When President Reagan nominated Judge Robert Bork to the Supreme Court in 1987, a political war began. Judge Bork had been a circuit judge on the District of Columbia Court of Appeals, which could be considered the second most powerful court in the nation. Although he was 60 years
old, his influence over ultra-conservative jurisprudence became well known at the time of his nomination. He is one of the founding fathers, so to speak, of originalism. Democrats feared that his confirmation would shift the court so far to the right that it would be decades before balance could be restored. That political war was fought mainly over Judge Bork's stance on Roe vs. Wade, a war which President Reagan lost. Fierce opposition from Democrats like Ted Kennedy and some Republicans like Arlen Specter, led to Bork being rejected by the Senate 58 to 42. Anthony Kennedy was confirmed unanimously in his wake. Judge Bork resigned his seat on the DC Circuit the following year, leaving his colleague on the court Antonin Scalia to carry the battle flag for another time. But Judge Bork's influence didn't fade. He is still held in high esteem by conservative legal scholars over such matters as federalism, original intent, and other matters. But his influence over another body of law is deep, pervasive and is playing out across the nation in ways that will probably be felt for generations.
After serving as Solicitor-General for Presidents Nixon and Ford from 1973 to 1977, Bork wrote a book that has had a lasting influence on the American economy. The Antitrust Paradox is Robert Bork's magnum opus. Along with Judge Robert Posner's seminal book Antitrust Law(1976), the influence that Bork's book has had on modern competition law in the conservative era is difficult to overstate. Both men are associated with the so-called Chicago School of neoliberal economics with its heavy emphasis on deregulated markets and the rational choice theory. Conservative legal minds like George Priest at Yale have praised his influence:
Virtually all would agree that the Supreme Court, in its change of direction of antitrust law beginning in the late 1970s, drew principally from Judge Bork's book both for guidance and support of its new consumer welfare basis for antitrust doctrine.Liberal legal minds like Zephyr Teachout have written about Bork's influence as well:
The spirit of antitrust has been eviscerated over decades by people like Robert Bork, who argued that antitrust had to be about "efficiency," as if efficiency was a nonpolitical, objective idea we all might measure.The D.C. Circuit Court of Appeals made Bork's doctrine official in a 1990 ruling in United States vs. Baker Hugues, which was a Clayton Antitrust Act enforcement action brought against Texas oil services company Baker Hughes. That influential ruling solidified the Chicago School's influence over antitrust enforcement by holding:
The Supreme Court has adopted a totality-of-the-circumstances approach to the statute, weighing a variety of factors to determine the effects of particular transactions on competition. That the government can establish a prima facie case through evidence on only one factor, market concentration, does not negate the breadth of this analysis. Evidence of market concentration simply provides a convenient starting point for a broader inquiry into future competitiveness...The judge who wrote this opinion? Clarence Thomas, who took Judge Bork's place on the D.C. Circuit after Bork resigned. Thomas was joined in the opinion by Ruth Bader Ginsburg. Justice Sotomayor has used applied Bork reasoning in antitrust cases when she sat on the 2nd Circuit Court of Appeals. Elena Kagan has agreed that the Bork/Posner drive to incorporate neoliberal economics into antitrust law is necessary. During her confirmation hearings she said "it’s clear that antitrust law needs to take account of economic theory and economic understandings."
While Justice John Paul Stevens is now considered a liberal champion, his primary, if lesser known, achievement on the court was initiating the embrace of Robert Bork's antitrust reasoning. When President Ford appointed Stevens to the Supreme Court in 1976, replacing traditional antitrust crusader William O. Douglas, he had already spent 20 years as an antitrust lawyer in Chicago. He taught antitrust law at the University of Chicago, where many other Chicago School neoliberals had ensconced themselves. He had been recruited there by the dean of the University of Chicago Law School, Ed Levi. After serving as a Nixon appointment to the 7th Circuit Appellate Court, he came highly recommended to President Ford by now Attorney-General Ed Levi and one other: Ford's Solicitor-General, Robert Bork.
Ford appointed Stevens to the Court in 1976. Shortly thereafter, the Court began to take Chicago School ideas seriously, ultimately completely overturning antitrust doctrine in a movement that continues today.When John Paul Stevens' position on antitrust law is the left-most position, that is clearly indicative of a fundamental transformation of applied law. It happened quickly and the scope and effect of it has been breathtaking. And Robert Bork was right at the center of making it happen.
It is difficult to overstate Stevens' contribution. At the time of his appointment, the development of antitrust doctrine for four decades had consisted of the continuous expansion of per se rules prohibiting a wide range of practices: price-fixing and territorial restrictions; group boycotts; tying arrangements; predatory pricing; and resale price maintenance, among others.
While I don't want to get into heavy legal theory in this piece, I'll try to summarize quickly how Judge Bork's views changed the nature of enforcement of antitrust law and then move to the effects these changes are having on our economy. This is not a scholarly essay, but rather a polemic. My goal in describing how Judge Bork's views affect America is political, not exclusively legal in nature.
In a 2007 paper published at Berkeley, antitrust scholars Johnathan Baker and Carl Shapiro get to the heart of the matter:
The past forty years have witnessed a remarkable transformation in horizontal merger enforcement in the United States. With no change in the underlying statute, the Clayton Act, the weight given to market concentration by the federal courts and by the federal antitrust agencies has declined dramatically. Instead, increasing weight has been given to three arguments often made by merging firms in their defense: entry, expansion and efficiencies.The primary effect that Judge Bork had on antitrust enforcement is changing the standards by which antitrust actions are brought and decided. The basic point of Judge Bork's book is that the determinative factor of when and how an antitrust action should be decided should be economic rather than political. This is why the factors determining the use antitrust powers are decidedly financial in nature: Are there any barriers to entry? Is the consumer paying higher prices than usual? The fixation on consumer choices and prices, rather than market concentration and number of actors is the basic fundamental difference between modern and classical antitrust enforcement. This is why you have not and will not see a breakup of a major corporation in America today no matter how large or how concentrated its market share. In simpler terms, it does not matter if Wal-Mart is the sole source of food in your county as long there are a wide variety of products, the prices are low and in theory someone else could open up a store. No barrier to entry? Wide variety? Low prices? Monopoly approved.
The original spirit of competition law in America, however, was decidedly political. Senator John Sherman of Sherman Antitrust Act fame, put it this way:
If we will not endure a king as a political power we should not endure a king over the production, transportation, and sale of any of the necessaries of life.Justice William O. Douglas, writing in a 5-4 dissent in United States vs. Columbia Steel, however, may have put the purpose of antitrust law better than anyone else:
"We have here the problem of bigness. Its lesson should by now have been burned into our memory by Brandeis. The Curse of Bigness shows how size can become a menace--both industrial and social. It can be an industrial menace because it creates gross inequalities against existing or putative competitors. It can be a social menace...In final analysis, size in steel is the measure of the power of a handful of men over our economy...The philosophy of the Sherman Act is that it should not exist...Industrial power should be decentralized. It should be scattered into many hands so that the fortunes of the people will not be dependent on the whim or caprice, the political prejudices, the emotional stability of a few self-appointed men...That is the philosophy and the command of the Sherman Act. It is founded on a theory of hostility to the concentration in private hands of power so great that only a government of the people should have it."That isn't an economic argument about consumer prices or market efficiency. Justice Douglas' argument for antitrust law was moral/political and it was not uncommon in his time.
The 1950's and 1960's were what might be considered the "golden age" in classical antitrust enforcement. During that era, the use of the Sherman, Clayton, and Robinson-Patman Acts inter alia, were buttressed by the Celler-Kefauver Act. Those bills allowed the Federal Government to aggressively limit mergers, intervene in concentrated markets and combat anti-competitive behavior with the heavy hand of consent decree regulation. While the era did not bring about a great deal of break-ups, the corporations knew there was a tough cop on the beat. The problem with these laws, however, was that they were so broad that they left a great deal of discretion over enforcement to the executive branch and the courts. What would happen if both institutions developed a very different view of "bigness" than John Sherman or Justice Douglas?
The "golden age" ended partly because of the tremendous legal influence of Robert Bork. His view of competition law fit neatly with the ascendancy of neoliberal economic thought. New antitrust enforcement guidelines were written by successive conservative administrations, whose members accepted Bork & Posner's thinking on the subject. Antitrust actions declined on both number and scope. The few actions that were brought were on the most obvious price-fixing and the like. Next, lawyers who accepted or in some cases enforced Bork's views were appointed to the district and appellate bench. Even nominally liberal judges appointed by Bill Clinton accepted the economic view of antitrust law and focused their concerns solely on consumer prices, product choice, etc. Mergers that in the 1950's would have completely rejected were approved.
You need only look at the recent history of Bank of America since 1980 to see the effects of the lack of meaningful antitrust enforcement. In the first thirty years of the conservative era, Bank of America was allowed by antitrust enforcers to become so gargantuan, that it's failure posed a direct threat to the entire national economy. So huge in fact, that only the government could bail it out as it approached failure in 2008. While Judge Bork and his ilk would likely point to the benefits of "free checking" and "national ATM coverage" to the consumer, classical antitrust enforcers would look at the size and concentration of an entity that large and conclude it's massive size poses an excessive risk to society as a whole. Taxpayers now know costly "the problem of bigness" can be.
When one considers the Citizens United ruling within the context of the dominant laissez-faire thinking among antitrust lawyers, it is easy to understand why large corporations have become the dominant institutions in American life. While there was a strong progressive and labor movement in the early part of the 20th Century to act as a counterweight to to the "robber barons" and "trusts," today no such movements exist. Perhaps progressives had thought the laws they worked so hard for, laws expressly designed to curb the size and concentration of corporate power, had largely made monitoring such things no longer imperative. But antitrust law was just a much a fundamental element of economic justice for the middle class as the labor movement. Even in cases where the trust busters failed, the people could see that there were people in government who were on their side, protecting the weak from the strong. But the conservatives planned ahead and planned well. Their victory was so complete, the Bush Administration didn't bother trying to enforce even the relatively lax Bork antitrust rules. And now, things are so far diverted from their original purpose, that Obama Administration's more robust antitrust action is firmly ensconced in Chicago School-style enforcement. Without traditional antitrust laws, or a labor movement, and unlimited corporate spending on elections, who or what will bring balance to the forces corporate power have over the people and their government?
In conclusion, I agree with Zepher Teachout:
There are also reasons to think an antitrust policy focused on size and power makes good economic sense. Despite economic theorizing, bigger companies are not always more efficient companies. And even if they were, there are important societal efficiencies that go beyond whether individual companies operate cheaply or produce low-cost products. As Bert Foer of the American Antitrust Institute recently testified before Congress, we can choose to use competition policy to help prevent much of the systemic risk that has crippled our economy. By focusing more on size and concentration, we might be able to avoid collapse, unplanned nationalization, and bailouts.To get there, we will either need a new body of competition law, or new teaching to undo the effects of the influential Robert Bork.