The Curse of Bigness: Antitrust in the New Gilded Age

Columbia Global Reports

by Tim Wu

From the man who coined the term "net neutrality," author of The Master Switch and The Attention Merchants, comes a warning about the dangers of excessive corporate and industrial concentration for our economic and political future.

We live in an age of extreme corporate concentration, in which global industries are controlled by just a few giant firms -- big banks, big pharma, and big tech, just to name a few. But concern over what Louis Brandeis called the "curse of bigness" can no longer remain the province of specialist lawyers and economists, for it has spilled over into policy and politics, even threatening democracy itself. History suggests that tolerance of inequality and failing to control excessive corporate power may prompt the rise of populism, nationalism, extremist politicians, and fascist regimes. In short, as Wu warns, we are in grave danger of repeating the signature errors of the twentieth century.

In The Curse of Bigness, Columbia professor Tim Wu tells of how figures like Brandeis and Theodore Roosevelt first confronted the democratic threats posed by the great trusts of the Gilded Age--but the lessons of the Progressive Era were forgotten in the last 40 years. He calls for recovering the lost tenets of the trustbusting age as part of a broader revival of American progressive ideas as we confront the fallout of persistent and extreme economic inequality.

Genres: Economics, Nonfiction, Politics, Business, History, Law, Technology

Audible Audio

First published November 13, 2018

About the author

Tim Wu is an author, a professor at Columbia Law School, and a contributing writer for the New York Times.. He has written about technology in numerous publications, and coined the phrase "net neutrality."

Reviews

[Tim Wu · Rating 5 out of 5]

I learned an awful lot writing it.

[D. St. Germain · Rating 5 out of 5]

The history of monopoly in the US began as an "economics eugenics movement” targeting those seen as unfit to deserve industrial life, Tim Wu writes in The Curse of Bigness: Antitrust in the New Gilded Age. Wu’s book, a history of monopoly power and public policy in America from the late 1800s onward, is particularly useful to revisit in this current age of tech firms, big pharma, and airline monopolies. Its also illuminating in showing how tussles over market concentration created openings in the modern American economy that made possible the tech and internet industries that exist today.

When the push to consolidate economic power first began (termed the Trust movement), America was a nation of decentralized and distributed economic activity, dominated by many small producers. These farmers, professional service providers, and shop owners were scattered throughout the country, working for themselves and trading amongst each other - and spreading prosperity over the continent. But it was not to last. Clever financiers (including J.P. Morgan) believed that, just as man had come from apes, monopolies were the natural evolutionary outcome of competition, and a society run by monopolies was one ruled by the strong. So they set about purchasing, consolidating or (if they couldn't do that) destroying small firms in order to organize them into larger Trust companies to capture market power. As Wu shows us, in the decade between 1895 and 1904, 2,274 firms merged into 157 corporations - a number of which you’d recognize as still in business today.

As trusts gained evermore power, they exerted political power as well, and this political power began overriding democratic will. When Teddy Roosevelt took the reins after President McKinley’s assassination, he was determined to take the power back for government, asserting that a “majoritarian government must lead the country” and that corporations must be accountable to the government, not the other way around. These were the first shots fired as the antitrust battles began in earnest.

These early antitrust fights are anything but boring, and Wu does a great job illuminating the price fixing, industrial sabotage, train accidents and cabals that led to the Rockefellers and Cowboy presidents, the insidiousness of IBM and Microsoft’s microserfs, and Jeff Bezos’ mapping a plan for Amazon’s growth “by first drawing a map of antitrust laws, and then devising routes to smoothly bypass them.” Wu shows how monopoly power has shaped the modern economy, and also shows how these antitrust laws that are still on the books have become sporadically enforced, highly partisan, and frequently under attack, particularly since the presidency of Bush 43.

It’s been two decades since a big anti-trust case has been prosecuted by the government, thanks to these shifting opinions amongst lawmakers and the judiciary. And as a result, more than 75 percent of industries have achieved increased concentration, and industries with large increases in concentration now enjoy higher profit margins and high-value merger deals.

This book shows there’s a path away from our extreme economic concentration, using laws we’ve had on the books for over a hundred years. The question is if anyone will garner the political will to do something with them.

Read my longer review of this book here.

[Charles Haywood · Rating 5 out of 5]

As the ideological tectonic plates shift in America, many apparently settled matters have become unsettled. This creates, at the same time, both conflict and strange bedfellows, though I suspect the latter will become used to each other soon enough. Such once-settled matters include hot-button cultural matters like nationalism, but also dry, technical matters of little apparent general interest that are of profound actual importance. Among these are the place in our society of concentrations of economic (and therefore political) power, the subject of the excellent Tim Wu’s awesome new book, "The Curse of Bigness." What Wu is hawking is “Neo-Brandeisianism,” and I am buying what he is selling.

Wu, a Columbia Law professor and sometime (unsuccessful) reformist Democratic candidate for Lieutenant Governor of New York, writes mostly on the intersection of technology and social organization. His most recent earlier book, "The Attention Merchants," focused on the downsides of advertising in the modern world, especially as mediated by the Lords of Tech. That book offered measured, practical ways to address the problems identified, which seems to be a Wu specialty. This book focuses on economic concentration through its legal treatment, under antitrust law, for the past one hundred and thirty years.

The Curse of Bigness is a short and punchy work; Wu is an outstanding writer. Woven throughout a history of antitrust are Wu’s own insights and opinions, which he caps with specific and well-thought out solutions. The core argument of this book is that for the past several decades, antitrust law has become effectively neutered, administered not at all in the manner its original nineteenth-century drafters intended. Instead antitrust law has, lately, refused entirely to recognize the extremely pernicious societal effects of economic concentration, even though it was designed by Congress to address precisely those effects. For my money, Wu is right on target, and, just as importantly, he provides building blocks for the political realignment in which social conservatives are aligning with economic liberals against the neoliberal/corporatist elite.

Wu begins with the pre-antitrust era, when men such as J. P. Morgan and John D. Rockefeller created massive enterprises as the United States industrialized, using grit along with bribes and coercion to build their concerns. These men, who created various giant trusts (a legal device for holding companies), thought that monopoly is awesome and competition is ruinous, for both business and society. Instead, they could and should be relied upon to innovate, lower prices, and generally benefit everyone, along with themselves. (As the author notes, today Peter Thiel pushes this same line, which has worked very well for him.) Wu analyzes this as a form of Social Darwinism, closely tied to eugenics (Rockefeller gave millions to sterilize the “unfit”). “The weak, the small, and the old-fashioned [businesses] were all being swept away. . . . For some, this purge displaced not just old ways and inefficient businesses, but Christianity as well, with its regard for the disadvantaged and insistence on humility before God.” Modern conservatives have too often failed to appreciate the long-term effects of worship of monopoly and consequent economic concentration, and that the logical end of this, Ayn Rand’s Objectivism, is a very, very bad prescription for a flourishing humanity, whatever its theoretical appeal.

One hundred and thirty years ago, though, Congress was not the do-nothing group of shambling cretins it is now; it was filled with, or at least led by, serious men who took their responsibility of governing seriously. Thus, in 1890, due to concerns about these and many other trusts, which collectively dominated all relevant industry, we got the Sherman Act, which to this day on its face absolutely outlaws all actions “in restraint of trade,” as well as any monopoly or attempts to monopolize. You ask, then, why are restraints of trade and monopolies all around us? Don’t worry—Tim Wu has arrived to tell you why, clearly and succinctly.

Before we get there, though, Wu takes a detour to lay the groundwork for his preferred philosophical position. While this is a book about what the law is, it is just as much about what the law should be. Wu’s avatar is Louis Brandeis, who served on the Supreme Court from 1916 to 1939. Brandeis grew up in Louisville, when flyover country mattered. He became a business lawyer for some decades, and observed first-hand the growth of the trusts at the end of the nineteenth century and the beginning of the twentieth, unhampered by the Sherman Act, which was treated as merely hortatory. Brandeis saw the trusts destroy small businesses, corrupt politics, and not in fact offer the efficiencies and benefits they claimed.

I’ve never really had much use for Brandeis; his association with the destructive Progressive movement and his use of so-called social science to decide strictly legal questions, thereby involving judges as ideological advocates in a legislative role and paving the road to the modern disastrous “living Constitution,” always left a bad taste in my mouth. But Wu makes a good case that Brandeis’s philosophy as it relates to economic concentration, totally aside from constitutional law, is both unanswerable and necessary for today. Like Theodore Roosevelt, Brandeis is someone whom today’s conservatives should at least partially embrace, rejecting country club Republicans who prostitute themselves, cheaply, to the neoliberal elite. “If [Brandeis] had a unifying principle, politically and economically, it is . . . that concentrated power is dangerous, that institutions should be built to human scale, and society should pursue human ends. Every institution, public and private, runs the risks of taking on a life of its own, putting its own interests above those of the humans it was supposedly created to serve.” It should most definitely not be the role of judges to impose their own values against the expressed will of the legislature, but as Wu notes, Brandeis’s philosophy here was, more or less, the original legislative theory behind the Sherman Act and subsequent laws.

Using Brandeis as his foundation, Wu is explicit about what he wants to build. “This book aspires to resurrect and try to renovate the lost tenets of the Brandeisian economic vision. It envisions a vigorous, healthy economy, a skepticism of the self-serving rhetoric projecting the romance of big business or the inevitability of monopoly, and, above all, a sensitivity to human ends.” As presented by Wu, Brandeis was profoundly conservative, or would be today, if placed next to today’s Left: “For him, the very purpose of life was the building of good character and the development of self. The ‘ideal’ of democracy, he once said, should be ‘the development of the individual for his own and the common good.’ ” Not for Brandeis the modern progressive goal of ever-more emancipation from unchosen bonds, of autonomic individualism enforced and empowered by the government. His goal was not gaining everyone more atomized freedom, as the Left pushes today; it was offering freedom in the Aristotelian sense, what was until recently the universal sense in the West, the freedom to choose rightly. To make that choice possible, everyone had to have, Wu summarizes, “sufficient liberties and adequate support to live meaningful, fulfilling lives.” Neither the government nor private enterprise should “stifle opportunities for thriving and life.” Economic concentration, monopoly, was the origin of much such stifling, because it allowed big, impersonal, impervious businesses to dictate to both workers and consumers.

I quibble with Wu in that, without discussion, several times he casually equates this set of goals with democracy. Democracy may be a goal, in that one could argue (though neither Wu nor, in his telling, Brandeis, does so argue) that democracy enhances the first-order goals of “sufficient liberties and adequate support to live meaningful, fulfilling lives.” At most, though, that makes democracy a second-order goal, and there is little evidence that modern democracy is necessary to achieve the first-order goal. Still, Wu makes a good case that economic concentration, in any society, threatens the first-order goal, which is the point of the book.

Brandeis wasn’t the one who resuscitated the moribund Sherman Act, though. He just acts as Wu’s philosophical lodestar. It was Theodore Roosevelt who did that, seeing trusts as corrupting America and failing to curb them as leading to social unrest and even Communism. The problem Roosevelt identified was that the private power trusts represented (even though, as he pointed out, they were “creatures of the State”) was easily transmuted into massive political power. Roosevelt’s intuitive observation was later given heft by Mancur Olson’s mid-century work in public choice theory, which compellingly demonstrated that motivated small groups with money could achieve disproportionately favorable governmental results through the magic of collective inaction. This effect is exacerbated by concentration; an industry with only a few players, even if they are bona fide competitors, can easily coordinate actions for the benefit of all of them to extract rents from the rest of society, where a less-concentrated industry would be unable to herd enough cats to achieve the same goal. The losers are the great majority of people, who have neither the money nor the individual incentive to organize in opposition—so, in Roosevelt’s and Wu’s thinking, that’s where the government comes in.

In 1902, Roosevelt attacked J. P. Morgan’s railroad trust, an action upheld in the Supreme Court’s Northern Securities decision. Then, starting in 1906, he broke up Rockefeller’s Standard Oil, again supported by the Supreme Court, which began putting together the outlines of a legal standard, not found in the ultra-broad language of the Sherman Act, that held that only “unreasonable” restraints of trade or monopoly were illegal. What is unreasonable, therefore, became the interpretive key to antitrust law in the following hundred years. Roosevelt himself later, when out of power, turned to corporatism, where it is held that giant companies are good, and competition bad, if the companies work hand-in-glove with the government (hello, Mussolini!), but in his earlier years worked tirelessly to ensure competition and smallness at the expense of bigness, and he is thus the prototype of what Wu thinks should be the proper executive approach to antitrust law.

Wu uses the Standard Oil case to frame what he thinks is the core question in antitrust law: is monopoly, or more broadly economic concentration, merely evidence of efficiency, spreading benefits for all? Or is it a form of anti-majoritarian and anti-human flourishing power, where monopolistic producers use their economic, and other, power, to keep out new entrants and reduce innovation and consumer choice, while deforming the political process in myriad ways, even if sometimes they also reduce consumer prices? Here Wu offers a range of often-forgotten basic economics, including that diseconomies of scale are just as real as economies of scale, so bigger is not necessarily better, and that the agency problem (the separation of ownership and control) frequently means decisions are made to build empires for management rather than in the best interest of stockholders, much less consumers. Size is closely correlated with crony capitalism and rent seeking at the expense of workers and the broader community—just look at Jeffrey Immelt and General Electric under the Obama administration, for example (not an example Wu gives). But Standard Oil, in fact, in the form of its constituent parts, boomed after its breakup, suggesting that monopoly did not even offer the company economic benefits. Wu also name-checks my favorite economist, Luigi Zingales, for these same points. Zingales is another person I think an essential player in the realignment of some conservatives and some liberals against their neoliberal/Chamber of Commerce enemies (and who also, together with his “Capitalisn’t” podcast partner Kate Waldock, recently discussed the Brandeisian antitrust revival).

Moving back to history, in the 1930s, as fascist-style central planning reached its peak under Franklin Roosevelt, antitrust action suffered a “near-death experience,” but rebounded soon enough, in part as a fresh reaction against economic concentration, which became seen as a key element of the Nazi and Soviet systems (including the rise to power of the Nazis—though the idea that the prime mover of Nazism or fascism was economic concentration is obviously silly now, it was compelling then). Concentrated economic power was now seen as un-American, and, more importantly, as risking an American turn away from democracy. Smaller businesses were seen as the iron bulwark of the American way of life, and so aggressive antitrust enforcement, including breakups of monopolies, continued through the 1950s and 1960s. During this time, though, law professors from the University of Chicago, originally led by Aaron Director and then brought to full flower by Robert Bork, created, by Wu’s account out of whole cloth, a new idea—that the real purpose of Congress in passing the Sherman Act and subsequent antitrust laws was not addressing the societal harms of economic concentration, but rather only demonstrable consumer harm. And that only in the form of increased prices, not any other, less direct, harm.

Bork, at one point the high priest of originalism, the school of Constitutional interpretation holding that the original understanding of the Constitution by its ratifiers was the only acceptable lens through which to decide Constitutional questions (which antitrust is not), based his argument on a very strained reading of legislative history (or so Wu tells us). He combined this with the powerful sales pitch that focusing on lower prices for consumers provided an objective, standard measuring stick that courts could use to decide antitrust questions, instead of vague and varied feelings about the social impact of economic concentration, which judges could use to simply impose their own politically desirable result. It was the desire for judicial restraint (not the same thing as originalism, though sometimes they go together) that really sold what Bork was offering. The net result, after Bork’s reinterpretation swept through first the academy, then the courts, was to return antitrust to its pre-Theodore Roosevelt days.

As Wu points out, Bork ignored possible costs imposed on consumers other than mere higher price, such as stifling of innovation. The classic example there was AT&T, after the breakup of which telecommunications innovation flourished, but the point is obvious—why innovate, if you are collecting monopoly profits? Bork also ignored “virtues of competition stressed by Hayek, like the virtues of decentralization and the avoidance of central planning.” AT&T was the prototypical aggressive and open monopolist, gladly engaging in collusion, “the jealous God of telecommunications, brooking no rivals, accepting no sharing, and swallowing any children with even the remotest chance of unseating Kronos.” The success of its breakup disproved Bork—but, ironically, it was around the time of its breakup that Bork’s view became dominant.

Finally, Wu turns to what he calls the Tech Trusts, and I call the Lords of Tech. He does not like them. Like other authors, such as Franklin Foer and Niall Ferguson, he distrusts, and more importantly sees evil in, all of Amazon, Facebook, Google, and so on. After a brief efflorescence of freedom in cyberspace, a false dawn in which fools (not including me) thought the rules of economics had changed forever, what always happens happened again: a handful of giant companies concentrated in their hands all economic power in the relevant portions of the new Internet economy, using all the usual tools of coercion, economies of scale, and crony capitalism, along with a few new ones. So, for example, Facebook bought all its competitors that might threaten it, such as Instagram, and the antitrust regulators swallowed the laughable claim that they were not competitors at all. Listing this parade of horribles, as well as intimating that possible future combinations of such economic power with government could lead to even worse things (a point he has expanded on in interviews talking about this book), Wu concludes, “If there is a sector more ripe for the reinvigoration of the big case [breakup] tradition, I do not know it.”

What Wu wants most of all is a return to aggressive breakups of any concentration of economic power, with a near-conclusive presumption that any long-term monopoly, say existing for longer than ten years, be broken up by government action. (He only touches lightly on the definition of monopoly, which revolves around how one defines the relevant market, but that is a relatively easily overcome hurdle.) Wu points out that since the decline of antitrust to near-total irrelevancy in the past twenty years, numerous critical industries have become very substantially more concentrated: airlines, cable, pharmaceuticals, beer, and even telecommunications, with AT&T reborn without government objection (though in a substantially changed technological environment, where the old AT&T monopolies are gone forever).

So, wrapping it up, he offers a “Neo-Brandeisian Agenda.” First, aggressive prior review of mergers, which now is perfunctory (and as I know from my own experience as an M&A lawyer, mostly an excuse for the government to charge juicy transactions taxes masquerading as fees). Second, transparency in mergers, which as an administrative process is mostly kept from public view by law. Third, and fourth, and most important, resurrecting “big cases,” followed by a presumption in favor of breaking up companies. This would involve bringing suit against them under existing laws (Wu does not call for any major new laws), with the claims being not consumer harm through higher prices, but the mere existence of restraint of trade and monopoly, or of any behavior that does not protect competition, for which the punishment should be corporate death, or at least corporate amputation. Wu notes that the idea that breakups can’t be done is laughable—again, something I know from personal experience, having helped put together many companies together in my time, it’s very clear that the external appearance of an efficient, welded monolith is a fantasy for any big company, or any big organization, and breaking them up would cause almost no real trauma. He also points out that court-ordered breakups are self-executing, rather than, as with consent decrees, requiring constant ongoing supervision for compliance. Fifth, Wu recommends what he calls “market investigations,” already done in Europe, which scrutinize any existing market concentration and recommend whether it should be attacked, either for bad behavior or because it has ensorcelled itself from competitive attack.

[Review completes as first comment.]

[Atila Iamarino · Rating 4 out of 5]

Um livro bem curto do Tim Wu com um grande argumento, as novas grandes empresas (FB, Google, Apple, Amazon, Disney, etc.) crescem como crescem e fazem o que fazem por uma competição pelo monopólio. Ele documenta o histórico anti-truste americano, quando deixaram de quebrar/perseguir grandes monopólios e como essa mudança reflete no mercado atual.

É um daqueles argumentos que, depois que você ouve, parece que você sempre soube daquilo. Por exemplo, a competição do Uber ou da Amazon dando prejuízo ano após ano com o apoio dos investidores só faz sentido se eles (e os investidores) estiverem pensando em recuperar esse prejuízo quando se tornarem o grande monopólio daquele mercado. Compra de startups, subsídio para quebrar concorrentes, lobby extremo e práticas afins são muito mais justificadas se a competição for pelo bolo todo e não só uma fatia.

[Skip · Rating 3 out of 5]

Kudos to Tim Wu, who has written a readable treatise on the lamentable decline of anti-trust policy in the U.S. He praises the pioneering work of Louis Brandeis and the political strength of Teddy Roosevelt in ending the Gilded Age, led by men like Morgan, Carnegie, and Rockefeller. Sadly, we are slipping back into a world dominated by one behemoth (Facebook, Amazon, Apple, Google) or just a few companies (banking, airlines, cable, wireless services) because our government has fallen back to the laissez faire policies of yesteryear, which has produced inordinate wealth concentrated in the top 1% of Americans. The last great anti-trust breakup was the telephone business which led to more choice, services and products than ever before.

[Mehrsa · Rating 5 out of 5]

Such an important (and short) book on the necessity of reviving old school trust-busting. Wu does an excellent job showing what went wrong (basically, Chicago school econ and Bork). He's absolutely right that the current test is meaningless and the modern tech and media behemoths are too large and monopolistic to be any good for the people and The People in the democratic sense.

[Zaphirenia · Rating 4 out of 5]

"Once upon a time, in the 1990s and 2000s, the Web and the Internet were new and everything was going to be different forever."

Very comprehensive and consise, suitable for non-experts to understand the history and development of American antitrust law and policy, from the breakup of the first trusts of Rockfeller and Morgan to the time of tech industry giants like Google and Facebook and the role of the law in preserving the very structure of competition.

[Athan Tolis · Rating 5 out of 5]

Monopoly is a monster with many faces. You can think of it as a structural pillar of the kind of politics we rejected in the forties and the late eighties, you can look at it from the angle of the businessman or the consumer or you can take the legal angle.

In this 120 page monograph, which is decidedly not cursed by bigness, author Tim Wu gives a thorough and entertaining history of the legal aspects of anti-trust from 1890 to today. You get flattering, but not fawning, profiles of the main protagonists, like Teddy Roosevelt and Louis Brandeis and a slightly less reverential look at Robert Bork, whom (like the author) I first heard of as part of the “block Bork” movement when I was an undergrad.

In short, the very broadly written 1890 Sherman Act was originally left alone, but the assassination of McKinley set in motion the forces for it to be interpreted (Tim Wu choses the word “activated”) by “Trustbuster” Teddy Roosevelt as a warrant to battle men who had become more powerful than the government they were meant to answer to, starting with an anti JP Morgan campaign in the Northern Trust case and moving on to JD Rockefeller’s Standard Oil.

The point is made that the law was interpreted and reformulated via the Clayton Act of 1914 to view not only monopoly but also scale as the enemy (or so the author argues, at any rate.) A further point that is made (p. 77) that the FTC was established to investigate and bring suit against any “unfair methods of competition.” And the historical context is given that the American way, competition, was very distinct from the methods of totalitarians of both the right and the left, what with both Germany and Russia in essence seizing the means of production with the intent of reaping the returns to scale and putting them at the disposal of “the people.”

The scene is set from there to move to the newer, “consumer welfare” standard introduced and pushed through by Robert Bork, initially in response to what at the time was considered over-reach on the part of what had in the meantime become the anti-trust establishment, but also due to a quirk that only had a chance of being relevant in times of relative prosperity: the fact that judges find it much easier to apply a simple criterion than make pronouncements on the bigger issues of right and wrong. To wit:

“despite the robes and bench, judges are still lawyers, and can become anxious when asked to decide complex and challenging cases. Bork offered a calming remedy with an appealing simplicity and apparent rigor.” (p. 91)

This line is probably the biggest contribution of this mischievous little book ;-)

From there Tim Wu moves on to

1. discredit the notion that anybody (let alone a judge) can seriously believe he can measure consumer welfare any better than he can make pronouncements on what’s fair

2. deplore the disastrous results of Bork’s victory and lay out the example of the damage inflicted today on competition *and consumer welfare* by the big tech trusts

3. argue very persuasively that a number of cases such as AT&T, IBM and Microsoft were triumphs from a consumer welfare perspective, regardless of whether they were won or lost

4. set a neo-Brandeisean agenda for the future

It’s a narrow book and I, in particular, feel the legal / legislative angle is the hardest and most radical of our choices when it comes to one day defeating the spiritual successors to JP Morgan and JD Rockefeller. We could get them to pay tax where they sell, we could change a tax regime that strongly favors leveraged financing (only the big can borrow in scale), and we could make it illegal for asset managers to own more than one player in any industry. That would stop the formation of new trusts in its tracks, leaving us to deal with breaking up the already existing ones at our leisure.

But “The Curse of Bigness” does not pretend to be a broad book, it’s a monograph on the legal aspects of our fight against monopoly and bigness.

A tremendous one!

[Charlie Cray · Rating 5 out of 5]

I remember going to the House Judiciary Committee-created Antitrust Modernization Commission's sole public interest hearing in DC. There was hardly anyone who wasn't a lobbyist or industry-friendly regulator in the room.

The panel and the presentations were all made by corporate lawyers. When the floor was opened up for public comment, I asked why there were no public interest representatives -- from, for example, consumer groups (after all, modern antitrust doctrine has narrowed the question down to price theory and consumer harm), or labor unions or family farmers or small businesses...

My question was received with an incomprehensible blank stare, then a response delivered by the chair w/o reference to who had raised the question. Which was something like this: "As for the question of balance, this panel is clearly balanced: We have representatives chosen by both Democratic and Republican members of the committee." In other words, "both Democrats and Republicans had an opportunity to pick K Street lawyers represented here..."

If you think the differences are significant, you should look at how much the big banks and companies like Google, Facebook, Apple give to both Democrats and Republicans. Along with Pharma, Big Ag., the Weapons Cartel, Chemical/Seed Mfrs, etc. (The AMC's final report can be found here, btw: https://govinfo.library.unt.edu/amc/r...)

There's clearly a need for popular understanding of the importance of real fundamental reform in how antitrust laws are interpreted and enforced. People know this (thousands of farmers turned out for field hearings held by the DoJ's antitrust division held at the start of the Obama administration's first term, but nothing substantial came of it). They know that the economy has become concentrated in few hands, driving both inequality and a dangerous concentration of political power in the hands of plutocrats. And that reality has been confirmed repeatedly by various studies. See, for example, the references to economist Gustavo Grillon, who found that 75 percent of industries witnessed increasing concentration between 1997 and 2012, as well as the Council of Economic Advisers report to the president ("Benefits of Competition and Indicators of Market Power." The problem extends far beyond Wal-Mart, Amazon and Too-Big-to-Fail banks. Another stark example is beer: Just one company sold 70% of all non-craft beer in the U.S. in 2017. (Remember when Anheuser-Busch renamed Budweiser "America" after they were bought by the Belgian In-Bev?).

As Wu points out, the consequences of market concentration are not merely economic power and control, they are also political and threaten Democracy itself. (A famous study of nearly 1,800 policy decisions by Gilens and Page found that none went in favor of public interest groups, leading them to conclude that by formal standards of political science the U.S. has become an oligopoly. An example that sticks out to me is the fact that between them Facebook and Google took in 75% of all online ad revenues outside of China in 2017. FB and Google are platforms; they don't generate original content or employ investigative journalists. The implications for democracy are evident in the spread of fake news.

Wu's book is the best introduction to Antitrust law and history that I know. I've been waiting for a book that could explain in accessible terms (for non-lawyers like me) why antitrust law matters and how we went from having a "trust-busting" President to seeing the law get "Borked" by the U. of Chicago and its more moderate followers at Harvard -- whose doctrines reduced the Sherman and Clayton Acts' interpretation down to narrow questions of price theory and consumer harm.

(btw - If you're interested in tracking these issues more closely, I recommend Two groups -- the American Antitrust Institute and the Open Markets Institute. Ralph Nader also had a great conference on the myths of market fundamentalism a few months ago - the recording is posted at CSRL.org. The growth of activity by these and other groups is a good sign.).

There are helpful references throughout for those who want to dig deeper. But start with "The Curse of Bigness" if you're looking for something akin to "Antitrust for Dummies"

Wu puts it plainly and clearly: we must control economic structures before they irreversibly control us.

[Clint · Rating 5 out of 5]

A short book about the seemingly dry subject of antitrust that revealed itself instead to be urgently important and incredibly readable to me as a layman in the area. Wu's brief history of antitrust's origins and strong enforcement in the early to mid 20th century is informative and compelling, but even more so I enjoyed his detailed recommendations for how and why we should now return to that tradition in the early 21st century.

In light of the increasing economic anxieties that currently dominate political/socioeconomic discussions, Wu argues for an alternative to two other popular ideas for solving capitalism's current ills. Where the far right seems to believe purely unregulated free market capitalism will be the cure and the far left has re-popularized rejecting capitalism entirely for socialism, Wu argues for re-acknowledging antitrust's original goals and again returning its early regulatory strength and will to be enforced.

Wu's argument could be lazily framed as the obvious moderate compromise between the two other more radical viewpoints mentioned above, but I don't think his position gains any inherent worth simply from fitting in the middle of a US-centric ideological mapping. Nonetheless, I found many of his points persuasive and I enjoyed the passionate and well-supported argument he formed from them, particularly since so many centrist op-ed arguments right now are unconvincing and lifeless promotions of an unsustainable status quo.

[Charlie · Rating 3 out of 5]

Tim Wu's The Attention Merchants is one my most favorite books read to-date on the media industry and as a result I have vowed to keep abreast of everything he writes. The Curse of Bigness is his most recent and, like his other books, is extremely well written, full of persuasive arguments and historical context, and also a pleasure to read. But something is amiss. The book's premise is to make sense of the growing income inequality in the US and points to the trend towards more industrial concentration over the past 20 years as one of the leading causes. Interesting thesis, but unfortunately the book lacks any proof. This is a major omission and a curious one, mostly because he does such a good job referring to many of the great legal and economics minds to lay the foundation for his arguments. As a result, while The Attention Merchants oozes with substance and can lay claim to being a definitive history of advertising in the US, I fear that this book will be judged as more of a lightweight effort.

[Rob Rains · Rating 3 out of 5]

This book argues that antitrust analysis has erred on the side of taking no action for the better part of 30 years. This pairs well with Chickenshit Club by Jesse Eisinger. The premise is more impressive then the actual delivery and even the broader analysis. Some of Wu’s conclusions are fairly self-evident and thus not quite satisfying. In short, there are better books about the topics of anti-trust [Steve Coll’s Trial of the Century about AT&T] and about white collar crime and the lack of prosecutions for violations [Eisinger]. Wait for this one until it gets to your local library.

[Teresa Chen · Rating 5 out of 5]

Short and smooth — now a neo-Brandeis convert

[Jason Furman · Rating 5 out of 5]

An outstanding, short, insightful capsule history of antitrust and antitrust through from the establishment of the Clayton Act in 1890 through the latest issues with the tech giants. All of it written very much for a general reader with little or no law or economics. In many places I would have liked to see much more, but you can find more in Wu’s papers—this book was for a different purpose. Underlying Wu’s version of history is an argument in favor of Louis Brandeis’ approach to antitrust, which focused as much on the political as the economic—specifically the risks of both concentrated economic power and concentrated political power.

Wu discusses the establishment of antitrust, its first major use with Standard Oil, and its growth through the Microsoft breakup pushed by Joel Klein during the Clinton administration. As antitrust actions are growing, the Chicago School was growing in importance as well with its emphasis on a much narrower concept of consumer welfare as determined by economic experts primarily with regard to whether a given merger will raise or lower prices. Ultimately Wu credits (or discredits) the “Harvard School” with taking the rough edges of the Chicago School and making it possible for the legal system to use it.

Wu faults the Chicago school’s narrow focus on economics while also faulting their economics. On the later, he is sympathetic to their limiting predatory pricing claims but thinks they way overshot the mark with their lack of concern about virtual all vertical mergers, many monopolies, and abuses of dominance.

At the same time Wu documents the benefits of antitrust enforcement, arguing the breakup of AT&T and the cases against Microsoft and IBM unlocked vast new economic terrains and were part of why the United States has outpaced countries like Japan which kept their monopoly telecoms in place. Some of this is widely accepted but Wu make a particularly compelling reinterpretation of the IBM case—often used as an argument against antitrust enforcement because it dragged on for over a decade—as central the separation of hardware and software and the rise of the PC.

Overall the book did not fully persuade me of the overarching “ne0-Brandesian” theory that Wu is seeking to revive for three reasons. First, I’m not sure how much link there is between corporate concentration and political power. It is the case that the wealthy have much more political power, but antitrust won’t do anything about hedge funds and private equity and I’m not sure that political power is much stronger with four airlines than six airlines. Second, much of Brandeis’s “big is bad” celebration of small businesses seems to be stronger on nostalgia than evidence. While too much corporate concentration can tilt bargaining power in a problematic way, it is not like small businesses are ideal places to work and in fact tend to have less workplace protection, benefits, training and room for advancement.

Finally, and most importantly, Wu shows that you don’t need to buy his broader political arguments to believe that antitrust needs to be more vigorous and specifically more vigorous in many of the ways he recommends (e.g., greater merger control, more reliance on structural remedies like breakups instead of conduct remedies about how companies are supposed to behave). Ultimately, Wu’s own arguments convincingly show that just appealing to economics—but expanding the focus to include innovation, quality, choice and other issues that are increasingly being considered in antitrust enforcement—is sufficient to get policy most or all of the way to where he would (rightfully in many cases) want it to go.

[Ribhav Pande · Rating 5 out of 5]

An excellent, tiny read which I picked up after Senator Amy Klobuchar's book 'Antitrust'. The Senator's book makes heavy reference to the ideas laid down in this book, but has a more elaborate discussion on the history of US antitrust law as well as the proposed changes in the law. That said, for this short a book, Curse of Bigness is quite a package.

Unlike the Senator's book, this book had more to say about two things that stood out for me: Louis Brandeis and a 'Neo Brandesian' Agenda. Louis Brandeis' approach to antitrust have already made a deep impression on me, and I intend to dive into the further readings on the man, as suggested by the author.

Essentially, the idea of 'Curse of Bigness' as well as 'Antitrust' is two-fold: 1) Big Tech is the new 'Trust' of yesteryears, and they are here to stay unless we do something about it; and 2) Let's go back to the original idea of taking on monopolies.

The original idea of taking on the monopolies (made possible through trusts) was essentially to identify anti-competitive practices and stop them. It originated in labour and agriculturalist ('Granger') movements. Candidates ran and won on an anti-trust agenda. That seems to have gone now.

President Theodore Roosevelt and Louis Brandeis made the important connection between monopolies and democracy – that concentrated power posed an ever ready threat to political systems, and to counter monopolies was to protect democracies. Both Tim Wu and Senator Klobuchar wed this original idea to the new role Big Tech – Google, Amazon, Facebook, Apple – is playing today. They counter Peter Thiel's love for monopolies in tech by bringing out how monopolies in Big Tech do not necessarily translate to higher efficiencies, which is the usual justification for monopolies. In fact, the aggregation of data itself as well as the role such firms have w.r.t freedom of speech, etc. make the need for broader investigations and revisiting clearances, based on the historic trend of monopolist-ish behaviour. A 'presumption' of anti-competitiveness for huge mergers is also strongly advocated.

The Neo Brandesian agenda is a fantastic chapter. My two best takeaways were: 1) the suggestion of 'Democratization of the Merger Process' by inviting public comments on big mergers and proposed settlement terms; and 2) robust market investigations, where '[t]he prerequisite would be persistent dominance of at least ten years or longer, suggesting that a market remedy is not forthcoming, and proof that the existing industry structure lacked convincing competitive or public justifications, and that market forces would be unlikely to remedy the situation by themselves.'

All in all, a wonderful read which was very ably supported by Columbia Univ. Would highly recommend reading Senator Klobuchar's book *after* reading this one.

[Ietrio · Rating 1 out of 5]

Another fallacious argument for the totalitarian state. The guy lives and publishes on tax money, so in his context the argument makes sense: anything that will give him a bigger pension plan as long as he is not paying.

The problem is his readership. So choosing between Google, Apple, Amazon or Facebook is way too hard for them. Somehow they are exploited though free services. Okay. But the solution is a monstrosity. The choice should be entrusted to the one corporation that rules all the lives of the people living within some borders. The one corporation that has run gulags (Japanese concentration camps for the citizens), does lab tests on its citizens (A-Bomb, the Syphilis tests), does drone killings, and if they don't work sends government mandated and tax paid hit men, the one corporation running several secret police forces, multiple secret tribunals, secret torture bases, and so on. It's easy to be righteous about the Foxconn working conditions without thinking heresies like: the Foxconn employees can quit. The millions working a dollar a day in the prison system can't.

And good luck migrating your data from the governmental hard drives.

[Mal Warwick · Rating 5 out of 5]

The Curse of Bigness highlights one of the most significant policy questions facing American society. The author, Columbia University law professor Tim Wu, insists it's time to restore America's lost commitment to the antitrust legislation passed in the late nineteenth and early twentieth centuries. Break up big corporations, he urges, since the increasing concentration of wealth in fewer and fewer hands has enabled the superrich to get their way with Congress and frustrate the popular will. Nothing less than the integrity of our democratic system is at stake, Wu contends. "[E]xtreme economic concentration yields gross inequality and material suffering, feeding an appetite for nationalistic and extremist leadership," he writes. In other words, Wu is suggesting nothing less than that vigorous antitrust action might go to the roots of today's extreme politics.

Taking action against the "malefactors of great wealth"
Defenders of tax cuts for the rich and corporate welfare will no doubt howl in protest at Wu's thesis. But it's difficult to see how they could logically refute his argument or disprove it on historical grounds. In The Curse of Bigness, Wu traces the history of antitrust from the passage of the Sherman Act in 1890 to the present. He argues that once Theodore Roosevelt ascended to the White House and launched the antitrust movement with an attack on the Northern Securities Company, public sentiment shifted decisively in favor of taking action against what the President called "the malefactors of great wealth."

Roosevelt saw antitrust not just as an economic policy but as a political necessity. Monopolists ("the trusts") wielded such power that they were able to dictate policy decisions to Congress. Thus, democracy was in peril since the trusts were able to lord it over the economy. Supreme Court Justice Louis Brandeis called it the "Curse of Bigness." And Wu cites Brandeis' writing as central to the thinking that dominated US antitrust policy until the 1970s.

Brandeis once said, "The 'right to life' guaranteed by our Constitution" should be understood as "the right to live, and not merely to exist. In order to live men must have the opportunity of developing their faculties; and they must live under conditions in which their faculties may develop naturally and healthily." Clearly, this is a conviction not shared by the leadership of today's Republican Party.

Break up big corporations to restore democracy?
It wasn't until the 1970s that a legal attack on antitrust led by Robert Bork began pushing against the antimonopoly sentiment that had prevailed since the turn of the century. Bork's crusade, abetted by increasingly sympathetic judges, yielded a series of landmark decisions in Federal courts. In the decades that followed, these cases undermined the ability of the Justice Department to take action against monopolistic corporations. His argument rested on what can only be a willful misreading of the Sherman Act. Bork insisted the only justification for an antitrust prosecution was if monopolists were charging higher prices and thus harming consumers. He rejected any argument that antitrust action could rest on anything but the narrowest economic grounds. And Bork prevailed. When George W. Bush entered the White House, antitrust had become effectively a dead letter.

"[D]uring the Bush years," Wu observes, "the anti-monopoly provisions of the Sherman Act went into a deep freeze from which they have never really recovered . . . [T]he Bush Justice Department proceeded to bring a grand total of zero anti-monopoly antitrust cases over a period of eight years, and did not block any major mergers." Antitrust action resumed under Barack Obama and would have continued in earnest under Hillary Clinton. And Donald Trump claims to be taking antitrust "very seriously."

Two big antitrust actions in the 1980s and 90s
It's true, as Wu makes abundantly clear, that two major antitrust prosecutions took place in the 1980s and 1990s. Under Ronald Reagan, the Justice Department sued to break up AT&T, then the largest private company in the world. But the case never went to court, as AT&T eventually consented to the breakup. Then, in the Bill Clinton era, Microsoft came under the microscope. The case was still in court in 2000 when George W. Bush was elected by the Supreme Court's Bush v. Gore decision. Bush's Justice Department essentially dropped the case, settling for what have since been viewed as cosmetic changes.

The problem doesn't lie just with the tech industry
These days, most of the little talk in the air about antitrust involves the tech industry: Apple, Amazon, Google, and Facebook. These companies all certainly deserve close attention, and most if not all of them could easily become targets under a more rigorous interpretation of antitrust law. But Wu argues forcefully that the "Curse of Bigness" has infected much more than the tech industry. For example, look at the market share for the major firms in the oil, pharmaceutical, and chemical industries. And consider this: the stock market has been shrinking for the past two decades. "The market is half the size of its mid-1990s peak," according to the New York Times. Anyone who so much as glances at the news about mergers and acquisitions knows perfectly well that the American corporate sector has been consolidating for decades.

Wu concedes that "antitrust alone will not cure the curse of bigness or eliminate the excesses of private power. But it strikes at the root, and getting the engines of the law restarted is an important part of dealing with a problem that has reached Constitutional dimensions." To that end, Wu lays out "A Neo-Brandeisian Agenda" in the conclusion to The Curse of Bigness. However, the actions he advocates will clearly have to await a political realignment in Washington, DC.

About the author
Tim Yu has taught antitrust, copyright, the media industries, and communications law at Columbia Law School since 2006. He is a contributing opinion writer for the New York Times. The Curse of Bigness is his fourth book.

[Daniel · Rating 5 out of 5]

A very short book, it is nonetheless a very timely book. Wu is a law professor at Columbia University. He brought us back to the Gilded Age where monopolies such as Standard Oil use unscrupulous tactics to either buy out or bankrupt their competitors. Then they enjoyed price setting power and innovation suffers, and consumers have to pay a lot more.

More recently however, Bush had settled the Microsoft anti-trust case that ended more than 10 years of hard work. Nowadays it is assumed that the Big Four Tech companies should be allowed to run monopolies because they are efficient! They have been buying out their competitors and therefore potentially stifling innovation, and earn exorbitant economic rent. Wu suggested that it is time to break them up!

I wonder whether the Justice Department will follow his advice...

[Anna (ani) 🕷 · Rating 3 out of 5]

Good book on how the modern view on antitrust has come around. A bit lacking in depth imo but you could definitely argue that’s a feature, not a flaw. Second half of the book is a useful primer for those (like me) who are somewhat familiar with the basics, starting with the Sherman Act & trustbusting after the gilded age, but less familiar with movements in the 70s/80s which sharpened its focus into something entirely driven by prices— somewhat detached from its original goals. Post-Biden-era, this is an interesting read as it (and the whole neo-Brandeisian line of thought) was clearly very influential. There are whole movements in law out there that I have no idea about, lol.

As a last point: almost a decade after being published, this remains extremely relevant. And I think it will only become more relevant with AI; if the domination of tech giants wasn’t already a serious concern, it certainly is now.

[Karen Chung · Rating 4 out of 5]

Now I finally know what a "trust" is in this context! When I first heard this term as a kid, I kept wondering why anybody would be against "trust", something that was touted as a major virtue in school and at home.

A clear and convincing exposition on the importance of enforcing antitrust laws in order to keep companies or organizations from getting too big, the real reason for this being, when you've got more power than the government, laws cannot restrain you. And this does not mix well with representative democracy and fairness.

[Kim Pallister · Rating 5 out of 5]

This is a very important book. Wu argues that the concentration of power in the hands of a few monopolists in the tech industry warrants a revisiting of anti-trust law interpretation and enforcement.

Considerably shorter than Master Switch, this is easy to digest but still demonstrates Wu's ability to concisely and clearly make sense of complex issues such this one. I'm going to recommend this to many of my friends in the industry.

[Vincent Li · Rating 3 out of 5]

A pretty interesting short history of anti-trust law along with some calls to action. Wu argues that anti-trust law was enacted because of the political fear of big private interests who could use their size and power to both craft unfair bargains with workers as well as lobby against political actions that might harm their interests (such as re-distribution).

Wu mentions different progressive responses to the rise of large corporations at the turn of the 20th century (which dovetails nicely with one of the essays in Sandel's "Public Philosophy"). While those who supported large trusts (the legal device used to consolidate and gain monopolies in private industry) saw competition as backwards and wasteful [and the monopoly as the superior "organism" in the words of social Darwinism], leaders like Brandeis and Theodore Roosevelt worried about the political power of unaccountable private concentrations of industry. Both feared that concentrated and consolidated industries could actually be inefficient because of diseconomies of scale but could protect their bloated size through political lobbying, corruption, and bribes. This part of the story seems a little questionable. Wu argues that because of hubris and natural "turf building" managers want to increase the size of what they manage even if it means becoming inefficient. But it seems to me, that even if this was an accurate description of what managers maximize, there's a countervailing market force (activist shareholders) who would step in to unlock value (if there is be any) by breaking up large inefficient companies into smaller efficient ones (of course, Wu might respond that large inefficient companies can lobby the government to create rent, and the shareholders would go home happy with their rent dividends). As Sandel and Wu discuss, both Brandeis and Roosevelt were worried fundamentally about the possible corrupting effects of such concentrations of power. Brandeis wanted to break the concentrations of power down, while Roosevelt wanted to subject the concentrated power to democratic control through a form of quasi-state corporatism. Wu discusses the history of "trust busting" and how the Borkian revolution changed anti-trust law (he also points some fingers at Areeda for wanting to make anti-trust law "scientific" by adopting Bork's view).

Bork and the Chicago School revolutionized anti-trust law by arguing that its focus was consumer welfare not power. That is, anti-trust law was not concerned with the size per se of concentrated power but if that size adversely affected consumers by allowing the corporation to use its power to rise prices against consumers. The argument was that government, by blunderbuss-ing large corporations that were efficient was actually harming consumers and that this was incapable with the congressional intent of the Sherman anti-trust act. Wu argues that this revolution has lead to the stagnation of anti-trust law, allowing companies to kill competition by simply buying up possible challengers (like facebook buying whatsapp). Wu therefore argues for a return to a Brandeisian view of breaking down the "curse" of bigness.

Wu makes some interesting legal arguments as well. The first is that the Sherman anti-trust act was not just concerned with consumer welfare but fundamentally with the concentration of power in private hands. Wu repeatedly cites a part of a speech by the sponsor of the bill to this purpose. I would have liked to see a more rigorous analysis of this claim. Legislative history is like looking into a crowd and picking out your friends. Wu's dismissal of Bork's article out of hand, is not too confidence inducing in this area. The second argument made, is that the election of 1912 was a "constitutional moment" rejecting a state-corporatist ideal of American industry for a model of competition. Wu argues the sound defeat of both Roosevelt, who always admired bigness to an extent proposed nationalizing concentrated industry, and Eugene V. Debbs who proposed socialism, by Wilson proves that the country rejected "bigness." Wu reads this as a "constitutional moment" that rejects state-corporatism along the theory of Professor Ackerman who argues that sometimes popular democracy "amends" the constitution without the pronouncement of the supreme court. But that version of the story assumes that corporatism was the voting issue, and ignores other political considerations such as Taft and Roosevelt splitting the Republican vote. Perhaps, in a sense, this purported example shows the weakness of the constitutional moment theory, but either way, I am skeptical of Wu's argument here.

In short, the book is lacking in a few technical aspects. The Chicago School's view of anti-trust is quite nuanced and well established (that is not to say that it is infallible), and parts of the book seem to side-line the more reasonable parts of the theory. On the other hand, it is a short and readable history of anti-trust law (and short readable histories of anti-trust can't be that common) that ties together interesting ideas from economics to the internet and calls for a return to thinking of anti-trust in a constitutive way instead of an economic one. Like most books, worth reading, but not worth taking at every single word.

[Allison]

so:
- we hate Bork. also Bush2000.
- antitrust isn't as scary as we make it out to be!! people overwhelmingly supported it for so long until Bork borked it up
- antitrust is a Constitutional check on private power, by preventing the growth of monopoly corporations into something that might transcend the power of elected government to control.

[Nachi · Rating 4 out of 5]

Nice review of the history of antitrust in America.

[Annie Fuller · Rating 4 out of 5]

Brief and informative, exactly the antitrust primer I was looking for.

I’d recommend — and as a bonus, try not to buy it on Amazon! 😬

[Samantha · Rating 4 out of 5]

A pithy and compelling case for increased antitrust regulation.

[Patricia Vaccarino · Rating 5 out of 5]

The Curse of Bigness, by Columbia University Law Professor Tim Wu, examines the monopolization movement through the lens of antitrust law, primarily the Sherman Antitrust Act from its inception in 1890 to today. This slim book tackles an enormous and complex problem in succinct narrative that is fluid and technically precise. Short on jargon and big on describing constitutional history in simple terms, you don’t have to be an antitrust lawyer to understand how corporate monopolies are dictating the course of economic policy in America.

Behemoth companies such as Amazon, Google, Facebook and eBay are not upholding the social contract that knits together the fabric of our democracy. These technology companies are only a few examples. There are many corporate monopolies controlling industries ranging from the airlines to the food industry. These monopolies control pricing as well as regulations that favor their domination in the marketplace. Mr. Wu lays out the danger of continuing to allow large corporations to place a stranglehold over our free market economy.

In his final analysis, Mr. Wu suggests that monopoly companies ought to be subject to a formal process of market evaluation and investigation. The outcome would be to break up monopolies that have proven to be substantial and persistent and have been dominant for over ten years. But in order to subject monopoly companies to a market evaluation and investigation, there will need to be strong governmental leadership who can restore antitrust laws the way Justice Louis Brandeis intended—as a measure to protect both the American people and the American free market economy from the tyranny of a few.

[Melwel · Rating 5 out of 5]

Great and concise book on the legislative origin, the ideological development, the enforcement stagnations, and the proposed solutions of the American Antitrust law from the 19th century to the modern day of the internet. Overall, this book is an intellectual adventure that demands a pen for frequent highlights.

An engaging author by the way. -Yes, I know him in real life too!

[Emily Erickson · Rating 5 out of 5]

I love you Tim Wu. I love it when you cite nothing, I love it when you cite yourself, I love that you’re always right anyway, and I’m sorry I didn’t read this when you assigned it in your class!

[Ramnath Iyer · Rating 4 out of 5]

That economic inequality has reached extreme levels in recent years is well known and accepted now. In the Curse of Bigness, author Tim Wu argues that the weakened appetite to curb corporate dominance through anti-trust regulations is an important reason for this increasing inequality.

This should worry everyone, since rising and high levels of inequality have historically led to revolutions. These were directly responsible for the rise of the disastrous lures of Communism, Fascism and Nazism in the 20th centuries. Wu shows that a tradition of institutional checks and balances on businesses have played a crucial role in protecting and strengthening democracy against the populisms of both left and right.

The alternatives have been control of the economic sphere either by a strong state (populism of the left) or by preferred corporates backed by the state (fascist capitalism or state capitalism). While both the above are recognised as usually practiced in “unfree” societies, what is at times forgotten is that even free societies have to act to maintain economic freedom for citizens. This is to keep key parts of the economy from being cornered by a few large corporates. Anti-trust regulations and their robust enforcement play crucial roles in this.

Contrary to current popular thinking, capitalism as practiced in America hasn’t always meant a laissez faire, winner take all economy. Not allowing corporations to become too big or dominant has always been part of the economic thinking. Such actions are not anti-capitalist but instead are essential to enable proper functioning as well as popular support for capitalism.

However, as well described here, anti-trust activity in the US has almost vanished since 2000. Its decline started in the Seventies. Interpretations of judges and practitioners from the Chicago and Harvard Law Schools gained ground. The tests of undesirability of mergers and consolidations were reduced to a consideration of only whether a merger hurt consumer interest by raising prices. This was quite contrary to the original intent of Congress in passing the Sherman anti-trust laws, which were intended to oppose large scale consolidation as ani-competitive by reducing choice, even if it did not mean higher prices for consumers.

It’s interesting to note that the seminal event that sparked the battle for American independence – the Boston Tea Party – was at its heart a protest against the monopoly control granted to preferred importers of British tea. The book briefly looks at other historical episodes of anti-trust activity in America. The successful breakup of AT&T, the long battle against IBM, the eventually abandoned one against Microsoft in the late Nineties – the author does well to highlight the not so apparent benefits from each of those actions. It’s clear that such large corporations and monopolies impeded innovation. Subsequently, their restraints led to an explosion of innovation that fortified America’s role as the pre-eminent economy.

While being highlighting relevant history and making a great case for restraints on big business, the book has its flaws. It observes that tech corporates such as Google, Facebook etc. have become immensely powerful and dominant. However, it disappoints in not analyzing how the current situation is different. With data increasingly the source of domination, the internet rewards network effects and therefore more becomes core to the strategy of most internet driven businesses. Now this can’t be assessed the same way as “consolidation” in older industries.

A more detailed analysis of this and some more nuanced solutions would have made it better. A rebuttal of the “fast changing industries make anti-trust unnecessary” argument is again conspicuous by its absence. It’s a frustrating weakness, given that Mr. Wu is brain behind the concept “net neutrality”, an important contribution to enabling economic freedom on the internet.