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)
Copyright 1996