Bourgeois Antitrust

Libertarian writer Thomas Knapp has an interesting discussion at his blog about what he calls “bourgeois libertarians”:

Bourgeois libertarianism is a failure not of theory or of ideology, but of imagination: Bourgeois libertarians simply can’t get their heads around the idea that a real free market or a real free society might produce outcomes or phenomena that they aren’t already familiar and comfortable with.

The bourgeois libertarian’s Libertopia is the same house he lives in now, on the same suburban street that house is on now, with the same brands of clothing in the closet and the same shows on TV (minus Keith Olbermann, perhaps).

He still mails out checks for services — they go to private contractors instead of government tax collectors, but the services are probably pretty much the same. The more efficient market means those checks represent a smaller percentage of his income, though, so maybe he’s added a sunroom to the back of that house, has a couple of extra pairs of Nike^® shoes in that closet, and watches a 52″ plasma screen TV instead of a 26″ CRT model.

A key source of intra-libertarian factionalism is how to view “big business” and regulation. Ayn Rand, the standard-bearer of the libertarian right, famously proclaimed that policies such as antitrust rendered big business a “persecuted minority.” Knapp and the libertarian left disagree with that assertion; they say government is the primary cause of “big business,” and that removing the state’s infrastructure would produce a radically different free market.

What strikes me, though, is how close Knapp’s description of “bourgeois libertarians” matches the views of most antitrust regulators. It’s a fallacy to presume all antitrust folks are socialists. Some are. (I would consider FTC Chairman Jon Leibowitz one.) But socialism, as I see it, means support for central planning. That’s not exactly what most antitrusters see there role as. Indeed, if you look at the pattern of FTC and DOJ antitrust intervention, you’ll often find there’s no plan or coherent thought at all. Many targets appear randomly selected.

The mainstream antitrust viewpoint is that free markets are good — so long as they produce outcomes that conform to preexisting consumer expectations. I don’t see how that diverges substantially from what Knapp describes. It’s an outcome-based approach to economic analysis that, as Knapp says, lacks imagination.

In any antitrust case, the regulator claims intervention will yield “lower prices and higher quality” without exception. But these two concepts are frequently at odds with each other. Innovation often requires capital investment that proscribes lowering prices in the short term. A common criticism of the market is that the race to lower prices reduces quality. It’s not always a valid criticism, mind you, but it demonstrates how people understand there are, in fact, trade offs in any market. The antitrust regulator pretends these don’t exist.

What Knapp and other left-libertarians argue, with merit, is that in the current market, large firms are usually the direct beneficiaries of layers of state intervention into the economy. Even in antitrust cases, regulators acknowledge this; it’s not uncommon for the FTC or DOJ to cite regulatory “barriers to entry” as helping to maintain a firm’s market position. Of course, the agencies don’t address those regulatory barriers — they simply impose another layer via antitrust. Because, you see, antitrust isn’t really regulation, but an expression of true free-market principles.

As I wrote the other day, there’s a “historic preservation” mentality inherent in antitrust, particularly when it comes to merger review. Current consumer preferences must remain constant; “innovation” is largely a matter of lowering prices and making marginal improvements to existing products. True innovation — imagination — is beyond the antitrust regulator’s abilities, since it involves considering a market that is perhaps radically different in structure and function.

So does this really mean that antitrust folks are “bourgeois libertarians”? Probably not, considering their disdain for things like constitutional due process. Still, it’s useful to examine the thinking of the regulators beyond merely condemning them as socialist trolls. (Again, some are.) And for libertarians, it’s a good reminder that they’re not always as far removed, intellectually, from their enemies as they’d like to think.