Why Antimonopoly Awoke From Its Slumber, Part 1: The Clinton Era’s Failed Utopia

In the first part of a three-part series, Matt Stoller explains why antimonopoly politics is experiencing a resurgence.

 

 

Photo by the Smithsonian Institution.

There are two basic components to the story of why the antimonopoly movement is coming back:

 

1. Why have businesspeople, political leaders, and citizens lost faith in what was?

 

2. Why have businesspeople, political leaders, and citizens begun to see in private monopolies the central element of dysfunction?

 

This is a complex political story, and it is happening all over the world, not just in the US. Moreover, antimonopolism is not a left-wing or right-wing type of politics, it is business reformism. It is how we think about our commercial selves, and thus our political selves. In part one, I’m going to try and describe where we came from so that we can understand the magnitude of the shift, which is akin to a once-in-a-generation political and philosophical revolution.

 

Revolutions start in our minds, and then they unleash themselves on the world through political events. For context, here’s one of my favorite passages from the American Founders, in a letter from John Adams to Thomas Jefferson in 1815:

 

“What do We mean by the Revolution? The War? That was no part of the Revolution. It was only an Effect and Consequence of it. The Revolution was in the Minds of the People, and this was effected, from 1760 to 1775, in the course of fifteen Years before a drop of blood was drawn at Lexington. The Records of thirteen Legislatures, the Pamphlets, Newspapers in all the Colonies ought be consulted, during that Period, to ascertain the Steps by which the public opinion was enlightened and informed concerning the Authority of Parliament over the Colonies.”

 

That’s the importance of public opinion and ideas. Moreover, a fancy Founder said it in an old letter to another fancy Founder, so it must be true.

 

To understand how far we’ve come, we must understand what was. I am going to try and help us reach back to the 1990s, before the financial crisis, Iraq War, Big Tech’s monopolization, before Nickelback jokes, and so forth. It’s a time we were alive and from which we have memories, but it’s also a time that I find hard to fully understand. Things seemed to be, well, really good. There was no Cold War or Iraq War, and the tech sector was vibrant and alive, as was the rest of the economy (or so it seemed to me, an urban liberal college student.) Wall Street wealth was up, but trickle-down was working. Discretionary income growth for many was up for the first time since the 1960s; the demand for labor was so strong that ex-cons were getting hired straight out of jail.

 

This story is from April 2000:

 

”Ten years ago, an employer wouldn’t even look at an ex-con,” said Willy Walker, director of the Detroit Employment and Training office. Now that the city’s unemployment rate is 5.5 percent, down from 14.1 percent 10 years ago, some companies have changed their approach. ”Employers will call and say, ‘We need somebody right away — if you have any ex-cons, clean them up and send them over,’ ” Mr. Walker said.

 

They had figured it out. The key shift had been to transform the conception of the person from a citizen to a consumer, to frame the point of life as consuming the maximum amount of stuff, and thus to turn us into utility-maximizing rational actors. For instance, Jason Furman, later to head Obama’s Council of Economic Advisors, penned a 2005 paper titled “Wal-Mart: A Progressive Success Story.” Big corporations and social justice went hand in hand, towards a more progressive future. If you want to know why Baby Boomers have such a hard time acknowledging catastrophe, it’s because the 1990s was the justification for everything they believed, and it seemed to work. I don’t mean to pick on Furman, he was just reflecting the ideology of the time.

 

The rhetoric and thinking of that time in the technology sector was straightforwardly libertarian, with cyber-utopian clothing, and—depending on how you saw it—a justification for unvarnished greed or the triumph of the countercultural disdain for national sovereignty and traditional hierarchies (If you want more on this, Fred Turner’s remarkable From Counterculture to Cyberculture: Stewart Brand, the Whole Earth Network, and the Rise of Digital Utopianism nails it).

 

The below headline from The Onion in 2001—just before George W. Bush took office—is how good we thought we had it during the Clinton administration. Now, it’s fascinating that the party who believed they brought forth this prosperity—elite Democrats—didn’t see the problem with a remarkably-prosperous era in which, oddly, they lost power. But it would be one of many missed signs.

 

 

Of course, such attitudes were not just Democratic self-deceptions. The smugness was bipartisan and existed deep into the commercial and policy worlds. In 2004, Ben Bernanke, then just a Fed board member, did an economist mic drop (though in somber technocratic terms), popularizing the term “The Great Moderation” to describe the stable and successful period of growth since the early 1980s. This wondrous economy had high productivity, high growth, and low volatility—it was both a dessert topping and a floor cleaner. Bernanke went through several potential explanations: better monetary policy, deregulation, or perhaps luck, and settled on monetary policy. Self-satisfaction was flowing through the policy world.

 

All these great economic results happened because policymakers finally realized that scientific truth. Bernanke’s smugness was a long time coming. In 1992, Francis Fukuyama published The End of History and the Last Man, a book describing his post-Cold War thesis that man had figured out its political end state of liberal democracy. A global utopian view, peddled most aggressively by Thomas Friedman in his 1999 book The Lexus and the Olive Tree and his 2005 The World is Flat, continued this framework. The key wasn’t just that we have figured out domestic stability, but global stability as well; China would become a democratic state, slowly, because its people wanted McDonald’s and X-Boxes, and McDonald’s and X-Boxes turned countries democratic.

 

“The 1990s libertarian model is the framework that is still embedded in many of our internet laws and regulations. But it wasn’t just the same ideas that led to today’s concentrated world. In many cases, it’s the same people as well.”

 

Bill Clinton structured online markets consistent with this basic libertarian posture. This is from the final version of his White House’s website:

 

“The Administration continued to build on the successful May 1998 WTO electronic commerce declaration to formally extend the existing moratorium on customs duties on electronic transmissions and continue the WTO work program regarding the application of all trade disciplines to e-commerce.”

 

The WTO electronic commerce declaration was important because it extended what turned out to be a pro-monopoly framework worldwide. The internet, far from a natural emergent system, arose in the way that it did because of policy choices like this.

 

The 1990s libertarian model is the framework that is still embedded in many of our internet laws and regulations. But it wasn’t just the same ideas that led to today’s concentrated world. In many cases, it’s the same people as well.

 

I’ll close with a memo written by Stuart Eizenstat, who has been a sort of political fixer in high-level Democratic circles since the Carter administration. Eizenstat was the ambassador to the EU in the early 1990s, and then Deputy Treasury Secretary from 1999 to the end of the Clinton administration. Here’s what he wrote:

 

“The President has issued a number of executive memoranda over the past month on e-commerce. Sheryl has suggested and I agree that I should call a meeting of the various Treasury offices, perhaps led by Economic Policy, to kickstart a process to devise a comprehensive agenda of critical policy changes necessary for Treasury to enhance the growth of e-commerce and increase access.

 

Executive Memoranda on Facilitating the Growth of Electronic Commerce instructs all agencies to identify any provision of law or regulation administered or issued by them that may impose a barrier to electronic transactions or otherwise impede the conduct of e-commerce and to recommend how such laws or regulations may be revised.”

 

That Sheryl was, of course, Sheryl Sandberg, who was then chief of staff to Larry Summers at the Treasury Department. She was handling Digital Signatures and a whole host of other issues related to e-commerce. Today, I suppose, it’s accurate to say she’s still handling such issues, in a different capacity. Good times.

 

In the second part, I’ll talk about why this system cracked, and the nascent anti-monopoly movements of the mid-2000s.

 

Editor’s note: This article first appeared in Big, Matt Stoller’s newsletter on the politics of monopoly. You can subscribe here. Stoller is a fellow at the Open Markets Institute and the author of the upcoming book Goliath: The Hundred Year War Between Monopoly Power and Democracy. You can follow him on twitter @matthewstoller.

 

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