Susan Walsh/AP Photo
Federal Trade Commission commissioner Christine Wilson testifies during a House Energy and Commerce subcommittee hearing on Capitol Hill in Washington, May 8, 2019.
On April 8th, FTC Commissioner Christine Wilson gave a speech, posted last week to Twitter, called “Marxism and Critical Legal Studies Walk Into the FTC: Deconstructing the Worldview of the Neo-Brandeisians.” It condemned FTC Chair Lina Khan and the New Brandeisians generally for reorienting antitrust around worker harms.
Commissioner Wilson’s view is consistent with recent statements by the senior vice president of the U.S. Chamber of Commerce, who told The New York Times, “There is a role for antitrust in labor markets. But it is a limited one.” However, both Wilson and the Chamber stand outside the antitrust mainstream, which recognizes that workers are protected under antitrust law, even under the consumer welfare standard (CWS).
While it’s fine to hold unconventional views on antitrust, it is not fine for Commissioner Wilson to assert that protecting both consumers and workers under antitrust law is the stuff of Marxists. Her remarks led Zach Carter, author of the New York Times best-seller biography on John Maynard Keynes, to claim that Commissioner Wilson was “engaging in straightforward McCarthyism.”
Commissioner Wilson’s argument is fundamentally flawed. By her logic, one could just as easily deduce a parallel between the Chicago school, which originally propagated the CWS, and Marx. Both believed that the concentration of economic production and economic power in the hands of the most efficient (and thereby largest) firms is a natural historical process. And because it’s either unwise (Chicago) or futile (Marxists) to interfere with, both are skeptical of antitrust enforcement. As Wilson is a classical Chicago school adherent, using her own argument, she must be the second coming of Marx herself. This kind of reductionist debate will never result in positive policy outcomes. In truth, neither side in the current policy debate should be simply labeled and dismissed.
Reading Commissioner Wilson’s speech, one might get the false impression that Sen. John Sherman (R-OH), the namesake of the Sherman Act of 1890, was an advocate of the CWS. By conflating the original goals of antitrust with consumer welfare, Wilson creates the false sense that the New Brandeisians are the rebels. Yet for a great deal of its history, antitrust did not have a CWS. Instead, antitrust law was used to advance a broader set of goals, including dispersing concentrations of economic power. (For an accessible primer to this history, read the recent book by Sen. Amy Klobuchar (D-MN), Antitrust: Taking On Monopoly Power From the Gilded Age to the Digital Age.)
To the extent that one can claim a deviation from antitrust’s tradition, the CWS has been far more virulent than any other policy prescription. Indeed, the New Brandeisians reflect a traditionalist school of thought, seeking to reset antitrust to its original goals. Its prescriptions are hardly revolutionary. Chair Khan wrote that the New Brandeisian goal of “restoring a theory of power that accords with the original values of antitrust—including a distrust of concentrated private power—is critical for reviving an enforcement regime that can fully address the concentrated market power across our political economy.”
The New Brandeisians Have Good Reasons for Advocating Antitrust Reform
The failure over the past 40 years of the CWS to disperse concentrations of power is by design. Led by Harold Demsetz, the Chicago school taught us that concentration was a good thing, actually, as it reflected inherently more efficient firms with lower costs taking over an industry. Smitten by this theory, antitrust enforcers let down their guard, and industries became concentrated with an onslaught of mergers. Economists have since correlated this growing concentration with higher markups and declining labor shares, all occurring in tandem with the adoption of the CWS in the 1980s.
Even more devastating, the CWS has failed to advance the narrow, short-term interests of consumers. Jonathan Baker’s “Market Power in the U.S. Economy Today” and numerous other studies show how competition has eroded under the CWS, both increasing prices and raising entry barriers. Thomas Philippon showed in The Great Reversal that U.S. consumers pay more for vital services, including health care, but get worse outcomes. One of us has shown that the largest price hikes in 2021 tended to occur in the most concentrated industries, which are more susceptible to coordinated pricing, in opposition to the interests of consumers.
Commissioner Wilson asserts, without support, that the adoption of the CWS has increased productivity, explaining: “While increased productivity and lower prices benefit consumers, those same things signify worker exploitation under the labor theory of value.” But there is no evidence that lax antitrust enforcement resulted in more productivity growth. In addition, there is no evidence that CWS resulted in stronger innovation. Below, we divide the historical data on labor productivity and total factor productivity (two standard measures of innovation) into two periods: the period of traditional antitrust (1948–1979) and the period after the adoption of the CWS (1980–2021).
As the table shows, both measures of productivity declined after the adoption of the CWS. We recognize that myriad factors affect productivity beyond an antitrust regime. But claiming that CWS increased productivity is without merit.
Beyond these empirical findings, the CWS is flawed as a theoretical matter. Among its problems, the CWS is based on a narrow reading of what constitutes consumer welfare, assumes that this welfare seeks only to maximize wealth, and designates transfers from the poor to the rich as welfare-neutral. There are also practical problems. The CWS has been interpreted in different ways by courts and competition agencies around the world and has led to inconsistent results. In particular, it has proven incapable of effectively addressing restraints on upstream sellers. The New Brandeisians have solid ground to contest the CWS on its own merits.
On the Rule of Law, the Revolving Door, and ‘Due Process’
Commissioner Wilson equates the CWS with the “rule of law.” She states that “while our civics classes taught us to prize the rule of law, Marxists have a very different view.” She asserts that such rule of law is “above or outside of politics.”
Wilson is silent, however, when devotees of the CWS ignore the “rule of law.” There was no objection when the Chicago school upended the traditional multiple-goals approach to antitrust and installed the CWS in the 1980s. In a recently uncovered memo to the Reagan administration’s transition team, George Stigler and Richard Posner argued that “many hallowed principles of antitrust are silly” and should be questioned. There was no uproar then about conservative disrespect for the rule of law.
There has also been no objection to the blatant lack of enforcement of some antitrust laws. For example, the Robinson-Patman Act remains a law, yet lack of enforcement has all but neutered it, to the point that 42 members of Congress recently sent a letter to the FTC asking for its revival. Conveniently, Wilson leaves out such details that run counter to her agenda.
Next, Commissioner Wilson takes the New Brandeisians to task for attacking the revolving door of antitrust political appointees. But there is legitimate reason for concern. Enforcers get paid handsomely by the defense bar or Big Tech, and, knowing this payoff, might be captured by the interests of those with the biggest wallets while serving the public.
Commissioner Wilson attacks Chair Khan and others for questioning the integrity of those who have left antitrust enforcement positions to represent companies before their old agencies, or what some call the “revolving door.” She then proceeds in footnote 48 to mention Chair Khan’s work with Open Markets—a left-leaning think tank that advocates for greater antitrust enforcement—and on the gubernatorial campaign of Zephyr Teachout, as a means of questioning Chair Khan’s integrity. This is a false equivalence. Chair Khan’s prior work for a progressive advocacy group does not create the opportunity for regulatory capture.
Commissioner Wilson proceeds to attack Chair Khan for violating “due process”: “In their desire to remake antitrust law, the Neo-Brandeisians have embraced a similar disregard for process and norms. They know what the utopian antitrust regime looks like, and they are willing to toss aside procedural niceties to get there.”
Due process does not mean what Commissioner Wilson thinks it means. Procedural due process considerations arise to a greater degree in terms of formal adjudication. Perhaps she intended to say a lack of stakeholder participation. But Wilson has been silent about stakeholder concerns elsewhere, such as when the Tunney Act’s requirement of judicial oversight of DOJ-approved mergers has been determined to be a rubber stamp in the D.C. Circuit and comments by stakeholders are rendered meaningless.
Moreover, Commissioner Wilson has not suggested that the FTC has exceeded its statutory authority. If it had, judicial review would step in to limit the FTC’s overreach. To the extent that agencies shift positions based on policy, it is not beyond the scope of administrative norms.
Rather than questioning the motives of New Brandeisians or defenders of the status quo, the proper scope of debate is whether the CWS failed to advance the original objectives of antitrust (dispersing concentration of power), failed on its preferred metric (to advance the interests of consumers), or both. We recognize this is an uncomfortable conversation for CWS advocates. But likening one’s intellectual adversaries to Marxists should be off-limits, especially for a sitting FTC commissioner.
