Rearview Mirror

Monopolies and other Shibboleths

I. Do you remember your elementary economics class where it was explained that there was a parallel between dollars and votes, and we all got to spend our dollars the way we all got to vote and by aggregating the dollars spent on a market basket of goods, we could establish a demand curve? James Buchanan, the public-choice economist, set out the argument formally in 1954 --in his article, “Individual Choice in Voting and the Market,” Journal of Political Economy, (62,4): 334-343 -- but it was probably a seductive sort of free-market folk wisdom far earlier. It seemed so when I took elementary economics as a college junior in 1958-59. Why did I not have the wit to pipe up: “But individuals each have one vote, while the number of dollars they possess can vary by up to millions”?

Indeed, the success of the analogy in the so-called “marketplace of ideas” -- the latter metaphor is in fact, a very similar disarming analogy -- provides a fine example of what Gramsci meant by “hegemony”: the attainment of class domination so complete that the language that expresses it is not even recognized as playing a key role in that domination. We live immersed in it like the fabled frogs who supposedly do not understand that they are in the pot designed to boil them.

The theorist who pointed out this situation most scathingly was probably Thurman Arnold in his book The Folklore of Capitalism (1937), an exposé of what he deemed the empty rhetoric of free competition that he wrote as a Yale Law School professor at a moment when what once was called the second New Deal was noisily embarking on a campaign to break up monopolies, which they blamed for the recurrence of recession in FDR’s second term. (The analysis complemented the models of “imperfect competition” published in 1933 by Joan Robinson and Edward Chamberlin, each of whom argued that oligopolies and monopolists could clear more profit by selling less at higher prices than by producing up to the classical market clearing point where marginal revenue equaled marginal cost.) Their “market power” shielded them from having to compete by cutting prices.

Instead of citing the old Ricardian bugaboo of a reserve army of the unemployed, the new generation of Keynesian economists effectively blamed mass unemployment on chronic under-production and under-investment-- which Keynes’s 1936 General Theory pointed out could be counteracted by government spending, Arnold’s reputation as a critic of outworn capitalist orthodoxy soon earned him an appointment to lead the antitrust division of the Department of Justice, where in fact, he vigorously began a campaign to enforce the antitrust legislation on the books since the Sherman Act of 1890.

This zeal did not last long, however. With the United States’ decision to aid Great Britain and even Soviet Russia in 1940-41, and then our own entry into the War at the end of 1941, the antitrust agenda soon gave way to the priorities of war production, government-industry cooperation in procurement, and the move from encouraging competitive pricing to agreed-on cost-plus contracts. (During World War I the government had effectively taken control of railroads and merchant shipping, but in the public’s name.) Thurman Arnold left for a seat on the D.C. Second Circuit Court of Appeals and ultimately a Law School deanship. Nonetheless, one of the lingering antitrust cases originated in the 1930s, an attempt to prosecute ALCOA for restraint of trade was left for the government’s was finally decided under Judge learned Hand in the New York Circuit Court in 1945, who ruled that monopolies did not have to pursue policies that explicitly sought to freeze out competitors to violate the law: commanding market share in itself qualified them for break-up. By the time the case played out, however, new entrants into the aluminum ingot market had weakened the case. The next spasm of anti-monopoly activity came thirty years later with the government’s break-up of AT&T into separate units for phone equipment production (GTE) and network transmission (Baby Bells). Recall the comedienne Lily Tomlin as Ernestine the telephone operator (on “Saturday Night Live” from, 1969 into the 1970s) at the switchboard blithely rerouting calls: “We can do what we want; we’re the telephone company.”

II. Remedies under antitrust legislation provide consumers with palliative care. They certainly should not be despised; we had cheaper airline ticket prices and more flight choices after the Carter administration deregulated airline ticket prices in 1978. Given America’s underlying commitment to the sanctity of property rights, periodic crusades against alleged monopolists remained the state’s wedge to set limits to economic power. They also diverted from more radical proposals for government takeovers and helped structure political coalitions. Alexander Hamilton’s program to advance the country’s economic development through federal government intervention, including tariffs, a failed effort to establish a national development company, and a more successful restoration of national finances and establishment of a national bank, has earned our generation’s admiration, thanks also in part to Lin Lee Miranda’s musical.

Yet Hamilton’s overall vision of a strong mercantile state has always aroused vehement opposition, early on from Jeffersonian agrarians, then Jacksonian Democrats -- who vetoed renewal of the Bank of the United States -- and Southern slaveholders, and later from soft-money Free Silverites, a new wave of Populist Party organizers, and by the 1930s Franklin Roosevelt’s New Deal. Somc of their animus veered off into quasi-paranoia: sample Ezra Pound’s Jefferson and/or Mussolini. Trying to find coherence in their platforms (outside the outright defenders of slavery and later segregation) is also of limited benefit, since in contrast to the Hamiltonians, their platforms were often discarded. The Hamiltonians remained a more purposeful coalition. Reorganized anew within the Republican Party of the 1850s, their platform promised containment of slavery, a protective tariff, and access to “free” land in the West by a homestead act -- and they more than delivered.

Still, the galvanizing denunciation of monopoly has continually recurred. A broad cross-party coalition passed the Sherman Anti-Trust Act of 1890. In 1903 the Northern Securities case became the first major exercise of the new policy; in 1911 the Supreme Court decreed the breakup of Standard Oil. Theodore Roosevelt (1901-1909) stressed activist regulation more than trust-busting as a remedy, but his administration initiated significant antitrust actions that bore fruit under his successor William Howard Taft. Woodrow Wilson’s “New Freedom” campaign of 1912, which caried that year’s election, stressed the evils of monopolies, and his administration passed the Clayton antitrust act of 1914, to tighten up loopholes. Now we are seeing another wave of anti-monopoly fervor directed at META (Facebook) and Twitter. It is clear that Donald Trump is not going to play Thurman Arnold, or the fabled “trust buster” and third-party Progressive candidate in 1912, Teddy Roosevelt, even if the President would like to have a space for his own face on the granite next to TR. If Lily Tomlin could be persuaded to resume her comedic talent, perhaps she could play Sheryl Sandberg instead of ATT&T’s Ernestine.

III. But today’s issues are about more than restraint of trade or competitive pricing. They are also crucially about content and public diffusion. Congress has famously exempted internet providers from liability, criminal or civil, for the content they carry. Print media and public have been protected, not by legislation but according to the degree that the courts find that the constitutional guarantees of the First Amendment are applicable. When radio became widespread after World War I, the government claimed that it had a proprietary claim on “spectrum space,” a new sovereign domain that it might partition and distribute or auction off by wavelength or frequency. It also set up a regulatory authority, which it later extended to cover television as well, that claimed to enforce rules to preserve parity or fairness for established currents of opinion. Thus, public struggles today are not only about the right to establish new channels of communication, most of which in the U.S remain private concerns that enjoy public immunities. Today’s concerns are also akin to earlier preoccupations about unwelcome content, whether political (sedition), libelous (defamation), or otherwise transgressive (obscene, age-inappropriate, personally abusive, or threatening, etc.). But it is precisely the internet’s capacity for mass communication that makes these issues so contentious.

The phone company, after all, provided facilities needed for person-to-person communication. So far as I know, no public authority has managed or sought to prohibit, for instance, phone sex between consenting adults although it has released or alluded to sexting transcripts it has gathered, presumably to discredit opponents who are in its sights. It is a safe bet that the FBI or other security agencies are trying to keep track of planning for demonstrations and protests. So far the common carriers themselves have not been prosecuted for hosting such communication although it seems a safe bet that the Trump administration would like to do so. Until very recently the internet provides access to services which, subject to restrictions on age and offerings involving bodily harm, any user has been able to send or receive no matter how scurrilous, libelous, or raunchy.

Although the parallel with freedom of the press sometimes seems intuitive, other public media have long been different. Control of content can involve government efforts to prosecute obscenity, “sedition” and “libel.” Sedition is an effort to undermine and discredit lawful government that goes beyond mere opposition. It has had an uneven career in Anglo-American courts. Even when a sedition act was legislated under the Federalist administration of John Adams it granted immunity to members of Congress and was abandoned once the Jeffersonians came to power. How sedition charges were to be squared with the First Amendment was unclear although exceptions were made for wartime prosecutions. The Lincoln administration’s effort to prosecute an anti-draft publisher during the Civil War would be reversed after the war ended. But even such a liberal justice as Felix Frankfurter upheld a state law in 1943 that required students’ pledging allegiance to the flag. It collided with the Jehovah Witness’s claim that it violated their religious conscience as well as other protections supposedly provided by the First Amendment.

Establishing liability (with fines or contempt proceedings) for defamation (which included slander and libel, i.e. written defamation) has provided an alternative way to inhibit opposition to the state as well as a recourse for private actors. But even before the celebrated case of John Peter Zenger in 1740, British courts had begun accepting that the state could not simply crack down on unwelcome opposition. Falsehood and/or defamation had to be involved. The limits of liability for defamation in the U.S. remain in some uncertainty. Will the expansive protection from libel prosecutions that the press has enjoyed since Sullivan v. The New York Times (1971), which essentially limited liability for any public figure to the reckless and malicious (i.e. willful and knowing) publication of false information, remain unconstrained?

Thus several clusters of issues are currently st stake: the traditional criteria for monopoly and restraint of trade, all the more sensitive when issues of political balance are concerned, including the power of internet providers to buy up ancillary services (Warner Bros.) or other providers is one; possible control of content and immunity from liability are others. Who can grant or change these terms -- the president or congress or department of justice? Ultimately five or six members of the Supreme Court will structure our domain of communicative action, indeed the dimensions of the public sphere, to appropriate Habermas’s terms, at least for a finite period. Defining what is public and what is private has always been the question préalable for liberal and constitutional politics. But can we presuppose that such a demarcation is possible, or historically was ever really possible? Why we ask that question in the Trump era is easy to answer; how to answer it is not.

Charles S. Maier, July 20, 2026