• America’s Antimonopoly Tradition: Talking to Barry C. Lynn

    What can’t you understand about “how the Founders designed this country to run” without grasping the central importance of citizen producers? What can’t you grasp about American traditions of distributed liberty without pushing beyond a narrow focus on white-male populism? When I want to ask such questions, I pose them to Barry C. Lynn. This present conversation focuses on Lynn’s book Liberty from All Masters: The New American Autocracy vs. the Will of the People. Lynn is the founder and CEO of the Open Markets Institute in Washington, D.C. His other books include Cornered (2010) and End of the Line (2005). His writing has helped to reshape understandings of how 21st-century monopolies threaten our democracy, individual liberty, security, and prosperity. Lynn’s work has been the subject of hearings in the US Senate, the House, and the Federal Trade Commission — as well as of high-level discussions by policymakers and scholars around the world, most recently in a half-day conference at the OECD in Paris.

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    ANDY FITCH: To begin outlining this book’s conception of the American system of liberty, could you first give some historical context on why we shouldn’t think of our political economy as waiting around for centuries to get better organized and optimized — but as decentralized by design?

    BARRY C. LYNN: You can see America’s antimonopoly tradition already in play with the Boston Tea Party’s rebellion against control — in this particular case against a private corporation, the British East India Company. By that time, both in the colonies and in Britain, folks had become well-aware of the British East India Company’s devastating impact on the Indian political economy. They also knew this corporation essentially had become a dictatorship over those who actually grow and make things. So with the Boston Tea Party, people basically said: “Hey, we don’t need centralized control over our political economy, and what we do with our hands and our minds, and how we decide to build up this world around us. Instead, we’ll take care of this together, ourselves.”

    So within this emerging system of liberty, in what ways should we also think of ordinary individuals as citizens by design — possessing practical power, and infused with principled aspirations? How does a robust flourishing of American citizenship catalyze active creators, makers, thinkers, dreamers?

    Today we might think of a citizen as someone who votes every two or four years. Today you don’t even need to go to the polls. You can just fill out your ballot from bed, mail it in, and feel you’ve exercised your citizenship. But for America’s first two hundred years, most people would have expressed this differently, something more like: “Being a citizen requires independence. When I speak in public, everyone needs to know that nobody else controls what I say, or what I think. They need me speaking my own mind, without fear of any consequences. That means I can’t depend on some master for my daily bread.”

    That takes us to the importance of property in this nation’s early days. Americans asked themselves: “Well, do we only make citizens out of the one in every one hundred people who owns a lot of land?” They already had models for that kind of aristocratic citizenship in Britain and a couple other places. But early Americans also asked themselves an alternative question: “Or do we try to give everybody sufficient property, to ensure that everybody can think and act and vote independently, to ensure that nobody is beholden to anyone else?” Of course at that time “everybody” only meant white men. But this still allowed for a significant break from the British model of an aristocratic republic. Rather than restricting citizenship to one percent of white men, in the new United States every white man was considered equal when it came to speaking their own mind at the townhall or in the legislature. For this vision of a democratic republic, property played an important role in ensuring every citizen’s independence and political equality and ability to take active part in ensuring that the citizens themselves were the sovereign power.

    For operationalizing that principle in this new society, we can turn to the Declaration of Independence. In the book I discuss a discovery made by scientists working in the US National Archives about 10 years ago. While x-raying an early draft of the Declaration, they discovered a section where Jefferson had scratched out one specific word. Jefferson had scratched out many words, but for one he had used terrific force, as if he were enraged by this word, and wanted to obliterate it for all time. The researchers determined that the word Jefferson had scratched was “subject,” and that he had written on top of it the word “citizen.”

    I consider this one of the American Revolution’s most revolutionary acts. What Jefferson did here was reconceive the foundational role that the individual plays in society. A subject exists below the state. A citizen is part of the state. A subject petitions power. The citizen grants power. By scratching out this notion of Americans as subjects of power, by establishing individual citizens as active parts of the sovereign whole, Jefferson empowered individuals to develop an entirely different conception of who they are and what kind of life they can live. By extension, he introduced a whole range of new understandings about how to organize society itself to ensure that every citizen would remain truly independent, free-minded, and equal in power to all of their fellows.

    In terms then of institutional dynamics that animate American liberty, you stress a common-sense philosophy of competition, as well as a systematic implementation of checks and balances — both operating to foster constructive forms of cooperation. So here again, why should we see a liberty-promoting America not as some laissez-faire paradise for would-be bullies and antagonists, but as a society deliberately harnessing distributed power (often within the context of marketplaces) towards achieving directed economic, social, and moral ends?

    Americans of course didn’t invent markets. Regulated marketplaces stretch back thousands of years. But within America’s own origin story, the citizens of the new nation needed to decide between having a centralized master (either the government, or a private entity like the British East India Company) basically determine who does what, and how people interact — or we needed a structure like a marketplace that would allow individuals to work out these decisions for themselves.

    The marketplace, properly understood, breaks up human activity into different pieces, allowing individuals to get involved in their own ways. If you go to a farmers’ market today, you see precisely how a marketplace functions. If only one stand sells tomatoes, then that stand can and will dictate prices that day. If five different stands sell tomatoes, that brings about a different type of interaction between buyers and sellers. Sellers compete with each other, to the benefit of buyers. The single seller’s monopoly gets broken. This benefits consumers, but it also benefits the additional farmers who want to sell tomatoes. For anyone who didn’t enter this business in order to cheat folks and make super-large returns, this should be a happy outcome — with many different participants now getting what they need to make it through the next week.

    That starts to answer the basic question of: “What are we doing this for?” The Boston Tea Party reacted against the British East India Company’s concentrated power. But with the nation’s founding, we needed a more positive vision of how and why to work and trade and cooperate with our neighbors (as our equals).

    With equality still in mind, and for one last definitional question, what makes this a book not just about power, but about identity? We’ve already mentioned, for example, struggles over who gets to count as a citizen — with America’s longstanding traditions of liberty no doubt proving more parochial or aspirational than universally accessible. So maybe with W.E.B. Du Bois here as intellectual precedent, how might you see, say, 20th-century Civil Rights claims as crystallizing our country’s ongoing efforts to realize what American liberty at its best could become?

    First in terms of identity, in recent decades, we’ve come to see ourselves primarily as consumers. In terms of the marketplace, we now picture ourselves as buyers, as acquirers. But in the nation’s early days, with citizens focused on their independence, they instead might have defined themselves by saying: “I want to open a business. I want to run a farm. I want to sell my labor in ways that give me the freedom always to speak my mind.” Back then, citizens saw themselves in the marketplace primarily as sellers, not buyers. They saw themselves as producers, as somebody who makes something, creates something. Liberty for these citizens often meant bringing what they produced to a free and fair marketplace. They didn’t want the British East India Company, or any government, getting in their face and preventing them from selling what they wanted to sell.

    Again, I consider this one of the revolutionary premises that makes our society so unique — with open marketplaces allowing these citizen producers to come together with their neighbors to trade and exchange and share. If you don’t understand that premise, you don’t understand how the Founders designed this country to run. You don’t understand the emphasis they placed on respecting and protecting your role as an active producer and contributor.

    To the extent my 2010 book Cornered had a presiding spirit, it was Louis Brandeis, the people’s lawyer who became a Supreme Court Justice and the re-creator of America’s system of liberty.

    To the degree Liberty from All Masters has a guiding spirit, it is Du Bois, one of the most brilliant Americans of all time. My own view of American history was closely shaped by Du Bois’s book Black Reconstruction, which he published in the early-1930s. Du Bois’s main goal in that book was to write African Americans back into the history of the Civil War and Reconstruction periods — as active participants, not passive beneficiaries or victims of white actions. In that book Du Bois offers a brutal but necessary look at human nature, and at American society’s ultimate abandonment of its commitments to ensure liberty for the freed Blacks. But in Black Reconstruction, I also found something beautifully hopeful in how Du Bois embraces this ideal of the citizen as a truly independent and self-ruling creator of the community in which he or she wants to live.

    I’ve read many different paeans to the American system of liberty. But Black Reconstruction stands out as the most powerful. It really taught me how to take a history of American competition policy unfurling and developing for over two hundred years, and to take a history of American society forbidding African American ownership of property in various ways (and also of course treating many African Americans themselves as property), and to place black men and women back into this ongoing narrative of American liberty. Black Reconstruction helped me to take a story of American populism that privileges white populists, and to bring in a tradition of African American liberty that has played just as important a part in shaping our society and our democracy for just as long.

    Pivoting now to today’s most acute threats to these traditions of distributed citizen power, could you describe a two-stage resurgence of monopoly in recent decades: first prompting an unnecessary sense of scarcity and brittleness and labor-market stress in particular industries — and then amplifying those pressures through the rise of sector-wide gatekeepers systematically eliminating potential market rivals?

    Not long ago, most of us still hadn’t recognized the extent to which monopoly had again become a major part of our political economy. Then as we woke up to this reality, we started seeing monopoly everywhere. We found it in our hospitals, in farming, in transportation, in certain housing markets. We also of course saw it in retail, and soon in almost every aspect of our online life. So at this point, we really have to start asking questions like: “Where did this problem come from? What role does technology play? What role does policy play?” And to get some clarity on those questions, we also have to take up this difficult but essential task of separating out different types of monopoly.

    When we look back chronologically, for example, we can see that much of the problem comes from bad policy decisions (sometimes due to ideology, sometimes just to stupidity) starting about 40 years ago. Then roughly 20 years ago, we start to see a true technological revolution take place, with the rise of the Internet and the digital economy. Then over the last decade or so, Internet-based corporations like Google, Facebook, and Amazon grow to enormous size and reach — all within the regulatory environment created by those bad policy decisions several decades prior. The result today is monopolies of a size, scale, and capability unlike any we’ve seen before.

    Given these concerns about domineering firms, your book nonetheless goes out of its way not to blame capitalism, but to present America’s antimonopoly tradition as privileging and protecting and championing capitalism. So here could we start looking at how the Reagan administration acted to fundamentally subvert, rather than to unleash, our country’s capitalist drives? What makes, for instance, the establishment of so-called consumer-welfare standards just as destructive to our social fabric as this era’s more conspicuous tax cuts and union-busting?

    I’d start with the policy scholars, the antitrust scholars, coming out of what often gets called the Chicago School of Economics, or neoliberalism, in the 1960s and 70s. This group was led by people like Robert Bork (who years later would be famously rejected from serving on the Supreme Court) and Richard Posner. In Liberty from All Masters I make the case that these scholars wanted to overthrow antimonopoly law, not reform it. They wanted to make it much easier for certain people to concentrate wealth, to concentrate power, to concentrate control over others. These policy scholars then went out and started selling their work to the people interested in concentrating power and control. So this neoliberal movement basically consisted of scholars working for would-be monopolists.

    The neoliberals basically said: “Rather than use antitrust to protect American citizens’ liberty and our democracy and our communities, let’s use antitrust solely to promote efficiency, solely in the name of the consumer.” They said the best way to serve justice was by promoting efficiency. This required hiring economists to devise elaborate systems to measure and maximize the efficiency of various industrial structures. It was an intellectual coup of the first magnitude, which then made possible a policy coup of the first magnitude, with the revolutionary restructuring of our entire regulatory apparatus in the Reagan administration’s early days.

    More broadly, our whole history of American liberty, as understood by Jefferson and Madison and Du Bois and Thurgood Marshall (the Supreme Court’s last great antimonopolist) gets overthrown. That core emphasis on protecting the property and livelihood of the independent businessperson, of the independent farmer, the independent creator, the independent thinker gets discarded. Instead, those with more money, and with control over powerful corporations, are given free rein. For two centuries, America’s antimonopoly system had protected capitalism itself, by protecting individual entrepreneurs from the people possessing big piles of capital. Now that shifts. Now our legal system operates to protect those big piles of capital, and to let certain people profit by stealing others’ livelihoods and liberties. These changes in policy free the folks on Wall Street to basically bankrupt or buy out whom they please.

    By the time of George W. Bush’s presidency, this first stage of resurgent monopolization leads to the era of Walmart, Monsanto, Citibank, and Exxon-Mobil dominating markets in ways our society just wouldn’t have tolerated in the mid-20th century. Even before the Internet revolution fully spreads across our economy, changes in ideology and policy from the early Reagan days result in this radical consolidation of power and wealth into a few hundred super-large corporations, super-large banks, super-large investment funds.

    Then for American monopoly’s next stage, if I had to extract one most pressing concern your book identifies coming from Big Tech firms, it would focus on the evisceration of common-carrier regimes, the collapse of fair and transparent markets, the corresponding atomization of society — allowing these giant corporations to treat each individual and each business uniquely in the provisioning of information, goods, and services. What precisely makes these distorted marketplaces most threatening to American rule of law, as well as to prospects for collective democratic decision-making?

    Well first, in the old days before the Internet, for a corporation like Walmart to become a monopolist, for it to gain 30 or 35 or 40 percent control of various American markets, took decades. Walmart had to invest billions of dollars building thousands of stores all across the country. They had to purchase the land, pay for plumbing and electricity, hire countless contractors and employees. It took a ton of work to build a nation-spanning monopoly as powerful as Walmart’s.

    For Amazon and Google and Facebook, however, gaining 70 or 80 or 90-plus percent market share (in e-commerce or search or social media) happens much faster. I mean, Amazon does have a physical component. They’ve invested a lot in distribution. But by the time of the 2008-2009 Great Recession, tech super monopolies had started spreading their reach everywhere. Google and Facebook increasingly become the interfaces across which most communications happen. They consolidate control over how we search for information, what we read, how we navigate the physical world with maps. Amazon becomes the essential interface for buying and selling most consumer goods. And all three firms do so without having to invest in the type of physical facilities that corporations like Walmart had to build.

    To really understand Google and Amazon, we should think of them in the way that Americans  understood the railroads in the 19th century, or AT&T in the early-20th century. Amazon, Google, and Facebook operate as essential networks, in which network effects play a significant role both in creating value and concentrating power. As a society, we don’t necessarily want to say: “Well, break Google search into 10 parts. Break Amazon’s distribution arm into 10 different networks.” We could lose a lot of social value that way. That’s why, in these particular cases, we have to look at a different set of antimonopoly tools, designed for monopolies that we don’t want to break into pieces.

    The key tool for such networks is nondiscrimination. This just means that a network monopolist providing essential services has to treat everybody the same — every seller and buyer, every speaker and reader. Network monopolists have to charge everybody the same price for the same terms of service. They have to serve their customers equally, without neglecting anybody. In the early days of railroading, of telephony, of the Internet itself, Americans said to these corporations: “Thou shalt treat everybody the same. Thou shalt not discriminate. Thou shalt not manipulate either the seller or the buyer.”

    We can trace nondiscrimination back to the English Statute of Monopolies, from 1624. What we see from a close study of that fight is how, when dealing with a monopoly, nondiscrimination provides the foundation for rule of law. When you allow a monopolist to control an essential service, and you also give this monopolist the power to treat different people in different ways, you’ve basically given monopolists life-or-death control over every businessperson who depends on their services.

    Without nondiscrimination rules, the people who actually grow the crops, actually make the shoes, actually install the curtains and sinks in your house, can see their property crushed at the sole discretion of the monopolist controlling a key chokepoint — not due to customers’ marketplace dissatisfaction. And let’s be clear what this means politically. When individual property is no longer safe, we don’t have rule of law. We don’t have independent citizens. We don’t have equal citizens. We don’t have democracy.

    Reading your book’s account of bipartisan failings over recent decades, my mind kept returning to conditions of labor-market monopsony. Could you discuss, for example, how certain policy agendas from the Clinton and Obama administrations passively accepted or actively enabled an ever-accelerating depletion of so many Americans’ workforce bargaining power? And again, alongside the forces of globalization and automation, how has corporate concentration drastically reduced citizen producers’ bargaining power?

    In 2006, I wrote a  piece for Harper’s called “Breaking the Chain: The Antitrust Case Against Wal-Mart,” which became the foundation of the analysis I then used for Cornered. That article essentially brought the term “monopsony” out of the wilderness. A monopsony basically means a buyer’s monopoly — a monopoly over the people who sell some product or service. When I bring my crops to market, I want to find many different people buying crops. I don’t want to find just one buyer, who could dictate prices to me. The same applies when I bring my work to market. I want to see competition among buyers for whatever set of skills I’m selling.

    So now think about all the public debates and discussions over the past 35 years asking: “What happened to America? Where did the American Dream go? Why did life get so hard?” And think about the many people responding: “Well, Reagan and others broke our unions. They made it much harder to organize.” That’s true. They didn’t completely break unions, but they did significantly weaken our unions. That made workers weaker, and made it harder for workers to claim their share. But we can’t forget that this overthrowing of antimonopoly law also made it much much easier for certain corporations to concentrate power — not only over us as buyers of things, but over any of us who want to sell something. And let’s be honest, whether I want to sell crops or sell work, if the market has only one or two buyers, I’m going to get less.

    We now have studies showing that labor-market monopsony has had huge effects on American workers’ lives. In practical terms, over the past 25 years or so, US wages have stayed at least 20 percent below where they’d be in a more competitive marketplace. In some parts of this country, in some sectors, monopsony has held down wages 30 percent or more. So when we ask ourselves why life now feels like a daily struggle for so many more of us than before, we have to remember that monopoly does not only mean we pay more for less. It also means we must work much more for less.

    You also made a separate point which I consider essential for folks across the political landscape to understand. We can’t just blame Republicans for what has happened to our economy. Yes, the monopoly revolution began under Reagan. But in many respects, Bill Clinton then completed the Reagan Revolution. Reagan overthrew antimonopoly law, which regulated certain parts of the political economy. But Clinton carried this neoliberal revolution into banking, into media, into telecommunications, into energy. He even made the world safe for defense-industry monopolists. Dwight Eisenhower had famously warned America not to allow the corporations supplying military arms to combine all of their power together. But Bill Clinton actually forced the corporations manufacturing our airplanes and tanks and arms to merge. He ignored the most dire political warning ever issued by a modern President to American society. And Clinton of course did so as a Democrat.

    So now for examples from preceding historical crisis points of American liberty needing to be restored and modernized, could you first contrast Teddy Roosevelt’s and Woodrow Wilson’s respective Progressive Era responses to early industrial monopoly? And while acknowledging that neither approach came close to promoting democracy for all Americans, what furthest-reaching legacies do stand out for these models of command-and-control reform, or of citizen-scaled distribution?

    That question has become especially timely, because today we see growing interest in Teddy Roosevelt’s approach. We see this especially among certain Republicans: Josh Hawley, Marco Rubio, Tom Cotton, for example. These Senators do recognize that 21st-century America has a monopoly problem. But they don’t reach back to Wilson and Brandeis’s model. They reach back to Teddy Roosevelt.

    One of the most destructive myths ever concocted in this country frames Teddy Roosevelt as our first trustbuster, and a great crusader against monopoly. If you look back at Teddy Roosevelt’s record, you actually find him describing monopoly as inevitable, as natural. Rather than try to rebuild our markets and restore competitive structures, Roosevelt said we must build an all-powerful federal state standing to ride herd over the monopolists. He said we need a federal government powerful enough to dictate to these monopolies what to do and how to do it. He said we need a super-powerful President wielding all this authority to serve the people’s interest.

    If you read what Teddy Roosevelt proposed as President, and what he proposed when running later on the 1912 Progressive Bull Moose Party ticket, you see him outlining a system that looks a lot like top-down fascism — with real power concentrated not in a handful of corporate leaders, but in the President presiding as authoritarian master over the political economy.

    In 1912, the American people managed to fend off this outcome. A plurality supported Woodrow Wilson. I consider Wilson a true Democrat of his time. He was an overt racist, who unforgivably resegregated the federal government while promoting segregation throughout society. But he was also an advocate of reinvigorated competition policy, and of distributing power as the country’s Founders had designed. In doing so, Wilson worked closely with Brandeis, whom he eventually appointed to the Supreme Court as the first Jewish justice. So Wilson left a very complex legacy. Yes, we must hold him to account for his sins. But we also should remember that Wilson and Brandeis rebuilt our political economy for the industrial era, in ways that empowered us to remain a free nation and free people.

    Here could you also describe how an early New Deal struggle between arguments for a neo-Brandeisian citizen-scaled society, or for a quasi-socialist collectivist society, played out, and helped to shape the next half century’s distributions of power — both at a national level, and in terms of US-led establishment of the postwar international order?

    Another dangerous modern American myth is that the main goal of Franklin Roosevelt’s New Deal was to centralize and concentrate power. Yes, in their very early days in office, FDR’s team promoted government management of businesses, to help fight deflation. Yet the system they created to do this, through the National Industrial Recovery Act, did not aim to promote mergers, but rather government-run small-business cartels.

    When this approach failed (and it failed miserably), FDR’s administration shifted to a radical antimonopoly approach, which aimed to protect the independent farmer, storekeeper, and community bank — as well as to break the power of big electricity, big insurance, even big liquor. They entirely restructured the US patent system to make it easier for small businesses to innovate. Then after World War Two, they essentially imposed this antimonopoly system upon both occupied Germany and occupied Japan, having concluded that monopolization played a major role in the rise of fascism and militarism.

    So with these various historical models in mind, and with certain fragilities in our political economy more pressing than ever, what could it look like to resurrect and redefine the concept of the American citizen for the 21st century? How would you hope to see such citizens fighting, winning, and holding power in fulfillment of our antimonopoly traditions, as well as our ongoing refinement of American liberty?

    Great question. I’d encourage people to focus on three fundamental truths. First, monopoly is by definition the enemy of democracy and individual liberty. Today’s crisis of American democracy gives proof of this fact. Monopolization, across the political economy, has concentrated so much power and wealth in the hands of so few. More dangerous yet, the anticompetitive actions and business models of Google, Facebook, and Amazon bear significant responsibility for the rise of this anti-democratic right-wing movement in America.

    Second, we already have all the tools we need to win. America’s antimonopoly tradition is fantastically rich. Today we actually see both lawmakers and law enforcers relearning how to use these tools — for instance, in the five new lawsuits filed against Google and Facebook late last year.

    Third, it’s important to understand that antimonopoly law is a tool that empowers us to remake our own futures. This means that in relearning how to wield antimonopoly law, we also relearn how to build the sort of world we’ll need in order to survive and thrive in the 21st century.

    Antimonopoly law, in short, empowers the American citizen to dream. So let’s stop focusing solely on all the terrible threats surrounding us, and begin to dream again of the world we’ll build after we have broken and harnessed all monopoly power. We have a world to win. We also have a world to build.

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