphere of small business.” Like Jefferson, Brandeis rejected the idea that “[e]fficiency, progress and the profit pattern should . . . be the controlling norms[.]” Business developments that benefited the consumer’s bottomline may also squash their capacity to develop core democratic values, such as independence. Such an outcome was not worth the supposed economic benefits. The two alike saw that certain instances of concentration could cause unacceptable social malaise and economic waste. In those cases, corporations would “dominate[] the interests of employees and consumers” in a blatantly undemocratic fashion.
For Brandeis and Jefferson, then, bigness is a concern to the extent it hastens “the extinction of independent businessmen[.]” This regulatory focus exposes the missing component of the antitrust approach pursued by the FTC and DOJ under the Biden administration. Errantly reducing what is problematic about bigness to a concern of bigness per se, they have failed to prioritize the interests of the small business owner, the little guy, and the ideal democratic citizen.
Core industries that warrant greater regulatory attention include the defense sector and health care. In these industries and others, entrepreneurs must climb over federal, state, local regulations that serve to entrench the success of existing corporations rather than spur innovation. The FTC and DOJ can and should use their expertise and authority to conduct investigations and research to help Congress identify which of these hurdles can be lowered. Such research would add to ongoing efforts to understand why it is that small businesses are struggling and entrepreneurs feel stifled.
This pivot cannot wait. The next administration will have an opportunity to use the bully pulpit as well as the president’s appointment power to set a new direction for the FTC and DOJ. A Neo-Jeffersonian vision is one grounded in the ideals of the founding of the U.S., that furthers the American Dream, and that increases the odds of Congress acting in the interest of the “cultivators” of a good democracy and robust economy.
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