sumers. In this manner antitrust law is basedon a misunderstanding of the very nature of markets and their grounding in private own-ership and control. Consumers are not threat-ened by firms that achieve dominancethrough internal growth or aggressive compe-tition. In fact, driving out one’s competitors isthe name of the game in business, and such“restraint of trade” is essential to consumerwelfare. No matter how large a company, thecapital markets and the rest of the economyarrayed against it are bigger and can appropri-ately discipline it. Indeed, market conditionscan never be frozen—the marketplace is anarena in which seemingly impervious stan-dards (like mainframe computers and vinylrecords) are routinely toppled.Economists, documenting that decades of antitrust enforcement and business regula-tion in general have failed to benefit the con-sumer, have noted the pro-competitive ele-ments of a number of practices typically eyedsuspiciously by antitrust regulation. But if these practices are actually efficient, thatimplies that enforcement creates inefficien-cies and harm. Policymakers cannot seem tomanage the industrial policy scheme calledantitrust to consumer advantage, and thatinvites rejection of the conventional view of antitrust as public interest law.Although antitrust supporters tend toagree with Adam Smith that self-interestrules in the marketplace, they embrace a con-tradictory view of human nature with respectto government officials engaged in “protect-ing competition.” Public servants areassumed to lack the capacity for self-servingbehavior, the existence of which those verypeople take for granted in the private sector.But skeptics do not share this view. Insteadthey ask
wealth is increased by theenforcement of antitrust laws, and they con-clude that it is not that of consumers. To be sure, there does exist such a thing ascoercive monopoly power. It stems from gov-ernment protectionism—from the restrictionof entry or the banning of competition.
AT&T once enjoyed protection from compe-tition, just as electric power companies andthe U.S. Postal Service do in some of their ser-vices today. Breaking up
monopolies—that is, abolishing exclusivelegal franchises, tariffs, quotas, and excessivelicensing restrictions would be an antitrustactivity worthy of the name.Although certain business practices havehistorically been regarded as anti-competitiveand harmful to consumers, there may in factbe pro-consumer justifications behind anumber of such practices. Alternative inter-pretations of several of those frowned-uponpractices, presented on the following pages,conclude that the quashing of those behav-iors only serves to transfer wealth from someproducers to others, or even from consumersto producers. In that sense, antitrust enforce-ment may function as one of today’s least-obvious forms of special interest pleading.But better, more economically astuteantitrust enforcers are not the answer: theproblem lies with the fundamental rejectionof property rights and contracts inherent inantitrust law and its flawed view of marketsand human interaction.Antitrust is anti-consumer.
1: Restraint of Trade andMonopolization
The stated intent of antitrust law is topolice restraint of trade and monopolization. The Sherman Act of 1890 makes illegal “everycontract, combination, or conspiracy inrestraint of trade”
and declares that “everyperson who shall monopolize, or attempt tomonopolize or conspire to monopolize shallbe deemed guilty of a felony.”
The 1914Clayton Act created a list of practices thatcould entail anti-competitive effects under cer-tain conditions, including tying arrange-ments, exclusive dealing, mergers, and inter-locking boards of directors.
But the notion that restraint of tradecharacterizes the marketplace at all is sus-pect. Markets represent the social incarna-tion of voluntary trade. Take the signature“golden age” or “smokestack” antitrust case
To be sure, theredoes exist such athing as coercivemonopoly power.It stems fromgovernment pro-tectionism—fromthe restriction of entry or the ban-ning of competi-tion.