VOL.6 NO. 8 (AUGUST, 1996) PP. 118-121

COMPETITION POLICY IN AMERICA, 1888-1992: HISTORY, RHETORIC, LAW by Rudolph J. R. Peritz. New York: Oxford University Press, 1996. 384 pp. Cloth $45.00. Reviewed by Paul Kens, Department of Political Science, Southwest Texas State University.

Given the title of this book, and that it opens with the 1888 Congressionaldebates over the Sherman Act, one might assume it to be a study ofanti-trust law in America. But Professor Peritz has actually set out to domuch more. His term "competition policy" is not meant as a reference to anylaw or series of laws. Rather he uses the term in a more general sense as aconcept that has affected American attitudes toward politics, economics,social order; and, most of all, liberty. Even more, his thesis seems to bethat the dominant view about what is the best competition policy hasfluctuated over time, and that these fluctuations explain much of thedevelopment in constitutional doctrine from the turn-of-the-century to thepresent day.

This development of constitutional doctrine is not the product of anevolution, according to Peritz. It is the product of an interplay ortension among competing ideas. Specifically, he focuses on the idea ofliberty and notes that the parties to the constitutional debate haveexpressed radically differing views of what liberty means. On one sidethere is a tendency to describe "liberty" as freedom from governmentalregulation. But Peritz notes that, from the time of the debates on theSherman Anti-Trust Act, an alternative version recognized "liberty" asmeaning freedom from corporate control of trade and commerce -- that is,freedom from economic power.

Over the course of the century, thinking about liberty has been laced withvarying attitudes about the nature of equality. Usually, people who haveviewed liberty as freedom from government interference have presumed thatall actors in American society stand on equal footing. Peritz calls thisformal equality. Those who have viewed liberty as including freedom fromeconomic control tended to seek governmental aid to balance extremedisparities in wealth and influence. Their goal has been to encourage faircompetition by moving toward what Peritz calls substantive equality.

These themes play out throughout the book, which deals not only with thedevelopment of legal doctrine, but also provides a sophisticated analysis ofchanging political and economic theory. The book is organizedchronologically by eras or blocks of time. Within each block, Peritz moldsa discussion of property rights, anti-trust, race relations, and free speechand other personal liberties.

Chapter one covers competition policy from 1888-1911. For Peritz, this eramarked the formative stages of debate about competition policy. It pittedSenator John Sherman's idea that used government regulation of trusts toencourage "full and free competition," against a alternative policy thatenvisioned much more limited government interference modeled on common lawrestrictions of contracts "in restraint of trade." The goal of Sherman'sfull and free competition was a society with widespread ownership ofproperty, where businesses competed on a roughly equal plane. ItPage 119 follows:required the law to prohibit private agreements (or combinations) thatconcentrated economic power and thus upset the leveling force ofcompetition. The common law approach was not so concerned withconcentration of economic power. It argued that government posed the mainthreat to competition and thus emphasized freedom of contract and freedomfrom government intrusion. Competition, this side also argued, could bedestructive as well as beneficial. Finding the balance, assuring thatsociety guaranteed economic liberty at the same time it avoided ruinouscompetition, according to this view, could be accomplished through privatecontract.

Both sides to this debate were seeking to enhance "industrial liberty,"Peritz notes. And, to a certain extent, both also sought to enhance libertyof contract. Their differences resulted from the way they viewed therealities of the economic and social order. The full and free competitiongroup saw that order skewed by concentrations of economic power and soughtto add an element of equality to the mix. The common law group assumed thatformal equality -- equality of rights -- was enough to assure faircompetition. This latter view, which emphasized property rights and freedomof contract, dominated both law and politics in the early twentieth century.

Peritz emphasizes, however, that the ascendancy of one point of view didnot mean the end of the other. In Chapter Two he describes the era between1911 and 1933, as a period of adjustment marked by "a series of efforts tomake a place for cooperative associations in a classical political economyand ideology founded on individualism."[p. 59] The mantra of the era, hesays, was "cooperative competition" -- a mixture of government participationin the economy and a competition policy that allowed commercial cooperationthrough trade associations. The exception, he notes, was labor unions,which were viewed as political factions rather than economic entities.Beginning with Oliver Wendell Holmes's metaphor of a free trade of ideas.Chapter Two also introduces free speech as an element of competition policy.

Chapter Three covers the New Deal, 1933-1948. It is not surprising thatPeritz describes this era as reflecting "a primary commitment to substantiveequality," and treating free competition as "competition free from economicpower. " [p. 112]. That would be a fairly conventional view of the era.Where most scholars have describe this as a rejection of liberty of contractdoctrine, however, Peritz explains it as an extension of the language offree competition and liberty of contract, and a reformulation of individualism.

In Chapter Four, Peritz explains the Warren Court years (1948-1967) as aneffort to deal with what he calls "the problem of persistent oligarchy." Ashe explains it, this was an era in which the ethic of substantive equalityfaced the reality of enormous disparities in bargaining power. The idealthat tended to guide competition policy in this era was the image of Americaa pluralistic society. Fair process and minority rights became key themesin politics and in law. Property rights were relegated to a secondary status.Page 120 follows:

Of course, in Peritz's account there is always and underlying tension orconflict with regard to competition policy. The Warren Court's judicialactivism, for example, produced criticism like Herbert Wechsler's call for"neutral principles" as the bases for constitutional decision making. Bythe late 1960s popular economic, political, and theory started to turn, onceagain, toward an emphasis on property rights, liberty against government,and formal equality. In Chapter Five (1968-1980) Peritz refers to thistrend as "the ascendancy of the Chicago-School law and economics." Heemphasizes and critiques the writings of Richard Posner and Robert Bork.

Pointing to the BAKKE decision as a prime example, Peritz maintains that,"By 1880, the Supreme Court had turned away from the Warren era's ethic ofsubstantive equality. Yet, no clear position on equality had replaced thatethic."[p. 265] In Chapter Six, he describes the period between 1980 and1992 as having completed a swing back to competition policy that emphasizedcorporate control, subject only to the discipline of the free market.

While Peritz continues to discuss economic theory and economic policythroughout the book, it is interesting that in these last two chaptersquestions of free speech become a more significant aspect of his account. Hediscusses three categories of free speech problems as matters of competitionpolicy. First are problems relating to advertising or other forms ofeconomic speech. Second are problems relating to limits on free speech inprivate property, like shopping centers, that have a quasi public character.Finally, and most uniquely explained as a matter of competition policy, isthe BUCKLEY V. VALEO line of cases, which address the question of whethergovernment can limit the expenditure of money on political campaigns.

In short concluding remarks, Peritz emphasizes an idea he only touches uponin the body of his book. Rhetorical confrontations about competition policyhave been extremely complex, he observes, but they have produced only threedistinct logics. These logics relate to idea that American democracy can beviewed as comprised of two spheres The public sphere where governmentregulation is appropriate, and the private sphere where individual libertyis cherished. The classical logic of competition policy, Peritz says,favored the separation of these as two distinct spheres. The second logic,he maintains, collapses the two spheres into one. "That is, one loses itsdistinctiveness and simply disappears into the other."[p. 302] The problemcaused by this logic is one sphere's ethical and social goals are lost inthe collapse. Also lost is the counterweight of the opposing sphere. Onemight supposed Peritz is referring here to the experience of the WarrenCourt as collapsing the private sphere into the public. Instead, he usesthe example of today's Chicago School of law and economics which, he pointsout, would collapse the public sphere into the private. The third logic,which Peritz prefers, recognizes the value of distinct domains yet allowsfor negotiation. These negotiations, he argues, should proceed from theview that the two spheres are interdependent and necessary, rather thanmenacing neighbors.Page 121 follows:

Everybody who is interested in twentieth century constitutional history orcurrent constitutional law will want to read COMPETITION POLICY IN AMERICA.Peritz offers an extremely fresh perspective of the era. Some readers mayfind it difficult to accept that all constitutional development can beexplained in terms of competition policy, but Peritz never says it is. Hisfocus on this broad view of competition provides an angle on constitutionaldevelopment previously overlooked. Peritz deftly uses it to offer someenlightening insights and explain some apparent inconsistencies. His bookis not light reading, even for a person who has a fair bit of familiaritywith twentieth century legal history. Peritz sometimes makes sweepingstatements of historical fact without providing relevant references. He hasa tendency to use cases without providing a background to make his pointeasily understandable (although he does much better on this account whendiscussing political and economic theory). The only significant weakness inthe book is that Peritz seems to ignore the current tendency to look forentrepreneurial liberty in the Takings Clause of the Fifth Amendment. Itwould be interesting to see what Peritz has to say about Richard Epstein'sbook TAKINGS and recent cases like LUCAS V. SOUTH CAROLINA COASTAL COUNCILand DOLAN V. CITY OF TIGARD. References:BUCKLEY V. VALEO, 424 U.S.1 (1976)DOLAN V. CITY OF TIGARD,___ U.S. ___, 114 S.Ct. 2309 (1994)

Richard Epstein. 1985. TAKINGS:PRIVATE PROPERTY AND THE POWER OF EMINENTDOMAIN. Cambridge: Harvard University Press.

LUCAS V. SOUTH CAROLINA COASTAL COMMISSION, 505 U.S. 1003 (1992)

REGENTS OF THE UNIVERSITY OF CALIFORNIA V. BAKKE, 438 U.S. 265 (1978)


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