The Great Leveler: Capitalism and Competition in the Court of Law 9780674089020

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THE GREAT LEVELER

THE

GREAT LEVELER Capitalism and Competition in the Court of Law

Brett Christophers

Cambridge, Massachusetts London, England 2016

Copyright © 2016 by the President and Fellows of Harvard College All rights reserved Printed in the United States of America

First printing

Library of Congress Cataloging-in-Publication Data Christophers, Brett, 1971– The great leveler : capitalism and competition in the court of law / Brett Christophers. pages cm Includes bibliographical references and index. ISBN 978-0-674-50491-2 (hc) 1. Competition. 2. Capitalism. 3. Antitrust law. I. Title. HB238.C44 2016 338.6'048—dc23 2015010933

For Agneta, Elliot, Oliver, and Emilia

CONTENTS

Introduction: Influences, Approaches, and Arguments

1

I

leveling in theory 1. Competition under Capitalism 2. Exchanging Production for Markets 3. Law as Leveler

29 57 82

II

leveling in practice 4. Designs on Monopoly 5. The Revival of Competition 6. Remaking Monopoly for the Twenty-First Century

123 168 216

Coda: Back to Balance?

267

Abbreviations

285

Notes

287

Acknowledgments

337

Index

339

INTRODUCTION

Influences, Approaches, and Arguments One of the world’s largest and most recognizable companies, Apple Inc., not unusually by its own historic standards, was embroiled in myriad lawsuits in the early months of 2014. Two of these were particularly high-profile suits and the subject of considerable media and public scrutiny accordingly. The first was a U.S. class-action suit filed against Apple and several other technology companies—including Google and Intel— by former and existing employees, alleging repression of wages through the suppression of competition for labor.1 The second was one of a plethora of suits, historic and ongoing, between Apple and Samsung, concerning the design of rival smartphones and tablet computers, and on this particular occasion filed in California.2 These two suits turned on two key sets of laws governing competition and market conduct more generally in modern capitalist societies. In the first case the relevant law was competition (or in U.S. parlance, antitrust) law, that Apple was accused of having violated; in the second case it was intellectual property (IP) law, and patent law more specifically, that Apple accused Samsung of having violated. Competition and IP laws, and their role in shaping the core dynamics of competition and capitalism, are the subject of this book. The Apple cases, and countless others like them, signal the profound importance of such laws to the shape and evolution of the economy at large. This importance was also signaled, albeit much more obliquely and in a very different way, by Nobel Laureate Paul Krugman in a December 2012 edition of his widely read and highly influential op-ed column in the New York Times. In this particular column, Krugman pondered an

2

Introduction

apparent paradox of contemporary U.S. economic life. Despite widespread predictions of economic doom and capitalist meltdown engendered by the financial turmoil between 2007 and 2009, and notwithstanding a significant period of national economic contraction in the immediate wake of this turmoil, corporate earnings were reported as having reached record highs. Capitalism, it was clear, at least from the perspective of its primary institutional protagonists (private corporations) in the United States, was alive and well: still with us, still relatively stable and, not least, still highly profitable. How, Krugman wondered, could this be?3 Krugman’s query can be usefully positioned within a long and distinguished history of scholarly questioning along similar lines. Given its manifest and recurrent tendencies toward seizure and crisis, how is it that capitalism repeatedly comes to be stabilized and regularized, allowing for the relatively even reproduction of regimes of profit creation? How are emerging crisis conditions escaped and underlying tensions smoothed over? For as the data for the United States show, there is something remarkably consistent about the historical profitability record (Figure I.1). Since 1929, when the Bureau of Economic Analysis (BEA) data begin, corporate profits have annually accounted for an average of 10.2 percent of total U.S. national income, and the share has rarely strayed far from this mean: In all but eight of eighty-four years it has been within four percentage points (i.e., between approximately 6 percent and 14 percent); and strikingly, none of those “anomalous” years has occurred in the past seven decades. The United Kingdom, which is the other territory most closely considered in this book, demonstrates an arguably ever greater degree of constancy: an average gross operating surplus for corporations of 21.2 percent of total national income since 1948, with the annual figure more than four percentage points from this average in only three years (1974–1976).4 What forces—political, economic, or both—enable such consistency? This has long been a central question for political economy in general and for the “regulation school” of political economy in particular.5 The latter school, as Bob Jessop, one of its foremost practitioners, notes, is concerned with “the changing forms and mechanisms . . . in and through which the expanded reproduction of capital[ism]” is secured.6 “Expanded reproduction” is political-economic phraseology for “growth,” and its fuel is the profit generation depicted in Figure I.1.

Introduction

3

30%

20%

10%

UK corporate gross operating surplus

0%

US corporate profits -10%

1930

1940

1950

1960

1970

1980

1990

2000

2010

Figure I.1. Share of national income realized as corporate profits/surplus, United States and United Kingdom, 1929–2012. Note: U.S. profits shown with inventory valuation and capital consumption adjustments. (Source: For United States, Bureau of Economic Analysis; for United Kingdom, Office for National Statistics.)

This book speaks to the core themes of this political-economic tradition, but it argues, in a radical departure therefrom, for the pivotal role of economic law as a technology of regularization and balancing. In this respect, it contributes to the wider “theoretical integration . . . between law and political economy” called for by, among others, contemporary scholars of “new constitutionalism” such as Stephen Gill and A. Claire Cutler.7 Laws relating specifically to competition take center stage in the analysis. There are two key such legal fields: competition and IP law.8 These laws do not regulate and stabilize capitalism by themselves; they plainly represent, as Jessop has observed of competition law individually, only “one element in the overall governance of accumulation.”9 Focusing primarily on the historical experiences of the U.S. and U.K. economies since the late nineteenth century, nevertheless, the book examines and prioritizes the central role of these laws in stabilizing regimes of capitalist profitability and growth and, in the process, in keeping Anglo-American capitalism on its relatively even keel. Such a role has been afforded scant attention in regulation theory or, indeed, in the tradition of political economy more broadly—and one aim of the book is to try to explain why. This role was powerfully foreshadowed, meanwhile, in the answer Krugman himself provided to the United States’ apparent profitability

4

Introduction

conundrum. In his discussion, Krugman latched onto the fact that the uptick in the share of national income taken by corporate profits since 2009 had coincided with a fall in the share taken by the other main—in fact, comfortably the single largest—component of national income: employee wages. Arguing that the two trends were linked, Krugman offered two hypotheses to explain why recent years might have seen corporate profits “take” income from labor. One concerned technology and its growing tendency to displace workers (“of all, or almost all, kinds”), with the result that income previously captured by labor now accrued to such technology’s owners. The other explanation concerned what Krugman labeled “monopoly power”: growing business concentration enabling the corporate sector to raise prices without passing any of the profitability gains on to employees. It is this latter hypothesis—monopolization—that speaks directly to the two legal regimes considered in this book. One such regime (antitrust) is designed to limit monopoly power whereas the other (IP law) is designed, effectively, to fashion and protect it. The Apple cases testify amply to these monopoly-related legal functions. Consider first the case, one of many, against Samsung. Here, Apple was suing Samsung for alleged patent infringement in relation to their rival smartphone devices.10 In a nutshell, Apple has patents on certain smartphone design features that it claimed Samsung copied; this copying, it further claimed, enabled Samsung to capture market share from Apple, and thus the latter was due compensation from the former. The reason the case boiled down to patents and patent law is that patents—like other forms of IP, such as trademark and copyright—grant their holders exclusive rights, for a predefined period of time, to use the intellectual property (here, the design features) in question. They grant, in other words, monopoly, specifically in the sense that they prohibit the development and sale of direct competitor products; hence the accusation in response by Samsung, which denied infringement, that Apple was trying to restrict competition by litigating. If we were to try to summarize Apple’s use of the law in one sentence, we might say that it was mobilizing IP law to protect its monopoly and the profits it furnishes. In the other Apple case, the shoe was very much on the other foot. As opposed to Apple suing to protect legal monopoly power (and profit), it was being sued on account of the allegedly illegal monopoly power (and profit) that it, together with nominally competitor companies, exploited.

Introduction

The crux of the case was the accusation that Apple, Google, Intel, and Adobe agreed not to recruit or hire each other’s employees, and that they did so expressly to prevent wage inflation and thus to cushion profits. In other words, companies that should have been competing with one another actively conspired instead, it was claimed, to avoid competition— in this case, for labor. Such conspiracy, it was further alleged, constitutes a violation of the U.S. antitrust laws, the purpose of which is to promote competitive markets and to prevent the abuse of monopoly powers, of which collusion to control the market price of labor is deemed to represent, in turn, a clear example. Here, therefore, the law was being used to attack monopoly and monopoly profits.11 That in this case it happened to be labor—employees seeking financial redress—that was appealing to the law to this end is not insignificant. And here we can helpfully return to Krugman. One of the most striking aspects of his rumination on U.S. corporate profits and their structural drivers was the terminology in which he couched it and the intellectual debates and ideas to which he felt compelled to refer. For in this instance, and for all his staunch Keynesianism, it was clear to Krugman that Keynes was not the answer. Rather, in observing that in the United States in the wake of the financial crisis “capital is doing fine by grabbing an ever-larger slice [of national income], at labor’s expense,” Krugman was moved to reflect as follows: “Wait—are we really back to talking about capital versus labor? Isn’t that an old-fashioned, almost Marxist sort of discussion, out of date in our modern information economy? Well, that’s what many people thought.”12 In this gesture of seemingly shocked (faux naïve?) recognition of the relevance even to the “new” economy of “old” debates and thinkers, furthermore, Krugman, among influential contemporary Keynesians, is not alone. Berkeley economist Brad DeLong, for example, in discussing the first of the two developments raised by Krugman—technology displacing workers—now conjectures that “while Marx’s belief that capital and labor were substitutes, not complements, was a mistake in his own age, and for more than a century to follow, it may not be a mistake today.”13 As to the second development (monopolization), here is Joseph Stiglitz, like Krugman a Nobelist as well as a Keynesian: “Some of the most important innovations in business in the last three decades have centered not on making the economy more efficient but on how better to ensure monopoly power.”14 This book unashamedly argues that, yes, indeed, we really are back to talking about old-fashioned matters such as capital versus labor,

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Introduction

including, although certainly not only, in relation to Marx. In fact, it submits that we have no choice. Our aim, as indicated, is to think carefully and critically about the real-world role of laws pertaining specifically to competition. Given this aim, it stands to reason that we need to work with a robust theoretical perspective on the political-economic dynamics of the latter phenomenon. But for all sorts of reasons, not least its indebtedness to a core model of perfect competition and its static as opposed to dynamic theorizing, mainstream economics—which comfortably encompasses the Keynesianism of a Stiglitz, Krugman, or DeLong—does not come close to providing such a perspective.15 Instead, this book looks back to the competition theories of the “classical” political economists in general, and Marx especially, to furnish an adequate conceptual framework within which to couch its reading of the law and competition in practice.16 And yet, this borrowing from the classics cannot be uncritical. Part of the reason that the law was largely neglected by twentieth-century traditions of political economy such as regulation theory is that whereas competition and IP law pertain primarily to market relations (where sellers encounter both one another and buyers, and establish prices in the process), modern Western political economy in general has largely followed the classics in focusing its critique of capitalism on the sphere of production and not exchange. Marx and, most significantly, Adam Smith, did of course contemplate and conceptualize competitive dynamics, and it is these conceptualizations we shall draw primarily upon; but they thought and wrote considerably more about production, even in the case of Smith and his legendary invisible hand. The upshot, for our purposes here, is that we are required to expand and recenter questions of competition and markets within the classical analysis, albeit while being careful to not fetishize markets in the way Marx argued that “bourgeois” economists were apt to do. As much as it concerns the law and competition, this book is obviously also centrally concerned with the law and competition’s eternal handmaiden, monopoly. More precisely, it is about the role of the law in mediating and managing the relationship between the forces of competition and monopoly. Yet it bears emphasizing at the outset that except where otherwise stated, it does not use the word monopoly in the limited, dictionary sense of a product or service being exclusively provided—whether publicly or privately—by a single supplier. It uses the term, rather, more as a way of denoting a particular form of market power and

Introduction

the tendency (monopolization) for such power to be assembled and exploited. This, in fact, is how Krugman and Stiglitz, who write explicitly of “monopoly power,” also use the term. Here the critical consideration is that of power, influence, or control over key market outcomes such as the level of output or, most especially of all, price. A firm with monopoly power may be able, for instance, to raise prices, even in a market with rival suppliers, without losing so many sales that its price rise becomes unprofitable; a firm with no such power cannot. Single-supplier markets clearly fulfill this criterion, but so also do other corporate configurations, among them oligopolies and price-fixing cartels (think Apple and labor-market allegations). Although its focus on the law sets it apart, this book is clearly far from being the first work of political economy to explore in detail the importance of monopoly power to the constitution and dynamics of capitalism. Indeed, Krugman’s argument that early twenty-firstcentury U.S. capitalism appears to be characterized by growing monopoly power specifically recalls an influential argument elucidated in the mid-twentieth century by such figures as Adolf Berle, Paul Boccara, and perhaps most famously, two other Pauls: Baran and Sweezy. This was the argument that a vibrantly competitive capitalism in the nineteenth century had been supplanted, by the postwar era of the following century, by a very different sort of capitalism dominated by great monopolistic and oligopolistic concentrations.17 Baran and Sweezy styled this capitalism “monopoly capital.” The foremost advocates of the monopoly capital argument today are John Bellamy Foster and Robert McChesney. Their 2012 book The Endless Crisis essentially updates Baran and Sweezy’s (1966) Monopoly Capital to the present, incorporating in particular the late twentiethcentury internationalization of capital and of monopoly powers—Baran and Sweezy’s book was focused on the United States—and the putative “financialization” of Western capitalism during the same period.18 On Foster and McChesney’s reading, recent decades have simply seen a deepening and broadening of the historical trend earlier depicted by Baran and Sweezy and by others like them. Thus if, by the mid-twentieth century, a once-competitive capitalism had become much less competitive and more monopolistic, today it is even less competitive and even more monopolistic than it was then. In short, “the tendency to monopolization in the capitalist economy .  .  . is demonstrably stronger in the opening decades of the twenty-first century than ever before,” and hence

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Introduction

“what we have been witnessing in the last quarter century is the evolution of monopoly capital into a more generalized and globalized system of monopoly-finance capital that lies at the core of the current economic system in the advanced capitalist economies.”19 For commentators such as Foster and McChesney, therefore, it would be quite clear how the most recent income-share trends highlighted by Krugman should be interpreted: as just one more historical round in the linear, long-run intensification of capitalism’s monopolization tendencies, whereby a progressive lessening of competitive intensity helps further bolster corporate profitability levels. Such, however, is definitively not this book’s argument. In and through its focus on the regularizing and stabilizing function of competition-oriented laws, it relates a very different historical narrative to that presented by Foster and McChesney and, before them, by Baran and Sweezy. Not only does it depart from their historical reading, it also develops and draws upon a crucially different theoretical understanding of monopoly and competition and of the relation between them. So, although it concurs on the pivotal, frequently overlooked significance of monopoly power (and levels of competition) to capitalist dynamics, and on the crucial role that profit plays in this drama, it otherwise diverges. In identifying and explaining this divergence, we can now tease out and sharpen The Great Leveler’s principal influences, approaches, and arguments. The aforementioned argument that capitalism has historically migrated from a state of competitiveness to a state of monopoly or oligopoly is deficient in four primary respects, both empirical and conceptual in nature. First, there is something deeply misleading about the either/or nature of this historical narrative. One of the most important—although rarely acknowledged—of Marx’s insights was that capitalism always, everywhere, requires both. It needs competition, assuredly, not least to drive technological innovation and the reinvestment of profits, and thus growth. But it also needs monopoly—not merely to enhance visibility within and control over otherwise potentially chaotic business environments, but also to underwrite capitalist, market-based trade per se. Not for nothing does David Harvey argue, after Marx, that the “monopoly power of private property” is “both the beginning point and the end point of all capitalist activity.”20 For the legal institution of private

Introduction

property does confer monopoly: the exclusive power to dispose of said property as the owner alone sees fit. Capital’s seemingly paradoxical need for both competition and monopoly is explored in Chapter 1, which extracts from Marx a conceptualization of capitalism that critically informs the remainder of the book: that of capitalism always, necessarily, teetering on a knife edge, balanced precariously between the contradictory forces of competition and monopoly, and perennially in danger of lapsing too far to one side or the other. “The problem,” Harvey shrewdly observes, “is to keep economic relations competitive enough while sustaining the individual and class monopoly privileges of private property that are the foundation of capitalism as a political-economic system.”21 And it is here that our economic laws crucially enter the picture. In metaphorical terms, the law acts as a powerful leveler: a pincer of sorts on the critical, combustible nexus of monopoly and competition, applicable from one side of the knife edge, the other, or both. Antitrust (competition) law, meaningfully enforced, serves to constrain monopoly power where it coheres too readily, thus boosting competition; IP law acts from the other side, allowing a degree of monopoly power where none “naturally” coheres, and limiting competition in the process. This conceptualization of economic law is sketched out in Chapter 3. Together, such laws help to ensure that over the long term, market-based capitalism is not too competitive (driving down prices and profits) but, in Harvey’s terms, remains competitive enough (avoiding stagnation and rent-seeking). In the process, the laws in question historically have contributed substantially to keeping capitalist accumulation regimes broadly in balance. At the pivot of this overall mechanism sits the phenomenon of profit. Following the lead of scholars such as Robert Brenner, this book places front and center the relationship between profitability and the interrelated dynamics of competition and monopoly.22 As, indeed, did the classicals: Profit rates were, as Chapter 1 will show, fundamental to their theorization of competition. But it is vital to recognize, as writers such as Keith Cowling have done, that this relationship does not assume a simplistic less-competition-means-more-profit form, isolated as it were from other contributory factors.23 Indeed, the book shows that excesses neither of competitive intensity nor of monopoly power support longterm stability of profit-making and accumulation.

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Introduction

Instead, it leans more toward the type of argument proffered by Gérard Duménil and Dominique Lévy, which is that the dynamics of profitability strongly influence the state’s attempts to regularize regimes of accumulation, and that stabilizing capitalism is thus in no small part a question, ultimately, of stabilizing profitability.24 Or, as David Gordon and coauthors have written, the reproduction of capitalism is “fundamentally conditioned by the level and stability of capitalist profitability. As profits go, in short, so goes the economy.”25 The book’s particular slant on such conceptions is to consider corporate profits more in relative than absolute terms—and relative to, especially, labor and wages. While a comparable focus has recently been adopted by Thomas Piketty in his much discussed Capital in the Twenty-First Century, the inspiration underlying the approach taken here lies much further back in time, in the work in particular of Michal Kalecki.26 For as Kalecki showed both historically and conceptually, the relation of capital with labor, and profit with wages, is centrally implicated in the monopoly-competition relation and the balance that capitalism requires of it. Kalecki, it is fair to say, would have had some very interesting things to say about the Apple wage-suppression antitrust lawsuit. A second and related problem with the linear historical narrative of from-competition-to-monopoly is its positing of monopoly and competition not only as mutually exclusive alternatives, but as separable ones. Once more, we can turn to Marx for an effective disabusal of this figuring. Monopoly and competition, he argued, are much more closely related, and much more closely connected, than is typically recognized. “Monopoly produces competition, competition produces monopoly,” he maintained, somewhat aphoristically, in a letter he wrote to Pavel Annenkov in 1846.27 Capital not only requires both but is in fact the expression, inter alia, of their synthesis—a synthesis that Marx, in trademark dialectical fashion, described not as a “formula” but as a “movement,” specifically “the movement whereby a true balance is maintained between competition and monopoly.”28 Such movement comprises opposing but connected economic dynamics of centralization and decentralization. When one or the other dynamic becomes disproportionately powerful, Marx argues, the “counteracting tendency” kicks in to return capital to a balanced configuration of monopoly and competition. This balanced organization of productive forces—always inherently unstable and always prone to knife-edge slippages—is very close to what Edward Chamberlin would later call “monopolistic competition.”29

Introduction

Such monopolistic competition internalizes monopoly and competition in dialectical relation with one another and is the capitalist norm—and always has been. “The notion of a bygone ‘competitive’ stage of capitalism where firms were price-takers is,” as Duménil and Lévy insist, “a fiction derived from the neoclassical analytical apparatus.”30 Equally fictional, albeit a fiction usually emanating from a very different analytical source, is the notion of a contemporary “monopoly” stage of capitalism absent meaningful competition.31 The historical, U.S.- and U.K.-based narrative related in this book therefore turns on precisely this dialectical, restless synthesis of monopoly and competition, and its ever-evolving, historically and geographically specific forms. In recent years, it is Harvey who has provided the most provocative reading of this dialectic and of its centrality to capitalism. It is, Harvey argues, one of numerous “moving” contradictions that plague the capital form, and with which capital constantly wrestles as it enters into and out of crisis.32 Harvey repeats Marx’s observation that capital requires a balance of competitive and monopolistic forces. He then derives from this postulate the propositions that crisis occurs when such forces become imbalanced—although this is not the only cause of crisis—and that such crisis can only be “fixed” once balance is restored. The result is that capital historically “oscillates” between relative excesses of monopoly and competition, always finding balance hard to achieve, let alone sustain.33 Understanding capital and its historical development in this particular regard, Harvey insists, requires us to recognize “how successful capital has generally been in managing the contradictions between monopoly and competition” and that “it uses crises to do so.”34 Such success, and the role played by crises or by threats thereof, are two of this book’s central, recurring themes. However, Harvey’s framing raises two vital questions that he fails, in his admittedly brief account of monopoly and competition, to answer. First, how has this success been achieved? “Capital,” Harvey writes, “has organically arrived at a way to balance and rebalance the tendencies towards a monopolistic centralisation and decentralised competition through the crises that arise out of its imbalances.”35 Again, there is no objection here, except to press: “organically,” how? This book fashions an answer. This answer rests on the role of the law. When capital has become sufficiently overcentralized and monopolistic to threaten its own successful, profitable reproduction, antitrust law has been called

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Introduction

upon to help restore the necessary degree of balance. This balance will never be perfect and at rest; in a dialectical relation, such as that between monopoly and competition, it never can be. When the dangerous excess has been of competition, by contrast, IP law has come to the rescue. Such laws, needless to say, have not effected this work of rebalancing by themselves, and this book documents their interaction with other pertinent dynamics; but their role has been paramount. The other problematic question raised by Harvey’s framing brings us directly to our third point of divergence with the Baran and Sweezy or Foster and McChesney reading of capitalist development. Consider here the agency behind the successful, crisis-based management and rebalancing of monopolistic and competitive forces envisioned by Harvey: “capital has been successful . . .”; “capital has arrived at . . .” But what, or who, is this capital, and has its form remained constant? For Harvey, clearly, capital is the capitalist class: those that own the means of production. Yet this singularization of responsibility for regulating and reregulating the core dynamics of the capitalist economy raises all manner of questions that Harvey fails to address. Is this capitalist class homogeneous? Does it share consistent objectives in terms of economic development and management? And even if it does (and of course, it does not), what is its relation with the state and with the different tools of economic regulation, the law among them, that the state uses to govern and shape economic conduct? If Harvey’s stimulating propositions call for circumspection on account of their simplifying structural abstractions, the connection to the “monopoly capital” thesis is that it too tends to rely upon just such totalizing, even reified, concepts. “Monopoly capital” is itself one such. One of the consistent themes of the tradition renewed by The Endless Crisis—one extending back through Baran and Sweezy’s Monopoly Capital to Rudolf Hilferding’s Finance Capital (1910) and even Lenin’s Imperialism (1917)—is its tendency not only to associate potent monopoly powers with a new stage or phase of capitalism but to depict the latter in terms of a consciously regulated and (centrally) planned system in which market-based competition largely disappears from view.36 For Lenin, this system fused the interests of capital and state (state monopoly capitalism); for Hilferding the fusion was tripartite, with finance capital also integral. But Marx, for all the stereotypes to the contrary, never saw capitalism as such. It was a totality, to be sure, but one that needs to be continually reproduced and reconstituted. This process occurs in and

Introduction

through the disparate actions of government, workers, consumers, businesses, and so on; when such reconstitution occurs in ways that imperil accumulation, crisis looms. The point of saying all this is not simply to oppugn a totalizing view of “monopoly capital,” but to contrast with it the approach taken in this book, particularly to the law and its mobilization. There is not, and has not been, a single hand on the tiller, for all the obvious importance of the state as the law’s formal originator; there is no single, homogeneous entity pulling the levers, so to speak, of political-economic regulation— no consistent regime of conscious, systematic control. As with other modalities of economic regulation or governance, the law, in practice, does not “work” like that. For one thing, there is an important difference between the written law and its interpretation. Two courts can interpret and apply the same law or laws in markedly different ways and with very different consequences. Perhaps the clearest example of this, at least in this book (Chapter 6), concerns U.S. antitrust law in the second half of the twentieth century: The nature and degree of enforcement of this law underwent a dramatic transformation in the late 1970s and early 1980s, but the law itself did not materially change. Intellectual training, social and political context, even judicial personality: These variables, and more, all matter to the law’s practical materialization. As such, we must remain constantly alive to the simple fact that, as Peter Carstensen has put it, “court doctrine is not the whole of the law in practice.”37 Relatedly, much of the enforcement of IP rights occurs at a significant remove from courts—specifically in, as argued by William T. Gallagher, the everyday practices of IP owners and their lawyers, whose “negotiations” with alleged infringers take place largely in the “shadow” of IP law.38 For another thing, just as the state never enacts new economic laws in total isolation from the influence and interests of capital, so both capital(s) and state—and indeed other economic agents—use the law to their own ends, and these ends are far from necessarily commensurate. Think, once again, about our two Apple cases. Who, in each case, instigated the legal action? Who put the law to work in their own interests? In the IP case it was Apple itself. In the class-action suit it was labor. But the latter suit was in fact itself based upon a prior government investigation launched by the Department of Justice’s Antitrust Division in 2010.39 Three legal cases, then, all driven by different actors with different motivations, but all revolving around the same political-economic locus: the knotty

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Introduction

complex of profit generation and accumulation constituted by Apple Inc. And if the law, together with its agents, is so palpably nonsingular at the scale of the political economy of just one company, on what reasonable grounds could we ever envision it thus—as a vehicle of conscious, unified control—in relation to the political economy of capitalism more widely? The “great leveler” indicated in the book’s title, in short, is not some omnipotent regulator in charge of the law; it is the law per se. How, then, might we more accurately characterize the human and institutional agency analyzed in the following pages in relation to the law, its mobilization, and its political-economic effects? At a general level, the conclusion reached by Paul David in his examination of the history of IP law fits particularly well: “The complex body of law, judicial interpretation, and administrative practice that one has to grapple with in this field was not created by some rational, consistent, social welfaremaximizing public agency. What one is faced with, instead, is a mixture of the intended and unintended consequences of an undirected historical process on which the varied interests of many parties, acting at different points (some widely separated in time and space), have left an enduring mark.”40 More specifically, however, we will see that although IP and competition laws have indeed performed their work under the influence of varied individuals and groups, the vast majority of the latter are ultimately committed to, and institutionally invested in, the reproduction, in as smooth a fashion as possible, of capitalism in more or less its existing form. And even more specifically, the “smoothness” here alluded to means the reproduction of capitalism especially without the kinds of problems—identified in Chapter 3—that tend to emerge when the necessary balance between monopoly and competition is substantially disrupted. On all the above grounds, therefore, this book’s argument diverges from that which we find in the all-too-common narrative of competitive capitalism historically segueing into monopoly capitalism. Of course, none of this is to suggest that nothing has changed historically in the capitalist constellation of monopoly-competition structures and dynamics. Far from it. But the book’s fourth and final quarrel with the conventional narrative is that what has substantively, perhaps irrevocably, changed is not the relative levels of competitive intensity and monopoly power—as in, that era had more competition, this one has more monopoly—so much as the source of monopoly powers and the degree of defensibility thereof.

Introduction

Capitalism, this argument runs, is always characterized by competitive undercurrents; were it not, it would not be capitalism. Meanwhile, and arising partly out of these competitive dynamics (the Marxian argument), there is an endemic drive to fashion monopoly powers. Yet the means of assembly of such powers do not remain constant, and neither does the ability of monopolistic capitalists to defend the powers thus amassed. Capitalists—and indeed the states committed to stabilizing capitalism, with the law one obvious apparatus at their disposal—must constantly find new ways of putting monopoly in place and keeping it there. “As monopoly privileges from one source diminish,” Harvey observes, “so we witness a variety of attempts to preserve and assemble them by other means.”41 Mindful, thus, of Marx’s dictum that the monopoly-versus-competition dualism is a red herring that confuses a dialectical relation for an oppositional one, this book focuses instead on the ways in which the unstable balance between the two forces is maintained—and it posits the law as the primary, necessarily mutable, instrument of such maintenance. To the extent that The Great Leveler develops this explicitly historical argument, it does so, as indicated earlier, in relation to two primary national economies: those of the United States and the United Kingdom. This geographical selection is not designed to infer any kind of wider argument about the significance or representativeness of either or both of these economies and their historical development. They are not posited as lodestars of global capitalism, for instance, or even as examples of a particular type of (e.g., financialized) capitalism. They are the focus because some sort of geographic circumscription was essential—to explore the book’s themes globally would entail a very different type of project—and because it was presumed that their examination would generate interesting, albeit geographically specific, insights. Hopefully, what follows proves this presumption to have been correct; whether those insights are applicable to other national economies and, if so, in what measure, remains for further research to explore. In relation both to underlying competition-monopoly dynamics, and to the evolution and effects of the laws designed to regulate those dynamics, the book explores significant historical differences and similarities between the United Kingdom and the United States. But the very setting-up of our analysis along such overtly territorialized lines inevitably raises questions about what, for want of a better word, we can group

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Introduction

together as the international or transnational dimensions of our primary objects of investigation. These dimensions are primarily threefold. To avoid unnecessary confusion or objection, it is important to explain here the book’s approach to dealing with each of these and its rationale for adopting this approach. The first issue concerns the dynamics of monopoly and competition themselves. Neither the exercise of monopoly power nor the operation of competitive forces is necessarily confined to within national borders. Companies frequently compete across borders. Equally, they sometimes enjoy the power, either individually or through collusion with other firms, substantially to dictate market outcomes in anticompetitive fashion in more than one territory; and often this power is itself transnationally constituted (synergistic, one might say) as well as exercised. This book’s approach to dealing with such dynamics is relatively forthright. It aims simply to recognize them where material, to understand and explain what they mean in terms of political economy (for capital, for labor; for price and profitability; and so forth), and particularly, to deal with their implications for antitrust and IP laws and those laws’ formatting of monopoly and competition. This, needless to say, is easier said than done. There is no simple formula that can be applied. To make the book both manageable and coherent, however, the general “rule” it adopts is to document and examine the internationalization of competition and monopoly only insofar as it demonstrably bears on monopoly and competition dynamics in the territories with which the book is concerned. When, for example, in the post–World War II decades, competition from overseas-based companies markedly increased in both the United Kingdom and (especially) the United States, how did this influence market dynamics in those two countries, how did it affect the operation and impact of IP and antitrust law, and how, if at all, did lawmakers and practitioners respond? Second, when we expand our analytical lens beyond the scale of the nation-state, it becomes particularly apparent that IP and antitrust laws do not represent the totality of regulation as it bears on our specific concerns of monopoly and competition. The matter of which companies are permitted to compete within a particular sector in a particular country—and, equally important, of the assets (including, but not limited to, IP assets) with which they are permitted to do so—is clearly bound up with what happens at the border as well as with the rules established by competition and IP laws within national borders. That is to say, there

Introduction

are critical questions of trade regulation that need to be closely considered. Bluntly stated, are foreign companies allowed to compete within the territory and sector being investigated, and if so, how freely? Even if this book were not concerned first and foremost with the work of the law, it would be untenable to ignore trade regulation in a study, like this one, of monopoly and competition and their centrality to capitalist political-economic dynamics because trade regulation frequently impinges directly on these twin forces. Tariffs or duties on imports can serve to buttress national-level monopoly powers, even when that is not their explicit purpose (and it frequently is): Protectionism means protection from foreign competition. Conversely, but by the same token, agreements to open up national borders to international trade, whether bilateral or multilateral in nature, are typically premised at least in part on the objective of boosting competition and eradicating monopoly or oligopoly. The fact that the law is the focus of this book makes the requirement to factor in trade regulation even more pressing. The international trade treaties and trade agreements that collectively constitute modern cross-border trade regulation are frequently given the label “international trade law,” and for good reason: They are generally laws in effect, if not always in name. The World Trade Organization (WTO), which has over 150 member countries and is the world’s main organization for trade regulation and liberalization, represents an emblematic example. Assuredly, it does not create laws as such. Rather, it is above all else a forum where member countries negotiate trade agreements, which are often referred to as its “rules” (hence why the WTO is described as “rules based”). These agreements usually comprise commitments to open markets to foreign companies (and to keep them open), partly by lowering tariffs and other trade barriers. But even if these commitments, and the agreements in which they are embedded, are not usually identified as “laws,” that is what they effectively are because they are legally binding in practice. Governments are contractually obliged to enforce them. Where they do not, the WTO’s dispute settlement system—whose procedures are themselves set out in the negotiated agreements—comes into play. As such, trade regulation/law must be factored in. But to explore it as centrally and systematically, conceptually and empirically, as competition and IP law would be to make the book as sprawling and unwieldy as examining the historical oscillation of monopoly and

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competition globally—as opposed to “just” in the United States and United Kingdom—would. More important still, it would somewhat muddy the conceptual waters. Consider again the WTO, as we must (its members account for over 90 percent of global trade in goods). Ostensibly dedicated to fostering “freer” trade and “fairer” competition, these are actually free-floating signifiers more than enforceable policies because the organization’s famous “rules” are in reality structured around a much more specific, albeit certainly related, principle: that of nondiscrimination. More particularly, the negotiated agreements are geared toward promulgating two subprinciples: those of most-favored nation (giving all WTO members the same “best” treatment at the border as one’s “most-favored” trading partner) and national treatment (giving imported goods and services the same treatment as those produced domestically). The reason for spelling out these trade principles is that they are, precisely, first and foremost, trade principles. They are not principles, first and foremost, of competition (or monopolization).42 This does not mean that they do not have competitive effects when implemented. They ordinarily do; but such effects are always dependent on, because they are filtered through, a country’s domestic economic regulation, and especially its laws of IP and competition. Trade regulation is thus situated outside of the book’s core theoretical and empirical remit, but features in it, necessarily, when and where material to “internal” U.S. or U.K. monopoly-competition dynamics, its effects evaluated strictly alongside those of domestic competition and IP laws. Indeed, running right through the book is the explicitly geographical argument that emergent historical imbalances in the monopoly-competition relation have often resulted from capitalism’s incessant technology-driven reterritorialization—as the railroads annihilated national space with time in the nineteenth century (Chapter 4), for example, or as newer transportation and communication technologies compressed international space-time (aka globalization) in the twentieth (Chapter 6). And in the necessary attendant recalibrations of the forces of monopoly and competition, trade (re)regulation—itself a lever, in part, of economic reterritorialization— has typically been intimately bound up with the effects of scrabbling to rewrite and/or reinterpret competition and IP laws. In generic terms, then, where trade policy is protectionist it tends to support domestic monopoly powers (and the work of IP law); as Giovanni Arrighi once remarked, protectionism is arguably “nothing

Introduction

more than a projection on to the international plane of the monopoly policy of maintaining prices and profits by restricting the expansion of production.”43 Where policy is oriented toward free (or freer) trade, meanwhile, it tends to bolster local competition (and the work of antitrust). But not always. Neither the WTO’s national-treatment nor its most-favored-nation principle, after all, says anything about the level of local competitiveness a foreign company can expect nondiscriminatory treatment to confer upon it. Such principles merely stipulate that treatment should be no worse than for run-of-the-mill domestic suppliers and for most-favored trading partners. Yet the latter may themselves all face highly anticompetitive market conditions, in which case nondiscriminatory treatment is of no great benefit to the foreign beneficiary of “free” trade and represents no great threat to the local monopolist.44 Trade regulation, in short, although hugely significant in the monopolycompetition context, cannot be dealt with unless the primary questions of competition regulation—the laws tackled in this book—have been adequately addressed. The third and final vital issue of “internationalism,” meanwhile, concerns the geographical scale of those core legal regimes themselves. Here we can summarize by stating that the book adopts its largely territorialized structure—examining U.S. laws largely as U.S. laws, and U.K. laws largely as U.K. laws—because throughout most of the period examined in the book, which runs from the late nineteenth century to the present day, IP laws and competition laws have been, for the most part, nationally territorialized. They have been formulated and implemented at the scale of the nation-state. This statement is not meant to suggest that legal developments in one place have occurred independently of developments elsewhere: U.S. antitrust law, to give a salient counterexample, has long served as a model for the development of competition policy elsewhere in the world, and where that is true for the shaping of U.K. policy specifically (as it increasingly has been in recent decades), the book acknowledges and documents this. It is intended to denote, rather, the fact that where IP and competition are concerned, the law has long remained considerably more insular than the political-economic dynamics it strives to regulate (notwithstanding ongoing endeavors by various parties to ensure that it does not lag too far behind). Indeed, it is only in the past two decades that this has really started to change, with the degree and pace of change strongly influenced by U.S. interests. The 1994 WTO Agreement on Trade Related Aspects

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of Intellectual Property Rights, which was very much a U.S.-led initiative, heralded a significant degree of internationalization of IP law: Signatories were required to align their domestic laws with newly harmonized international standards. This internationalization may have been more de facto than de jure (the laws themselves remain domestically legislated), but internationalization it nonetheless was. Efforts to internationalize antitrust law, however, have borne considerably less fruit, and partly because the United States has typically opposed them. Contemporary U.S. antitrust, in particular, remains a thoroughly national creation and process. The United Kingdom, in large part due to its membership in the European Union (EU), which has its own competition authority, represents a more complex case (Chapter 6). EU influence has become especially pronounced since 2004, to the degree that competition policy in the United Kingdom is now in considerable part EU policy. Yet despite such recent developments, in the fields of both competition and IP law, there generally remains a striking disjuncture between (globalized) market and (national) legal geographies. “In general,” argues David Gerber, “the laws that are applied to global markets are not themselves global—or even transnational! Instead, the laws of individual states govern global markets.”45 The historic work of the laws of the United Kingdom and United States, as illuminated by the conceptual prism of classical political economy, is the subject of this book. There are two parts to The Great Leveler. Part I contains its conceptual arguments, Part II its historical arguments. The former, therefore, steps back from the particulars of the U.S. and U.K. experiences to ask, in abstracted theoretical terms, three main questions: How can we understand competition and its relation to monopoly under capitalism? How in turn is the competition-monopoly relation implicated in the core capitalist dynamics of profit-generation and accumulation (and why, relatedly, did twentieth-century political economy tend to underplay its role)? And how, in principle, do IP and competition laws each figure in this latter, wider landscape of capitalist political economy, specifically given their role in formatting the dialectic of monopoly and competition? The answers to these three questions are developed in Chapters 1 through 3, respectively. Their inspiration is found, as stated, in classical political economy in general and Marx in particular, although they offer considerable extension and refinement thereof in order to resolve

Introduction

conceptual problems that the thinkers in question either left unanswered or did not (and in several instances, could not) even begin to broach. Part II represents the empirical-historical counterpart to Part I. Its objective is simply stated: to examine and unravel the role of our two central legal complexes, in and through their work at the monopoly-competition interface, in influencing macropatterns of historic profit making and accumulation in the U.S. and U.K. economies. In practice, does this role look anything like that which the conceptual investigations in Part I suggest it might? If not, why not? Or if so, how significant has the law’s role actually been, and to what extent does this particular explanation for the moderation of rhythms of capital accumulation and growth fit with—or depart from—existing alternative historical explanations? The central argument of Part II, and of the book, is that the law has, for at least the past century, been profoundly important to the historical development—the continual successful reproduction on a generally expanding scale—of the Anglo-American economies. A key facet of this argument is that the law’s significance has lain in enabling capital successfully to manage the inherent contradictions and tensions between monopolistic and competitive tendencies. Harvey, in other words, is entirely correct to suggest that such management has been crucial to capitalism’s wider historic viability and vitality; he simply fails to specify the role of the law, or indeed of any other regulatory mechanism. Harvey is also correct, moreover, to point to the decisive function of crises. As we shall see, crises, or the imminent threat thereof, have been the pivotal moments of galvanization for the law’s leveling work. Repeatedly, emerging imbalances in the dialectic of monopoly and competition have threatened the U.S. and U.K. political economies with seizure or worse; repeatedly, IP law, competition law or both have been fundamentally reconfigured, in implementation if not always statutory inscription, to help redress such imbalance; and on each such occasion to date, the requisite degree of balance between the forces of monopoly and competition has been restored, thus enabling capitalism to reconstitute itself anew—only, in time, in a system seemingly beset with instability, for imbalance to reemerge once again. A reader interested only in the details of the historical argument—in the questions of when and where IP law or antitrust law have taken precedence; how the epistemic, political, and institutional conditions were realized for them to do their work; how specifically they served in practice to augment the forces of monopoly or competition; how they

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interacted with other forces of political-economic configuration; and so on—could conceivably turn straight to Part II and skip the conceptual foundations provided in Part I. Chapters 4 through 6 would, just about, “make sense” in and of themselves. But the historical understanding garnered thereby would be a somewhat limited (and perhaps even unconvincing) one, precisely because the conceptual understanding would be deeply etiolated. Parts I and II, this is to emphasize, do not stand apart. While it makes a novel contribution in its own right, Part I also sustains and gives wider meaning to the arguments of Part II. Not only does it provide a framework on which to hang the historical findings and against which to consider their significance, but it furnishes the conceptual tools required to recognize and understand the work of the law in the first place. This, to be clear, is definitively not to say that Part I somehow determines what Part II concludes. On the contrary: Chapters 1 through 3 tell us where to look in the historical record, not what to find. It is to insist, rather, that Parts I and II are co-constitutive; just as Part II depends on Part I for its possibility and wider contextual framing, so in turn it gives the latter a historicalgeographical significance that it would otherwise lack. If, as Marx tells us, monopoly and competition cannot exist without one another, neither can—or perhaps better, should—theory and empirics. And if this book contributes positively in any small way to the thorny, ongoing, collective endeavor of figuring out how to “work” productively with Marx’s abstract “laws” of the motion of capital in relation to concrete historical realities, it will have achieved one of its several objectives.46 Part II (and Chapter 4) begins, in any event, in the late nineteenth century. Although there is no fixed starting point from which the analysis and narrative proceed, perhaps the signal year, if we had to nominate one, would be 1890: the year of the passing in the United States of what was, and arguably still is, the world’s most significant statute of competition law, the Sherman Act. Competition law, indeed, in the sense that we understand it today, first came to prominence in late nineteenth-century North America. To be sure, several industrialized European nations by that stage had long experience of experimenting with various predecessors to modern antitrust policy, among them the English common law of restraint of trade. But it was not until the final decades of the nineteenth century, in Canada and the United States, that the first modern competition-oriented legislation was drafted. This occurred in the context of widespread fear and suspicion of the power of consolidated corporate

Introduction

“trusts,” at a point in time when, especially on the Continent, prevailing European attitudes toward monopolistic corporate behaviors were typically relatively relaxed.47 Yet there would be a stark irony in such a nomination, for if one were to imagine that 1890 thus marked the start of an era in which the law worked in the United States to inhibit monopoly powers and boost competition, one would be entirely mistaken. In point of fact, in the United States and the United Kingdom, the decades through to World War II represented a period in which the law largely buttressed monopoly. Chapter 4 shows how and why: how, in terms of the combination and relative strengths and weaknesses, in writing, mobilization, and enforcement, of each territory’s competition and IP laws; and why, because this buttressing of monopoly powers was exactly what both territories initially needed in terms of the prevailing forces of competition and monopoly and the (im)balance between them. In the 1890s both countries experienced deep recessions characterized by intense competition and downward pressure on prices, profits, and investment. Both countries thus required the widespread reassembly of denuded monopoly powers. Alongside other forces, not least among them that of industry consolidation, the law helped enable such reassembly, partly by generally not preventing the consolidation that took place. It then, on balance, continued to be primarily supportive of monopoly through to around midcentury—long after, in reality, a point of approximate balance between monopoly and competition had been reached. The implications of this continuation are addressed in Chapter 5, which covers a period—from the immediate aftermath of World War II through to the late 1970s—when, by contrast, the law was principally on the “side” of competition in the negotiation of Anglo-American capitalism’s knife-edge balancing act. This reversal was, the chapter shows, required, insofar as the threat of crisis that stalked the United Kingdom and United States economies before they embarked on their “golden age” journey from the early 1950s lay in an imbalance of monopoly and competition that was the opposite of conditions which had obtained in the 1890s: now, it was monopoly powers, flushed by the support of the law and other contributory forces over a period of decades, that were in relative excess. The next three decades saw these powers substantially eroded as the respective roles of IP and competition laws were dramatically transformed, the latter coming to the fore while the former—previously dominant—took a backseat, subordinated role.

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Both Chapters 4 and 5, in other words, paint the historical development of the U.K. and U.S. economies in broad, macro-level brushstrokes. That this is the scale of analysis merits emphasizing because it means that whereas some tendencies—those manifesting themselves at this scale—are highlighted, others are not. In arguing, for example, that the tendencies of the periods covered in those two chapters were toward greater levels of monopoly and competition—buttressed by ascendant IP, then antitrust, laws—respectively, the book inevitably overlooks significant differences between the experiences of different economic sectors. Its thesis is not that such differences are unimportant, but rather that, on balance, at the scale of the economy as a whole, the trends identified were those that ultimately played out. A certain granularity of understanding is undoubtedly sacrificed in the process; such sacrifice, however, is hopefully more than compensated by the gains afforded by adjusting our lens explicitly to the macroeconomic level. Remaining at this level, Chapter 6 charts the twentieth century’s second great reversal in the nature of the political-economic leveling work performed by the law in the U.S. and U.K. contexts. It emphasizes that as in the period directly following World War II, crisis, or the seeming imminence of crisis, was the trigger for wholesale legal reconstitution. In the 1970s, of course, the crisis was real enough; and the chapter follows the lead of scholars such as Brenner in understanding this crisis as one of imbalance in monopoly and competition where the latter was now in relative excess. As Figure I.1 shows, corporate profits had been under considerable and increasing pressure for some time: As a share of national income, they began declining in the United Kingdom in 1961 and in the United States in the middle of the same decade, and they did not pick up again in either until the early 1980s. Together with an abrupt relaxation in antitrust enforcement (particularly in the United States), the strengthening and more vigorous application of IP law from exactly the latter point in time served henceforth to boost flagging monopoly powers. It did so, pointedly, in the context of the rapidly growing economic importance of industries—audio-visual, pharmaceutical, and others—in which sources of monopoly power other than IP were thin on the ground. This novel industrial context represented one of two vital differences between the post-1970s era and that earlier period, between the 1890s and World War II, in which the law had similarly worked to reassert the powers of monopoly vis-à-vis the forces of competition. The second major difference was the far greater degree of internationalization

Introduction

that now characterized both competitive and monopolistic tendencies. It is with a close consideration of the significance of these differences that Chapter 6 ends. Among the primary lessons to be drawn from the history depicted in Part II of the book is that although “capital,” to use Harvey’s category, indeed appears highly successful at managing the contradictions between monopoly and competition in the short term, problems typically appear to resurface—albeit rarely in the same form—in the longer term. The law having twice, from the 1890s and 1950s, served to rebalance a political-economic system in deep imbalance, the U.S. and U.K. economies have then twice seen imbalances of an opposite polarity gradually materialize. By the late 1940s an original excess of competition had become one of monopoly; by the late 1970s the latter condition had reverted to the former. Given and in the light of this history, The Great Leveler ends, not with a conclusion that looks back, but with a brief coda that surveys the current state of play in the Anglo-American political economy and, more tentatively, looks forward to the future. With the law having been primarily supportive of monopoly powers since the early 1980s, how might we characterize the status of the monopoly-competition dialectic today? Does it appear to be broadly in balance, capital thus sitting comfortably—or as comfortably as it ever can—atop its precarious knife edge? Or has substantive imbalance, in one direction or the other, again been generated? Additionally, given the latest developments in both the political economy of Anglo-American capitalism (which, lest we forget, has just been through one of its most convulsive crises in history) and the laws that seek to regulate its competitive and monopolistic impulses, what might we expect, again both of the law and of the underlying political economy, going forward? It suffices to suggest here that the developments with which we started this introduction are, in these regards, highly instructive. Consider, first, the Apple lawsuits. If these demonstrate anything beyond reasonable doubt, it is the twofold conclusion that monopoly powers are today rampant—even in the “new” economy from which so much was expected by way of open competition and thus democratic empowerment—and that big capital will fight tooth and nail to defend those powers when their exercise is threatened, either by the state, or by labor, or indeed by other capitals.

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Consider, second, and explicitly in the context of such lawsuits, the trends identified and discussed by Paul Krugman. Once more, two conclusions stand out. The first is that as the 2000s segued into the 2010s, monopoly power was not only evident but, vis-à-vis competition, visibly dominant; the imbalance between monopoly and competition has, yet again, reversed. The second is that this dominance, as it ordinarily does, has significant consequences for labor. Can we therefore imminently expect another reversal in the work of the law? Can we expect its support of monopoly power in recent decades to switch direction now that monopoly has reassumed the upper hand in its perennial dialectical struggle with the forces of competition? The book concludes by offering a speculative answer to this increasingly portentous question.

I L E V E L I N G I N T H E O RY

1 C O M P E T I T I O N U N D E R C A P I TA L I S M

To explore the role of competition-oriented laws in moderating the vicissitudes of capitalist profitability and growth we first need to consider competition itself. From the regulatory perspective, competition is a field of economic forces and activities into which the state has historically inserted various technologies of legal investigation and intervention. But what specifically, and economically, is meant by “competition”? How does it “work,” and how do these workings intersect with growth and profit dynamics? In short, it is imperative to have a firm grasp of competition per se in order to then be able to decipher the effects of laws targeting it. We risk misapprehending the law’s objectives and effects if we fail to examine it strictly (although clearly not exclusively) in terms of “the complexities of its object.”1 Yet where should one look for productive insight into competition and its complex nature? This is no trivial question, not least because there is nothing remotely like a consensus theorization of competition in Western economic thought. “Although the concept of competition has always been central to economic thinking,” observes John Vickers, “it is one that has taken on a number of interpretations and meanings, many of them vague.”2 Moreover, not only are many of these interpretations vague, they are often also mutually inconsistent. This, then, puts us in the demanding position of having to assess the relative merits of these different interpretations, specifically in relation to the context in which we would seek to mobilize them. Which reading—or readings, for we do not necessarily have to limit ourselves to one—of competition are fit for the purpose? Perhaps even more problematic, meanwhile, in the context of a book explicitly concerned with the development and regularization of capitalist economies, is the relative dearth of a latter-day secondary literature

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dealing explicitly with competition and capitalism. While hundreds of books have been written about capitalism in recent decades, and hundreds also about economic competition, one can count on one hand the number of such books that deal expressly with the dynamics of competition within capitalism as a mode of economic production.3 This is a genuine curiosity, and a key objective of this chapter and the following one is to seek to explain it. One explanation for this dearth can be stated already at the outset: Neoclassical economics, comfortably the most influential economic language for the conceptual analysis of competition for at least the past century, simply does not talk about capitalism—as a mode of economic production, or indeed as a mode of social reproduction, whereby “capital” can be conceived as both process (of circulation) and social relation (between capital and labor)—at a systemic level. Its interests center on resource allocation and price determination in markets; and, moreover, on markets typically in equilibrium. For this and other reasons, which will also become clearer as we progress, mainstream modern economics does not provide the lens we need here: a lens which must enable us to grapple with and comprehend competition dynamically, at the macrolevel scale, and with all its inherent tensions brought to the surface. As such, our main touchstone in this chapter and throughout this book will instead be classical, mainly nineteenth-century political economy, where the discussion of competition is of competition and capitalism, even if it was not articulated in that particular language by the protagonists.4 However, the discussion will also reference the work of three twentieth-century economists who, while working at a considerable distance from the conceptual frameworks of classical political economy, wrote revealingly about competition, and did so in ways not always entirely congruous with the neoclassical canon, namely, Edward Chamberlin, John Maynard Keynes, and Joseph Schumpeter. Yet as intimated in the introduction, extracting a workable and useful conceptualization of competition from classical political economy is itself no straightforward matter. While one might expect competition to assume center stage in the classical analysis—John Stuart Mill, after all, claimed that “only through the principle of competition has political economy any pretension to the character of a science”—its presence is in fact relatively peripheral, which helps to explain why competition also later came to be marginalized in the one modern heterodox economic “school” (political economy) that does take “capitalism” as its subject.5

Competition under Capitalism

We can, however, piece together, particularly from Smith and Marx, a convincing picture of competition that will stand us in good stead for the analysis of competition-oriented laws.6 In this chapter’s reading of Smith and Marx, the latter’s views are consistently privileged. Why? Again, there are numerous reasons for this, but they ultimately boil down to a central proposition: that his various commentaries on competition, scattered throughout his works but mainly concentrated in volumes one and three of Capital, frame competition and its implications for profitability and growth in such a way that the role of law in the regularization of capitalism can be most vividly and meaningfully brought to light. Whether this assessment is correct, and Marx’s is indeed the “right” perspective to be guided by, will of course ultimately be for the reader, at the end of the book, to judge.

The Nature of “Competition” Is competition an activity (that companies engage in), or a condition (as in a competitive context), or both? In the works of Smith and Marx it is characterized primarily, although not exclusively, as the former. Competition is something done, by and among multiple businesses (and, both Smith and Marx remind us, by laborers). As Roger Backhouse has observed, this is most evident in Smith in his frequent use of the definite or indefinite article before the word competition: repeated references to “the” or “a” competition underline the fact it was seen as a process.7 Marx, meanwhile, talks about “competition raging,” “the battle of competition,” the “competition of capitals,” and the “general competitive struggle.” Competition is definitively alive. Smith’s and Marx’s, therefore, were very much dynamic concepts of competition. Firms engaged in active, unfolding rivalries with one another whereby they competed mainly—although again, not exclusively—on price.8 Not insignificantly, this is also more or less the popular understanding of competition, which is to say, the understanding that prevails in the business world. There too competition is figured—if not always practiced—as active, dynamic rivalry between firms. The average businessperson, in other words, would likely be perfectly comfortable with the predominant perception of competition we find throughout classical political economy. “Competition,” notes J. K. Galbraith of this episteme, “was the rivalry of the merchants of the town or of the cotton manufacturers or pit proprietors of nineteenth-century England.”9

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More substantively and technically it was, writes Bob Jessop, “a steering mechanism of actual economic development and differential accumulation.”10 And within the milieu of such competition the movement of resources (land, labor, capital) from one sphere of production to another was accorded a central, coordinating role. For modern neoclassical economics, by contrast, competition is understood more as a condition. This condition can be figured positively or negatively: either as a form of freedom, or as a lack of restraint. In turn, such restraint can emanate from different sources, including in particular the state, or monopolistic or oligopolistic forms of organization. In either case, restraint would manifest itself most materially in the shape of price-setting behaviors, meaning that the idea of “free” competition crystallizes in the neoclassical envisioning of firms as essentially impotent price takers. Thus, one of the ways in which Galbraith distinguished between the neoclassical and popular/classical understandings of competition was to pose the question of whether a business had “measurable control” over its prices.11 If it did, even in the context of fierce day-today rivalry with competitors, then the economic space within which it operated was not strictly competitive in the neoclassical sense. We will return to this neoclassical conceptualization of competition, and indeed its relation to the classical conception, in due course, when we come to consider competition’s relation to monopoly. For now, it suffices to note that this is a decidedly static conceptualization, wherein the dynamic issues explored by the classicals, such as market entry and exit, largely retreat from view. Markets, not companies, establish prices, and those markets are conventionally assumed to be in equilibrium. Contra the dynamic rivalry of the classical worldview, the neoclassical edifice assumes “static competition focusing on the formation of market prices.”12 As both Backhouse and Vickers remind us, however, there were important historical precedents to this neoclassical reversioning.13 Each points in this respect to the formative work of two nineteenth-century economists in particular: Augustin Cournot and Francis Edgeworth. Vickers identifies these two as “pioneers of the formal analysis of competition.”14 But Smith, notably, had also hinted at what was to come. He too occasionally invoked competition more as a condition than an activity; neither he nor the other leading classical economists were, as Galbraith remarks, “especially self-conscious in their use of the term,” although as Backhouse explains, Smith tended to call it something different (e.g.,

Competition under Capitalism

“perfect liberty”) when doing so.15 More important, he too argued that such liberty or competitive freedom, couched in markets, saw prices effecting an equilibrium of supply and demand. Smith called this equilibrium price the “natural price,” which is a concept we will have cause to examine in more depth below. The important point at this juncture is that Smith hereby prefigured the influential neoclassical depiction of “price takers,” identifying the natural price as “the lowest which can be taken, not upon every occasion indeed, but for any considerable time altogether. . . . [It] is the lowest which the sellers can commonly afford to take, and at the same time continue their business.”16 Now we encounter the first obvious signs of divergence between Smith and Marx.17 For where Smith envisioned “natural” equilibrium in competitive exchange relations, any such balance appearing in Marx is inherently brittle and unstable. To understand such divergence and the reasons for its emergence, it is necessary to explore in detail how each writer saw competition actually operating, dynamically, in practice.

Competition, Profit, and Growth Competition in Marx’s Mirror Once more, we start with the parallels in Smith’s and Marx’s readings, which are often underappreciated. Smith saw competition as pivotal to market economies not only through its role in equilibrating—through the price mechanism—supply and demand, but also through its linked role in regulating profit levels across different sectors of the economy. Smith’s argument here was that because of competition, there was an inherent tendency within capitalism for profit rates in different sectors to converge. Capital, assumed to be mobile, would always respond to profit differentials, migrating to those sectors in which profitability was currently highest—but with the (unintended) consequence of equalizing profit rates in the process because competition would increase and prices decrease in the sector into which investment was migrating. Smith, focusing primarily on those sectors from which capital was being withdrawn, put it like this: “The stock of the country . . . is applied to those particular branches only which afford the greatest profit. Part of what had before been employed in other trades, is necessarily withdrawn from them, and turned into some of the new and more profitable ones. In all those old trades, therefore, the competition comes to be less than before.

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The market comes to be less fully supplied with many different sorts of goods. Their price necessarily rises more or less, and yields a greater profit to those who deal in them.”18 The upshot, in any event, was that differential profitability was a temporary phenomenon. Marx was in total agreement with Smith (and with David Ricardo) on this point.19 As he wrote in Capital, volume three: “The rates of profit prevailing in the various branches of production are originally very different. These different rates of profit are equalized by competition to a single general rate of profit, which is the average of all these different rates of profit. The profit accruing in accordance with this general rate of profit to any capital of a given magnitude, whatever its organic composition, is called the average profit.”20 For both Marx and Smith, the selling prices at which such “average,” or equalized, profits are realized constitute a critical part of the analysis. Smith, as we saw above, called this the “natural” price, whereas Marx (and Ricardo) called it the “price of production.” A consideration of the nature of this price is a necessary step to demonstrating exactly where, why, and how Marx diverges from Smith. “Price of production” is in some respects an unfortunate label because it is not the sale price at which the cost of production is merely repaid. It represents, instead, cost plus a profit. How much profit? Marx has already given us the answer: “average” profit, or the profit rate which obtains across the whole of the economy once competition has done its work and equalized profitability levels. The notion of the price of production is crucial, therefore, inasmuch as it is the knot that ties together profitability and competition in the Smithian and Marxian schema. It is the price level at which goods must sell in order for their sellers to realize average profits, and at which market prices are alleged to settle, assuming capital mobility and Smith’s “perfect liberty” of “free competition.” So where exactly does Marx take exception to Smith’s analysis? It is in his discussion of prices of production—and in relation to this, of competition and profit—that Marx engages in some of his most biting critique of Smith and the other “bourgeois” economists, so it is vital to understand where his quarrel lies. This is not a simple matter, but perhaps the best way to understand this quarrel is in terms of the conceptual work that the different protagonists expect competition, in particular, to perform. Marx essentially argues that Smith burdens this concept with too much explanatory weight. “It has been said,” Marx writes, referring to the work of his “bourgeois” predecessors, “that competition levels the rates of profit of the

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different spheres of production into an average rate of profit and thereby turns the values of the products of these different spheres into prices of production.”21 This is a key sentence, for in it we see the appearance for the first time of what is obviously, for Marx, a pivotal word: value. Marx is saying that in Smith’s (and Ricardo’s) writings on competition, the value of a product is ultimately being determined by competition: Competition brings profit rates in different sectors into line with one another, and in the process it establishes both the prices of production and the underlying product values that those prices represent.22 Marx’s objection, to be clear, is not with the idea that prices of production are quantitatively equal to values (at least, in the long term); nor with the notion that when profit rates are equalized across sectors, prices of production equal market prices; and nor, of course, with the argument that competition equalizes profit rates (as we have seen, he maintained this too). Instead, it is with the direction, so to speak, of causality. For Marx, values ultimately determine prices of production—and thus, in a scenario of averaged profitability, market prices—rather than the other way around. It is in prices of production that competition (from the one side) and value (from the other) “meet,” with Marx arguing that Smith et al. critically confused the source of determination. Hence his insistence, which is vital for us to retain as we progress, that “everything appears reversed in competition. The final pattern of economic relations as seen on the surface, in their real existence and consequently in the conceptions by which the bearers and agents of these relations seek to understand them, is very much different from, and indeed quite the reverse of, their inner but concealed essential pattern and the conception corresponding to it.”23 Two particular elements of this argument bear drawing out. The first is that an analytical emphasis on prices of production is misplaced because all these prices are, for Marx, is a surface expression of underlying value. Values not only “lie beneath the prices of production” but also, and more materially, “determine them in the last instance” (this last a notion that Althusser would later make famous); and for Marx, of course, value is determined by labor-time. “We can well understand,” Marx thus quips, why his predecessors “always speak of prices of production as centres around which market-prices fluctuate. They can afford to do it because the price of production is an utterly external and prima facie meaningless form of the value of commodities, a form as it appears in competition, therefore in the mind of the vulgar capitalist, and consequently in that of the vulgar economist.”24

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The phrase “as it appears in competition” provides the link to the second and more important element of Marx’s thesis for our purposes, which is that an analytical emphasis on competition—where, recall, Marx says “everything appears reversed”—can also be misplaced, if the concept is expected to do too much explanatory work. For: “What competition does not show,” he reiterates, “is the determination of value, which dominates the movement of production.”25 But how, one might reasonably ask, can Marx avoid imputing value-determination powers to competition while accepting that it equalizes profit rates? Marx’s claim here is that competition is essentially a “leveler”: It serves to level out values, prices, and profits, the underlying quantum of which is ultimately—in the last instance—dictated by invested labor quantities. Competition, as he envisions it, simply “brings out the price of production equalizing the rates of profit in different spheres.”26 It does not determine it; it is an enabler thereof. It is worth quoting in full Marx’s clearest articulation of this claim, if only because, hidden away in one of the final chapters (Chapter 50) of the final volume of Capital, few readers of Marx ever make it to this point: Competition can only equalise inequalities in the rate of profit. In order to equalise unequal rates of profit, profit must exist as an element in the price of commodities. Competition does not create it. It lowers or raises its level, but does not create the level which is established when equalisation has been achieved. . . . The average rate of profit sets in when there is an equilibrium of forces among the competing capitalists. Competition may establish this equilibrium but not the rate of profit which makes its appearance with this equilibrium. When this equilibrium is established, why is the general rate of profit now 10, or 20, or 100%? Because of competition? No, on the contrary, competition has eliminated the causes producing deviations from 10, 20, or 100%. It has brought about a commodity-price whereby every capital yields the same profit in proportion to its magnitude. The magnitude of this profit itself, however, is independent of competition. The latter merely reduces, again and again, all deviations to this magnitude.27

His last word on the matter is devastatingly abrupt: “In short, competition has to shoulder the responsibility of explaining all the meaningless ideas of the economists, whereas it should rather be the economists who explain competition.”28

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Competition’s Coercions If the placing of limits on the explanatory purchase of competition constitutes the first major difference between Marx and Smith in their respective analyses of its operation, a second arises in and through the former’s deeper consideration of why capitalists compete and of what the broader, long-term consequences of such competition might be. Aside from his important and influential thesis regarding the tendency of competition to reduce intersectoral profit differentials, most of Smith’s discussion of competition is limited to “local” effects: bringing supply and demand into equilibrium in particular markets, and establishing prices (and values) in the process. Neither, curiously, does Smith offer much by way of reflection on what it is that makes capitalists compete. Indeed, where he does discuss capitalist motives and driving forces, it is more often—as we will shortly see—in relation to monopolistic tendencies than competitive ones. Instead, the competitive impulse comes across in Smith as a quasi “natural” phenomenon. There are important parallels here with the writings, considerably later, of Keynes. For one thing, Keynes, like Smith, saw competition as a “disciplinary” force within capitalism, whereby rates of return were equalized across sectors.29 More significant, there is in Keynes as in Smith something inherent or endemic about the competitive drive.30 But crucially, this competitive “itch,” even if ontologically comparable, was ultimately much more material to the Smithian schema than the Keynesian one. For Keynes, competition’s practical efficacy began and ended with its disciplinary impact; it was definitively not the motor driving the capitalist system onwards.31 For Smith, by contrast, competition was the kernel of capitalism’s dynamism. So too for Marx. Yet where in Smith the competitive imperative is naturalized, in Marx it is socialized. Rooted in “the basic conception of Marx’s analysis”—value—explains Robert Heilbroner of the Marxian theory, competition “arises in the first place as an aspect of the manner in which ‘value’ expands.”32 How so? To understand the centrality of competition to the expansion of value, and to do so in a way that heeds Marx’s own warning about ascribing the determination of a commodity’s value to competition, we need to attend to another of Marx’s central notions, that of accumulation. Accumulation, in Marx, is not the same as what we tend now to call

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“growth,” but it is closely related to it and the relationship is necessary to flesh out. Marx argues that any kind of economy—capitalist or otherwise—can either grow or not grow. Where it grows, Marx says that something called “expanded reproduction” is taking place: The economy is not only reproducing itself but, by virtue of levels of production and consumption greater than are necessary for that reproduction, it is getting bigger. The “no growth” scenario Marx calls “simple” reproduction: The economy is, simply, reproducing itself. And to distinguish analytically between the two scenarios, Marx calls upon the concept of surplus value. This is the extra value—realized in the form of more money than was invested at the outset—created in the production process. (Again, surplus value is not the same as profit, but is closely related to it, and is the source thereof.) The difference between simple and expanded reproduction, then, is that in the former case either no surplus is produced or all such surplus is consumed or hoarded, while in the latter case at least some of the surplus is reinvested in production—hence growing the economy. In Marx, “accumulation” is the word given to this process of the creation and reinvestment of surplus value under the capitalist mode of production. In other words, expanded reproduction—or “economic growth”—is dependent on and driven by capital accumulation. And what is absolutely central to Marx’s argument is that reproduction under capitalism is necessarily, and uniquely, expanded reproduction. Capitalism, that is to say, must grow. The reason? Because accumulation—the motor of growth—is a categorical imperative for capitalists. “Accumulate, accumulate! That is Moses and the prophets!” Marx famously writes in volume one of Capital.33 All of which brings us to the key question in the current context: Why must capitalists accumulate? Why can they not be satisfied with an existing level of wealth? Marx provides the answer in the same chapter, and it is now that competition reenters the picture. Capitalists must strive to accumulate because competition obliges them to do so. Sitting still is simply not an option because one’s competitors will not be sitting still (or at least cannot be expected to do so), and thus not to reinvest in expanded production is to risk competitive destruction. Others will be investing in new technologies and improving productivity and profitability accordingly, so one must also do so, merely in order to keep up. As Marx writes in his fullest statement of this obligation: “Moreover,

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the development of capitalist production makes it constantly necessary to keep increasing the amount of the capital laid out in a given industrial undertaking, and competition makes the immanent laws of capitalist production to be felt by each individual capitalist, as external coercive laws. It compels him to keep constantly extending his capital, in order to preserve it, but extend it he cannot, except by means of progressive accumulation.”34 Critically, therefore, Marx figures these “coercive laws of competition” not as something inherent to—a “natural” property of—the human capitalist but as inherent to capitalism (the historically specific mode of production), “brought home to the mind and consciousness of the individual capitalist as the directing motives of his operations.” The coercive force of competition guides the individual capitalist “who applies the new method of production” and meantime “forces his competitors to adopt the new method.”35 And most evocatively of all, it stands in stark contrast with the “perfect liberty” that Smith had regarded as the “nature” of competition in capitalist markets. “Free competition,” Marx remarked, in highlighting this very incongruity, “brings out the inherent laws of capitalist production, in the shape of external coercive laws having power over every individual capitalist.”36 In sum, competition is hardwired into capitalism and relentlessly energizes its growth imperative. From Competition to Competition and Monopoly This leaves just a third and final major difference between the Smithian and Marxian understandings of competition to be discussed. It emerges directly out of Marx’s analysis of how competition drives generalized investment in new technologies of production. Consider the range of outcomes of this competitive investment scenario. One, to be sure, at least in theory, is equalization of profit rates; equally certainly another, assuming the safe production of surpluses, is economic growth. But as numerous writers on capitalism have argued, the effects extend much further than this. Joseph Schumpeter, writing in the first half of the twentieth century, had some interesting things to say on this score. He, like Marx, saw competition as “a dynamic process of differentiation and struggle among firms” in which technological innovation played a pivotal role.37 But the parallels with Marx only go so far, and the differences between

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the two help sharpen the distinctiveness of the latter’s arguments. For while Schumpeter, as Heilbroner has shown, deemed competition a stimulative process in which firms with pioneering technologies effectively pulled other firms along with them (a rising tide lifting all boats, as it were), Marx theorized this technology-based struggle among firms very differently.38 Heilbroner explains why: Marx’s intercapitalist competition is not a stimulative (or disciplinary) but “an eliminative process” characterized, above all, by “the efforts of capitals (firms) to displace other capitals.”39 In other words, one firm’s practice of competition through technological innovation does not tend to enable competitors so much as destroy them. This destruction, Marx says, can take two main forms: Either those weaker firms go out of business or they are compelled to surrender—through acquisition—to the more powerful and innovative capital. That is to say, the inevitable result, as Marx sees it, is centralization and ultimately monopoly; and this result emerges out of and because of competition. And thus competition, as Marx wrote in the letter to Pavel Annenkov cited in the introduction, “produces monopoly.”40 It would be difficult to exaggerate the distance between this understanding of competition and Smith’s.41 Smith invariably analyzes competition and monopoly separately, as if they are, in practice as in his theory, separable. Marx does not. In fact the very idea of such separability constitutes yet another ground for ridicule in the direction of “vulgar” economists: “What they all want,” he maintains in the same letter, “is competition without the pernicious consequences of competition. They all want the impossible, i.e. the conditions of bourgeois existence without the necessary consequences of those conditions.”42 The “pernicious consequences” he is referring to here are none other than monopoly; and as Michel Foucault would later remark, such striving for the impossible would continue to haunt “liberal economics,” the latter’s need “to save competition from its own effects” representing what he termed its “paradox of monopoly.”43 So, for Marx, competition and monopoly always go hand in hand. How and why they do so is a significant issue not just for Marx but also, of course, for the present book, given its central reliance—sketched in the introduction—on the concept of a perennially unstable balance between the two. With this centrality in mind, the next section of this chapter is given over wholly to an examination of competition, monopoly, and

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the relationship between the two in classical economic thought. This discussion sees the first appearance in the book of what later becomes its core topic of concern: economic, competition-oriented law (albeit not competition/antitrust law per se, nor intellectual property law). Again, our main focus will ultimately be on Marx. But again, we will start with Adam Smith.

Competition and Monopoly In Smith Like competition, monopoly is, for Smith, more of a behavior or process than a state or condition: It is the process whereby ownership of the means of production becomes increasingly centralized or monopolized. And such a process was of anything but mere theoretical interest; Smith saw it in evidence all around him in the economy of the late eighteenth century, not least, in England and Scotland, in the shape of the monopolization of local production activities through the widespread materialization and robust defense of town trade guilds. This in itself is an important recognition, for the impression has long persisted not only that the era of Smith, Ricardo, and Thomas Malthus was one of highly competitive markets (“when thousands of tradesmen, craftsmen, or farmers are offering their wares to thousands of customers,” as Adolf Berle later put it) but that these economists, and Smith in particular, were themselves responsible for envisioning early industrial capitalism as such (Berle identifying the “balanced economy” of his above description as that which was “expounded by Adam Smith”).44 But Smith did not see or describe things this way, making the popular imagining of that era, and its close association with Smith, something of a mystery. “Why on earth,” wonders David Harvey, among others, “do we typically dub this period of capitalist history as ‘the classical competitive stage’?”45 A misreading of Smith is one answer; and one of the most important objectives of Giovanni Arrighi’s final book, Adam Smith in Beijing, was precisely to try to rescue Smith from this misreading.46 In reality, Smith saw himself living in a social economy shot through with monopolistic tendencies, and part of his interest was in questioning the sources thereof. In fact, and as intimated above, he writes more about the evident impulses towards economic centralization than towards the competition with which his name is more commonly associated. In just

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one example, he argues that “the corporation spirit, the jealousy of strangers, the aversion to take apprentices, or to communicate the secret of their trade, generally prevail” in various contemporary trades, “and often teach them, by voluntary associations and agreements, to prevent .  .  . free competition.”47 Subsequent influential writers on capital and capitalism have made much the same basic, yet also profound, point: that given the opportunity, capitalists will invariably try to become monopolists. Thorstein Veblen, one of the most perceptive observers of the dynamics of monopoly and competition in the early twentieth century, concluded simply that “the endeavour of all such enterprises that look to a permanent continuance of their business is to establish as much of a monopoly as may be.”48 Yet Smith was ultimately much more deeply concerned with effects than with motives. What did monopolistic dynamics mean for the economy and for its main sets of constituent actors? Here Smith was frank. Competition was “good” whereas monopoly, for the public at large, was “bad,” even if—in fact, precisely because—it boosted the coffers of a small coterie of capitalists. The latter monopolists Smith castigated as “an order of men, whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it.”49 And in perhaps his clearest statement of the antipodal interests of the public on the one hand and monopoly capital on the other hand, Smith exclaimed: “The interest of the dealers, however, in any particular branch of trade or manufactures, is always in some respects different from, and even opposite to, that of the public. To widen the market and to narrow the competition, is always the interest of the dealers. To widen the market may frequently be agreeable enough to the interest of the public; but to narrow the competition must always be against it, and can serve only to enable the dealers, by raising their profits above what they naturally would be, to levy, for their own benefit, an absurd tax upon the rest of their fellow-citizens.”50 This, to be sure, was not a novel argument by any means. As a number of commentators would later note, the mercantilists whose theories Smith dismantled—in particular the German mercantilist Johan Becher and the Scot James Steuart—had much earlier formulated the comparable case that “monopoly (‘monopolium’) would result in high prices while competition in the form of many sellers (‘polypolium’) would drive prices down” and help to eliminate “excessive profits.”51 Smith’s

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particular contribution, in no small part effected in and through his denunciation of monopolization, was, as Paul McNulty suggests, “the elevation of competition to the level of a general organizing principle of economic society.”52 Smith’s delineation of monopolization and its effects was not without contradictions, however. Consider what monopoly entailed specifically for laborers—part of Smith’s “public” and yet, at the same time, somehow standing outside it. In some places Smith seems to suggest that labor, like capital, benefits from monopoly conditions. This, for instance, is Smith in Chapter 7 of book one of Wealth of Nations: “The exclusive privileges of corporations, statutes of apprenticeship, and all those laws which restrain, in particular employments, the competition to a smaller number than might otherwise go into them, have the same tendency, though in a less degree. They are a sort of enlarged monopolies, and may frequently, for ages together, and in whole classes of employments, keep up the market price of particular commodities above the natural price, and maintain both the wages of the labour and the profits of the stock employed about them somewhat above their natural rate.”53 Here, by contrast, is Smith just three chapters later: “The enhancement of price occasioned by [monopoly] is every-where finally paid by the land-lords, farmers, and labourers of the country.”54 Whereas on the first reading labor is aligned with monopoly capital, on the second—the more common reading one finds in Smith, and the one explicitly recuperated by Arrighi—it is part of the “public” exploited by such capital. Smith is considerably more consistent, meanwhile, concerning the question of how and why monopoly is able to cohere and prevail. One major reason, he argues, is that the public simply does not ordinarily oppose monopolization in practice. It should do: Any new proposal from the side of business, Smith says, “ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention”; but typically, it does not. The “land-lords, farmers” and (perhaps) laborers taxed by monopolization “have seldom opposed the establishment of such monopolies. They have commonly neither inclination nor fitness to enter into combinations; and the clamour and sophistry of merchants and manufacturers easily persuade them that the private interest of a part, and of a subordinate part of the society, is the general interest of the whole.”55

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More fundamental, however, was the impact of the sociotechnical field with which we are here centrally concerned: the law. Already by Smith’s time fledgling corporation laws and other regulations were being mobilized, he asserted, to enable the monopolization of trade and, in the process, to distort the price stabilization theoretically brought about by competition. Indeed, for Smith, the very process of creating companies as legal entities in the first place—the process of incorporation—was bound up with the striving to realize monopoly powers: “It is to prevent this reduction of price, and consequently of wages and profit, by restraining that free competition which would most certainly occasion it, that all corporations, and the greater part of corporation laws, have been established.”56 This was a forceful claim; and in Smith’s view the legalized dynamic of monopolization which resulted was further buttressed by a wider field of regulation. He made this case, for example, in relation to an observable uneven geographical development of corporate powers, and one which we shall have occasion to revisit later: “The superiority which the industry of the towns has every-where in Europe over that of the country, is not altogether owing to corporations and corporation laws. It is supported by many other regulations. The high duties upon foreign manufactures and upon all goods imported by alien merchants, all tend to the same purpose. Corporation laws enable the inhabitants of towns to raise their prices, without fearing to be under-sold by the free competition of their own countrymen. Those other regulations secure them equally against that of foreigners.”57 In Marx, and in This Book What, then, did Marx make of all of this? As with the dynamic of competition, he agreed with much of what Smith wrote about the dynamic of monopoly. He too saw monopolization (or what he typically called “centralization”) as decidedly against the wider public (economic) interest.58 And he too saw such monopolization occurring all around him. It would of course be odd if he had not: By Marx’s time, the scope and scale of centralization was vastly more pronounced than it had been when Smith was researching and writing. The centralization of capitals in the railroad industry was here emblematic, and Marx observed it with something verging on awe: “Accumulation, the gradual increase of capital by reproduction as it passes from the circular to the spiral form, is clearly a very slow procedure compared with centralisation,

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which has only to change the quantitative groupings of the constituent parts of social capital. The world would still be without railways if it had had to wait until accumulation had got a few individual capitals far enough to be adequate for the construction of a railway. Centralisation, on the contrary, accomplished this in the twinkling of an eye, by means of joint-stock companies.”59 One perhaps obvious difference between the two writers was that Marx shared none of Smith’s apparent equivocation on the matter of which “side” labor was on in the Manichean divide between corporate monopolists and the public. Where monopolization enabled firms to raise prices and profits above Smith’s “natural” price, it was for Marx axiomatic that the gains thus realized by capital were not shared with labor. Rather, gains for capital automatically entailed losses for labor. A second, extremely important difference, already trailed above, is that unlike Smith, Marx yoked monopoly and competition together, maintaining—first of all—that the latter inevitably gave rise to the former. Competition, as we saw, was deemed “eliminative,” and hence always and everywhere led, unless explicitly checked, to the centralization of capitals. Competition produces monopoly; it has an intrinsic tendency, as Foucault—riffing on but not explicitly referencing Marx—later put it, “to suppress itself,” generating as it does phenomena (of monopolization) “which precisely have the effect of limiting, attenuating, and even nullifying competition.”60 Indeed, Marx regarded competition, seemingly perversely, as one of “the two most powerful levers of centralization.” The other was the credit system, which he described as “an enormous social mechanism for the centralisation of capitals.”61 Disappointingly, Marx’s discussion of how centralization typically proceeds under capitalism consists merely of brief conjectures. It was one of many “unfinished” elements of his wider political-economic project. As he wrote in Capital, volume one, on the general “law” of capitalist accumulation: “The laws of this centralisation of capitals, or of the attraction of capital by capital, cannot be developed here. A brief hint at a few facts must suffice.”62 What hints or raw materials does Marx give us to work with, then? They are few and far between, but two stand out, and both pertain to what modern economists call economies of scale. Such economies refer to the cost and thus profitability advantages conferred by greater operating scale, and are widely accepted as contributing to industry consolidation. Marx’s first observation in this vein is short and to the point:

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“The battle of competition is fought by cheapening of commodities. The cheapness of commodities demands, caeteris paribus, on the productiveness of labour, and this again on the scale of production. Therefore, the larger capitals beat the smaller.”63 His second, related observation alludes to the way in which, in practice, Marx saw the eliminative dynamic of competition-to-monopoly sweeping first through one sector and then another: “It will further be remembered that, with the development of the capitalist mode of production, there is an increase in the minimum amount of individual capital necessary to carry on a business under its normal conditions. The smaller capitals, therefore, crowd into spheres of production which Modern Industry has only sporadically or incompletely got hold of. Here competition rages in direct proportion to the number, and in inverse proportion to the magnitudes, of the antagonistic capitals. It always ends in the ruin of many small capitalists, whose capitals partly pass into the hands of their conquerors, partly vanish.”64 Notwithstanding the inadequacy of his conceptualization of centralization processes per se, however, Marx’s writings on monopoly and competition—the necessary linkage should not be forgotten—can and do offer us a robust platform upon which to stage our consideration of the role of the law in the regularization thereof. This proposition rests on a number of different recognitions. The most important is that “monopoly” was never for Marx just about such centralization or concentration processes. It was much, much more fundamental than that, for what is private property—that central capitalist institution—if not itself a legalized monopoly of ownership? Our society’s kneejerk equation of capitalism with competition often leads to this basic attribute of the capitalist system being overlooked, so it fully warrants the emphasis that Harvey—in recently seeking modestly to progress Marx’s analysis of the monopoly-competition relation—gives it: “Monopoly power is foundational rather than aberrational to the functioning of capital.”65 That capitalism systematically depended on such monopoly was most strikingly articulated by Marx not in Capital but in the Economic and Philosophic Manuscripts of 1844, in his discussion of land rent and the transition from feudalism. The critical difference between feudalism and capitalism, Marx claimed, was that the latter turned the “immovable monopoly” of landed property (which was “the root of private property”) into “the mobile and restless monopoly” of private-propertyand commodity-based competition.66 Monopoly, crucially, had not

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disappeared; it had in fact become more potent, precisely because it was now implicated in circulation and thus was generalizable. Marx expresses this transformation best through the analogy of the breaking up of feudal monopolies of land: “The division of landed property negates the large-scale monopoly of property in land—abolishes it; but only by generalizing this monopoly. It does not abolish the source of monopoly, private property. It attacks the existing form, but not the essence, of monopoly. The consequence is that it falls victim to the laws of private property. For the division of landed property corresponds to the movement of competition in the sphere of industry.”67 Subsequent generations of writers have made similar claims concerning the importance to the spread of capitalism of the historical origination, generalization, and mutation of private property relations. Kurt Burch, for instance, has examined the emergence in the eighteenth century of two distinct concepts of property and associated rights—“real” and “mobile”—bearing close (if unstated) parallels to Marx’s “immovable” and “restless” monopoly powers. Burch argues that these concepts were not only coupled to increasingly separated and separable property types—land and “exchangeable” property, respectively—but also helped legitimize the nominal separation of the state system on the one hand and nascent global capitalism on the other hand by virtue of their linking with these respective spheres.68 Marx powerfully prefigured such claims. In the process, he resolutely tethered competition and monopoly together: His generalized mobile-and-restless monopoly enabled markets—it was, in Burch’s terms, “exchangeable”—and thus prepared the terrain on which competition occurs. Harvey emphasizes this very point, saying that the “monopoly power inherent in private property forms the basis for exchange and by extension for competition.”69 Indeed, it is on the basis of markets’ and competition’s inherent reliance on the monopoly power of private property that Harvey refers to the relation between monopoly and competition as one of “contradictory unity.” They are contradictory, in the sense of pulling in different directions; but they are united, in the sense of existing inseparably from one another. The deeper implication of Marx’s insights, however, is simply that, as stated, capitalism systematically depends upon monopoly. Monopoly is a sine qua non of the circulation and accumulation of capital. Without the monopoly power of private property there is no profit, no accumulation, indeed no capitalism.

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But it is important at this point to acknowledge that this recognition, curiously absent in Smith, is not unique to Marx. Consider the influential neoclassical concept of “perfect competition.” This is an important concept for our analysis of the monopoly-competition relation precisely because it presupposes an economic condition—recall the static nature of the neoclassical conceptualization of competition—wholly lacking monopoly power. The concept was properly developed at the time of the neoclassical revolution in the late nineteenth century, and as James Clifton explains “the essential ‘perfection’ of perfect competition” lay in the atomism of individual economic agents.70 But again, there were significant precursors: A fledgling notion of perfect competition had been introduced by Nassau Senior as early as 1836 to answer the question, raised by the classical, pre-Marxian understanding of competition, of the basis for the center of gravity around which market prices fluctuated.71 The perfect competition conceptual ideal has had a notoriously bumpy history. From even the very early years of the twentieth century it was widely seen to be a myth when considered in relation to real-world economic realities. Thus, when Harvey writes that capitalism “has never been perfectly competitive or even remotely in accordance with that ideal,” he is merely repeating what earlier generations of heterodox economists asserted equally emphatically.72 Veblen had written in 1904, when his Theory of Business Enterprise was first published, that “it is very doubtful if there are any successful business ventures within the range of the modern industries from which the monopoly element is wholly absent.”73 Michal Kalecki, in turn, maintained that perfect competition “is a most unrealistic assumption not only for the present phase of capitalism but even for the so called competitive capitalist economy of past centuries: surely this competition was always in general very imperfect.”74 Moreover, perfect competition was a myth to which, as we have seen, Smith himself clearly did not subscribe; McNulty suggests that he actually “presented a theory of imperfect competition.”75 More interesting and revealing, however, is that the notion of perfect competition has also long been recognized to be oxymoronic. Counterintuitive as this may sound, the basis for this view is compelling and is important to grasp. For while Clifton claims that it is “only under conditions of perfect competition that competition freely reigns in the neoclassical system,” the reality is actually very different.76 Perfect competition, to the contrary, in fact “deals with a situation where competition, as the term is commonly understood, is absent.”77

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While Milton Friedman argued this exact point, the scholar whom most mainstream economists today credit with (earlier) demonstrating the absence of competition-as-rivalry from a scenario of perfect competition is Friedrich Hayek.78 Hayek argued that “if the state of affairs assumed by the theory of perfect competition ever existed, it would not only deprive of their scope all the activities which the verb ‘to compete’ describes but would make them virtually impossible.”79 Why? Because the imagined (and imaginary) context of pure market rule, where all firms are powerless price takers, disallows not only monopoly power but also the rivalrous, price-establishing, profit-generative competition (i.e., actually existing capitalism) which, as Marx showed, is reliant on such monopoly. Underlining its distance from and incompatibility with the classical conception, Jessop thus describes the original neoclassical conception of (perfect) competition as “an abstract or idealized condition of equilibrium in which there was no long-term competitive advantage between firms.”80 For these and other reasons it has become increasingly widely accepted among mainstream economists that the “reality” of competition under capitalism is not such “perfect” (noncompetitive) competition but something much more “imperfect.” Indeed, the most clumsy and unhelpful criticism of neoclassical economics tends to be that which depicts perfect competition as the latter’s figuring of real-world economic dynamics. It is not; it is a simplifying assumption, although admittedly its limited standing as such has sometimes been forgotten, and with hazardous consequences. “Perfect competition when its actual status of a handy model is forgotten,” cautioned Kalecki, “becomes a dangerous myth.”81 The “real” nature of competition under capitalism thus came to be seen as what Edward Chamberlin, referencing the monopoly power at the core of its operative capacity, called “monopolistic competition.”82 Monopolistic competition was, in Chamberlin’s schema, competition predicated explicitly on monopoly over the (private) property that was each firm’s product or service. His thesis emerged from out of his realization that—Marx aside—“the middle ground between competition and monopoly remains virtually unexplored.” In many respects the thesis was a simple one whose time had simply arrived, namely, “that both monopolistic and competitive forces combine in the determination of most prices, and therefore that a hybrid theory affords a more illuminating approach to the study of the price system than does a theory of perfected competition, supplemented by a theory of monopoly.” “Neither

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force,” he wrote of competition and monopoly, “excludes the other.” Hence: “To discard either competition or monopoly is to falsify the result,” since “both elements are always present, and must always be recognized.”83 One of the key attributes of the monopolistic-competition scenario, Chamberlin said, is that price-setting occurs; firms are not helpless price takers, although substitute products and services do typically limit the degree of control exerted over price. And as Backhouse notes, the concept of monopolistic competition in one respect is—and for Chamberlin, was—little more than a conventional understanding of competition with the central place of monopoly power in capitalist trade-enablement duly recognized.84 “Because most prices involve monopoly elements,” Chamberlin surmised, “it is monopolistic competition that most people think of in connection with the simple word ‘competition.’”85 On the surface at least, Chamberlin’s deliberately “hybrid” concept of monopolistic competition is not so distant from Marx’s siting of “mobile and restless monopoly” deep within “the movement of competition.” But there are, needless to say, many substantial differences, of which one merits highlighting here. This, recalling our introduction above of a distinction between static and dynamic understandings of competition, is that Chamberlin’s was very much in the former mold. What McNulty has said of Cournot’s concept of competition—“totally devoid of behavioral content,” with a focus “entirely on the effects, rather than the actual workings, of competition”—applies equally well to Chamberlin’s.86 His is a static account primarily of market structures. He does not consider the dynamics of competition, the nature of competitive behaviors, or most critically of all, the mutual and necessary interactions between competition and monopoly. This is where Marx’s account decisively stands out. He envisions competition and monopoly not only dynamically but, more specifically, as co-constitutive of one another—that is to say, as dialectically interlaced, and thus existing in what Harvey terms “a dialectical but contradictory relation.”87 And in doing so, Marx establishes a tremendously powerful analytical foundation for exploring in the rest of this book the work of economic laws in stabilizing capital’s temporal rhythms. The starting point to elaborate this dialectical relationship is to reiterate the Marxian claim that competition leads irreducibly to monopoly (centralization). This is the part of Marx’s argument picked up and developed by twentieth-century scholars, such as Paul Baran and Paul Sweezy

Competition under Capitalism

in their Monopoly Capital.88 Theirs is perhaps the most influential and sophisticated statement of the not uncommon view that capitalism had (and has) become more and more monopolistic in nature over time, although it was certainly not entirely original in terms of its core proposition: among those to have earlier propounded comparable arguments, particularly though not exclusively in relation to the U.S. economy, were writers ranging from Lenin to Schumpeter, from Rudolf Hilferding to Galbraith, and from Kalecki to Berle.89 By Baran and Sweezy’s line of argument, centralization had indeed emerged ineluctably out of an earlier stage of competition. The modern economic world was seen to be dominated by enormous corporations behaving toward each other in what Schumpeter had called a “corespective” manner, maintaining the impression of serious competition but in reality refraining from eroding each other’s profits.90 An “attitude of live-and-let-live toward other members of the corporate world,” according to Baran and Sweezy, now dominated business affairs.91 But we must not forget the other—in fact, the first—component of Marx’s gnomic statement on monopoly and competition in his letter to Annenkov: “Monopoly produces competition, competition produces monopoly,” he wrote; or as Oswald Knauth, paraphrasing, put it in 1916: “A condition of monopoly naturally engenders competition, while a condition of competition naturally develops monopoly.”92 We misunderstand Marx if we extract and emphasize the latter clause while neglecting the former. And while Marx was never remotely as clear about how he saw monopoly producing competition as he was about the way in which competition led to monopoly, he clearly believed that the former effect was no less endemic to—and essential for—the reproduction of capital. Thus, while repeating the observation that capitalism was characterized by the “centralisation of existing capitals in a few hands and a deprivation of many of their capital,” he insisted equally that this process “would soon bring about the collapse of capitalist production if it were not for counteracting tendencies, which have a continuous decentralising effect alongside the centripetal one.”93 Competition and the market “coordination” effects it enabled was, for Marx, the most significant of these counteracting, decentralizing tendencies. It was, quite simply, a capitalist necessity: Capitalism needs competition in markets to offset the “centripetal” tendencies associated with monopoly power. Otherwise, Marx argued, monopoly capital would inevitably ossify—reverting, as it were, to the stagnant, rent-seeking status

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of “immovable monopoly” that landed property had represented in the feudal age. “Capitalism cannot do without market co-ordinations,” affirms Harvey, “and still remain capitalism.”94 Baran and Sweezy’s claims about an era of “monopoly capital” must be read in this particular light. They were essentially arguing that capitalism’s competition-based, decentralizing tendencies had, over time, dissipated—that the competition dynamic which Marx envisions as hardwired into capital’s DNA had come to be thoroughly neutered by an overwhelming historical centripetal force. Michael Burawoy later posited such neutering thus: “Competitive capitalism was pregnant not with socialism but with a new form of capitalism—monopoly capitalism.”95 This book, as the introduction made clear, refutes this narrative. It instead follows Harvey and Marx in arguing for capitalism’s ongoing need for—and characterization by—a relatively balanced organization of productive forces, pitched somewhere between the extremes of excessive centralization on the one hand and excessive decentralization on the other hand.96 We can usefully picture and conceptualize such a constellation of capitals as constituting the pivot of the monopoly-competition dialectic: as, specifically, the historically and geographically-contingent constellation of productive forces under which capitalism’s coincident need of both monopoly and competition, in dynamic and co-constitutive interplay with one another, happens to be served. To further stress the importance of this balance we can again cite a central assertion of Harvey’s: his proposition that, for capital, “the problem is to keep economic relations competitive enough while sustaining the individual and class monopoly privileges of private property that are the foundation of capitalism as a political-economic system.”97 The value of this statement is its evocation of capitalism permanently teetering on a knife-edge. As Harvey readily acknowledges, there will always be, and always have been, forces liable to disturb capitalism’s precarious balance by pulling it too far in one direction (toward monopoly) or the other. Hence Harvey’s adamancy that any such harmony achieved by capitalism is “inherently unstable” and that “the balance between monopoly and competition oscillates erratically back and forth.”98 Yet balance, or a degree thereof, there must ultimately be. If there is no productive, operative tension between forces of centralization and decentralization, then by definition the dialectic of monopoly and competition is no longer in play; and without that dialectic, capitalism would no longer be capitalism in anything like the form Marx theorized

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it. This latter implication is one that Baran and Sweezy, in consciously departing from Marx’s law of value in their envisioning of monopoly capital, actually readily concede.99 But the balance alluded to here is light years away from Smith’s “equilibrium.” It is not a natural point of rest. There exists, rather, an unstable and dynamic zone where the conjoint drama of monopoly and competition can play out without one overwhelming the other and unbalancing the capitalist system in the process. The knife edge occupied by capital at any particular moment is located somewhere therein. Even if capital is constant in its need thereof, nothing, moreover, remains constant about the balance between monopoly and competition—about the particular form in which it crystallizes, the forces that threaten to destabilize it, or most important of all for our purposes, the mechanisms employed to produce and reproduce it. To take the period most familiar to us as an exemplar, capitalism has changed immeasurably in recent decades, not least in terms of the dominant configurations of productive capital, as the territories which figure centrally in this book—the United States and the United Kingdom—have seen alleged shifts from product to service economies, from material to immaterial labor, from Fordism to post-Fordism, and so on. In the context of such a maelstrom of change, we should expect to see nothing less than radical transformation in the balance of competitive and monopolistic forces, in the challenges to—and sources of—realization of monopoly power, and in the regulatory regimes put in place to keep capitalism on its knife-edge course. As we will see, the law has played a crucial but underanalyzed role in this last respect. It certainly played its part in Adam Smith’s day, as his brief analyses of the price effects of early corporation laws indicate. Since then, it has increasingly taken center stage, in historical conjunctures both of excessive centralization (when antitrust has come to the fore) and of excessive decentralization (when there has been a more prominent role for intellectual property law). This role has simply not been systematically explored. While Marx gives us some extraordinarily valuable conceptual tools with which we can try to frame and interpret the role of the law, he plainly does no more than that. Nor should we expect him to: Laws relating to competition were few, far between, and relatively feeble in his day, and for good reason. After all, there was clearly no apparent danger of capitalism being too decentralized and competitive, for all

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our stubborn imagery of a “bygone” competitive capitalist age. Equally, when Marx wrote in 1867 that “in any given branch of industry centralisation would reach its extreme limit if all the individual capitals invested in it were fused into a single capital,” such a scenario of too much centralization was purely hypothetical; hence the “if.”100 Wind forward a quarter of a century to the year of 1890, however, and things were already looking markedly different. The stage was set for the law to assume the pivotal role outlined in this book. It was in that year that the fourth German edition of volume one of Capital was published. In it, its editor, Friedrich Engels, pointedly added a footnote to Marx’s hypothetical statement concerning centralization into a “single capital,” which read as follows: “The latest English and American ‘trusts’ are already striving to attain this goal by attempting to unite at least all the large-scale concerns in one branch of industry into one great joint-stock company with a practical monopoly.”101 Indeed they were. And, not coincidentally, on the other side of the Atlantic, it was in this exact same year that Congress wrote into the United States’ law books the Sherman Act: the first and, still, most important statute of U.S. competition law.

Conclusion “Competition,” we have seen, is an enormously slippery and elusive concept, used in different ways by different commentators, and for different reasons. The American economist Frank Knight once even said of competition that “use of this word is one of our worst misfortunes of terminology.”102 Misfortune or not, however, it is surely impossible to talk systematically about capitalism without talking about competition. For this reason, it remains something of a mystery that the word was omitted from Raymond Williams’s famous “vocabulary” of contemporary culture and—capitalist—society, Keywords.103 If we need to understand competition to understand capitalism, then it is no less self-evident that if our objective is to analyze the field of law in relation to competition, we require at least a workable conceptualization of the nature of the latter. This chapter has argued that given we are interested in the law’s role in stabilizing regimes of accumulation and growth, it is imperative to approach competition dynamically—to figure and interpret it as an activity, process, and behavior rather than a static state or structure. For this purpose it is the classical economists, not the modern neoclassical mainstream, that best suffice.

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To this end the chapter considered the views on competition—sometimes concordant, often not—of the two most influential figures of eighteenth- and nineteenth-century political economy: Smith and Marx. And it argued that the latter’s conceptualization can most productively inform our reading, in the rest of the book, of the law. It pinpointed four primary reasons for this, all of which are important to bear in mind in the following chapters. First, where Smith saw competition assisting in bringing supply and demand into local equilibrium through the mechanism of market pricing, Marx emphasized an altogether different—and in the context of the long-run evolution of capitalist economies, significantly more material—effect of competition. This is its function in compelling individual capitalists to strive to accumulate, and hence in driving the much wider growth imperative of capitalism as a mode of production. Second, where Smith envisioned and analyzed competition and monopoly separately, as discrete phenomena, Marx bound them in dialectical relation with one another; monopoly, he said, produces competition, and vice versa. This insight, as we shall see, is critical. When considering the reality of the economic dynamics of particular industries on the ground, it is meaningless to isolate monopoly powers and monopolistic tendencies from the competitive currents in relation to which such powers and tendencies crystallize. Third, through his identification of the co-constitutive natures of monopoly and competition, Marx bequeathed to us a powerful guiding assumption. This is that for capitalism to reproduce itself, a balance between monopoly and competition—between centralizing and decentralizing tendencies—is required, continually, to be struck. We can develop our understanding of the regularizing role of the law a considerable distance by assessing the nature and strength of its implication in the production and maintenance of such always-unstable balance. This leaves one final reason for the emphasis in this chapter on Marx. It is also, perhaps, the most important of all. Marx, as we saw, claimed that “everything appears reversed in competition.” What he meant by this is that competition appears to explain more than it actually does, particularly in relation to price and profit levels. This is a crucial point. If we intend to place competition at the forefront of our political-economic analysis, and perhaps especially if we intend to draw on Marx’s ideas in doing so, then the implication of Marx’s observation is that we must be exceptionally careful in how we do so. The

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danger of fetishizing competition is, Marx seems to have suggested, an ever-present one. The next chapter will show that Marx’s cautionary note has exerted a profound influence on the subsequent course of Western political economy. His insistence that competition appears to explain more than it actually does has shifted the attention of generations of political economists firmly towards questions of production and, equally decisively, away from competition, markets, and exchange relations—and in the process, away from the laws that seek to regulate the dynamics thereof. But the chapter will also argue that this bias has been overdone. In trying to understand how capitalist profit and growth regimes have historically been stabilized, we not only can, but need to reorient our critical lens towards questions of competition and the laws that regulate it; and we can do so in such a way that Marx’s warnings about the reification of competition remain heeded.

2 EXCHANGING PRODUCTION FOR MARKETS

How have students of capitalism previously sought to account for the relative stability of the capitalist system, in terms particularly of its profitability dynamics, over the longue durée? The reality is that very few have actually sought to do so. Mainstream economic history has usually come at the history of capitalism from a quite different perspective. Rather than assuming that capitalism is characterized by forces encouraging disequilibrium, and hence interrogating sources of harmonization, it generally reverses the analytical optic. If the economy tends to equilibrium, what needs to be explained is not stability but instability. Furthermore, the timeframe considered in such conventional histories is typically the short as opposed to long term. Out of these dual predispositions emerges, most conspicuously, the well-known theory of business cycles.1 And where economic historians have ventured theories of volatility on a longer timescale, as have the likes of Simon Kuznets and, most famously, Nikolai Kondratiev, the critical reaction to their arguments has seldom been positive.2 The most striking and important exception to this paucity of studies of stabilization is to be found in the work of scholars influenced by Marx, be they political economists, economic historians, or historical sociologists. This, of course, is to be expected. As is well known, and as we have already noted, Marx saw capitalism as a mode of production riven by tensions and contradictions that rendered crisis and other manifestations of disequilibrium a constant threat. It stands to reason, therefore, that those who study capitalist history with Marx as an inspiration would be on the lookout not for volatility—which they would likely discern everywhere—but for the mechanisms through which such volatility has been tamed.

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This book contributes to the latter literature. It explores the historic role of competition-related laws in providing precisely such a taming influence on the “natural” volatility of capitalist accumulation dynamics. And in the previous chapter it developed, after Marx in particular, a dynamic and flexible conceptualization of competition through which to frame its examination of those laws. One matter the previous chapter did not address, however, is the degree of materiality of competition dynamics and, hence, of the laws that seek to regulate them, specifically in relation to the issue of regularization. It showed that the classical political economists furnished rich understandings of what competition is and how it functions. It also showed that, for Marx at any rate, the existence of competition was necessary to fuel the capitalist growth imperative. Last, it showed that Marx saw capitalism teetering on a knife edge between forces of centralization on the one hand and decentralization on the other hand, and that his envisioning of a dialectic of monopoly and competition could potentially help us in understanding capital’s historical navigation of this tortuous path. But the chapter did not explore what power actually exists in competitive configurations materially to influence the stabilization of accumulation and the reproduction of capital. Marx never even came close to integrating his remarks concerning monopoly and competition, centralization and decentralization, into his general—and productioncentered—“laws” of the motion of capital. Rather, he left them hanging—suggestively, to be sure, but also wholly disconnected and thus open to all manner of different interpretations as to their significance or otherwise. There is, furthermore, seemingly good reason to be cautious about the materiality of the dialectic in question, to not give it too much weight. For one thing, and most important, we must not forget Marx’s own counsel regarding competition: that, in it, “everything seems reversed”— that it appears to explain considerably more than it actually does. For another, and as the present short chapter will demonstrate, the apparent consensus among Marxian-inspired historians of capitalism has been in the negative, concluding that the structure of competition is not especially material to the core dynamics of capitalism. And so, the question remains: Is competition—and its ostensibly co-constitutive relationship with monopoly—substantively implicated in regulating and stabilizing profit and growth regimes? Chapters 3

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through 6, through their focus on the law, seek to answer this question empirically, and do so in the affirmative. Before demonstrating the case empirically, this chapter develops it conceptually.

Law and Competition in the Regulation School of Political Economy In the twentieth and early twenty-first centuries, Western political economy has extended and expanded in numerous different directions in its attempt to answer an ever-wider range of questions. Increasingly, however, as capitalism has evolved, transformed, spread and, above all else, persisted, political economists have come to place a new central question alongside their traditional preeminent concern with understanding the core dynamics of capital accumulation. This question, broadly speaking, is as follows: How does a mode of production seemingly beset by contradictions and crisis tendencies repeatedly succeed in reproducing itself, and even manage to demonstrate a certain level of stability and predictability in the process? There have been numerous attempts—of widely varying scope and sophistication—to grapple with this question, and we will touch upon many of them in this chapter. Comfortably the most concerted and broadly based, however, has been that associated with the so-called regulation school of political economy. Although definitions and categorizations vary, the regulation school is typically associated first and foremost with a group of heterodox French economists researching and writing about capitalism in the 1970s, although over the following decades work within the regulationist paradigm spread rapidly both within continental Europe and, in particular, across the Anglophone academic world. There were important differences between the most influential early theorists of the regulation school, but they shared both a common intellectual opponent—an “orthodox economics [that] did not understand how real economies operated”— and a “common Marxist heritage.”3 The regulation approach, explains Robert Boyer (one of the school’s leading developers), “begins essentially in the Marxist tradition, yet makes use of Keynesianism and economic history in hopes of renewing the institutionalist perspective and arriving at an original synthesis.” A “common cause among all its members,” he further confirms, is “rejection of the concept of general equilibrium.”4

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Both in its original 1970s incarnations and in its later re-workings, meanwhile, regulation “theory,” in Bob Jessop’s words, represents “an approach to capitalism which isolates the conditions and rhythms of its long-run cohesion.”5 Its goal has been to explore “how the inherent contradictions of the capital relation [are] regulated through specific structural forms and institutionalised compromises in different stages of capitalism.”6 In short, scholars inspired by Marx have sought to identify the secrets of capitalism’s success in negotiating the contradictions and crisis tendencies that Marx himself had identified a century earlier. Regulation theory is characterized by a number of key features, beyond its intellectual heritage and core objectives. One is its figuring of capitalism in terms of what has commonly been labeled a “regime of accumulation,” with the latter itself segmented into two linked and equally material components (Figure 2.1). The first of these is the so-called accumulation system (or mode of production) itself: the actual core economic realm within which capital circulates and value is created through production and consumption processes. The second, and arguably regulation theory’s core analytic contribution, is the “mode of regulation.” This field, as Jamie Peck and Adam Tickell observe, “acts to guarantee REGIME OF ACCUMULATION Mode of regulation Competition form

Money form

State form

Wage form

International regime

Institutional forms

System of accumulation

Figure 2.1. The regulation approach: a simplified schematic overview.

Exchanging Production for Markets

that the dominant accumulation system is reproducible in the medium term, through the accommodation, mediation and normalization of crisis tendencies.”7 It comprises the “institutional forms, procedures and habits” that “give rise to regularities in the accumulation process.”8 As Boyer emphasizes, however, the “mode of regulation” has never been only about “regulation” in the conventional, micromanagement English sense of the word. Indeed, for Boyer, “régulation theory” offers a type of analysis that is “entirely the opposite” of that which he associates with “the purely microeconomic approach of regulation.”9 As such, he calls on the definition offered by another leading early developer of such theory, Michel Aglietta, who wrote of “the analysis of the way in which transformations of social relations create new economic and noneconomic forms, organized in structures that reproduce a determining structure, the mode of production.”10 Régulation is deeply social, and imparts stability to accumulation processes. Alongside its distinctive envisioning of capitalism in these dualistic terms, regulation theory is also notable for its emphasis on historical change. It is a theory of capitalism’s necessary temporal evolution. Capitalism, recall, is deemed inherently contradictory and thus prone, by its very nature, to crisis, whatever the exact form of the accumulation system existing at any particular historical conjuncture. Once those contradictions become manifest and crisis looms, action must be taken to enable, in Boyer’s words, “a durable resumption of growth and job creation.”11 Such action, in the “regulatory” sphere (broadly defined), allows the relatively smooth transition to a reconfigured accumulation system wherein the particular contradictions that previously surfaced are more comfortably accommodated.12 For this reason, such adjustments in the mode of regulation are often referred to as an “institutional fix” to capitalism’s crisis tendencies.13 This concept of a historical “fix,” of one form or another, is one we will return to later. The last critical feature of the regulation approach flows from the second. This is that in view of capitalism’s inevitable historical transformations, the particular symbiotic relationship achieved at any moment between the accumulation system and the mode of regulation—whereby the latter enables and supports the economic integrity of the former—is both historically specific and temporary. “All that is solid melts into air,” Marshall Berman, after Marx and Engels, claimed of the experience of modernity.14 Berman was no regulation theorist, but the metaphor certainly captured a central message of the contemporary writings of those

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who were of this school. However good at regularizing and stabilizing the (contradictory) accumulation system an “institutional fix” may be, it can never be perfect; crisis can only ever be temporarily averted because the underlying contradictions always resurface, albeit not always in the same form. A new fix, and a new symbiosis of accumulation and regulation, will always be required. In the regulationist literature, Fordism and post-Fordism are the classic examples of such historically specific and temporary accumulation regimes.15 If regimes of accumulation and modes of regulation “are for a while successful,” claims Alain Lipietz, “it is only because they are able to ensure a certain regularity and a certain permanence in social reproduction.” They “allow social relations to be reproduced for a certain length in time without a crisis arising.”16 Given that the regulation approach has always been centrally concerned with the social forces and institutional or “governmental” mechanisms implicated in regularizing capitalism’s development, one might reasonably expect the law—and economic law in particular—to figure substantively in regulationist readings of institutional fixes, both theoretically and in historical, empirical practice. And indeed, the law does frequently appear in regulationists’ “laundry lists” of the primary sociopolitical elements that constitute, collectively, the all-important mode or field of social regulation. Peck and Tickell, in just one typical example, include in their list of such elements “habits and customs, social norms, enforceable laws and state forms.”17 Yet with one notable exception (labor law), the curious reality is that one searches in vain, in the large and still-expanding regulationist literature, for any substantive theoretical or empirical engagement with economic-legal regimes. The law is essentially absent, for instance, from all of the school’s cornerstone foundational texts.18 It is absent from the school’s principal, latter-day, critical retrospective.19 And it is absent from the most recent collective attempt to understand capitalist transformations explicitly through the regulationist lens.20 How, then, might we seek to explain this absence? In the context of this book, this is clearly a highly pertinent question. If other scholars—not least those writing in the political-economic tradition most concerned, as we are here, with identifying and explaining the primary sources of historical regularization and stabilization of the capitalist economy—have not seen fit to accord economic law a central role, why should we do so? The answer (to the question of absence) posited here is as follows. The regulation approach has largely overlooked economic law—labor law

Exchanging Production for Markets

aside, it bears repeating—because such law’s main sphere of intervention in the economy is that of markets and exchange relations, and the latter are themselves areas of only relatively minor focus for regulationist scholars. These scholars have tended to neglect economic laws, that is to say, because they have also tended to neglect the markets and exchange relations to which such laws principally apply. This claim, of course, demands clarification and substantiation at a number of levels. Take, first, the two legal regimes with which this book is concerned: competition and intellectual property (IP) law. It could feasibly be argued that these laws apply primarily to the realm of production, not exchange: that competition law aims above all to prevent uncompetitive constellations of productive forces (cartels or oligopolies, for instance), whereas the central mission of IP law is to police rights to produce particular products. In both cases, according to such a figuring, the issue is one of production—what can be produced, and under what conditions of productive organization. But is it really the case that production is what is being legislated for, monitored, and potentially interrupted? This book claims not. This argument is developed at greater length in the following chapter, but the basic claim is that competition law and IP law are both ultimately concerned with competition and that competition occurs in markets— where capital meets capital, as well as consumers, in the establishment of prices—even if the products or services and organizational structures with which firms compete are also production-related issues. A firm could manufacture a product under patent with another firm, but unless it tries to exploit this product in the marketplace it will not appear on the radar of the IP protection authorities nor therefore attract their intervention. Similarly, competition authorities are concerned, both de facto and de jure, with market power—it is the practice or possibility of sustainably raising prices above a competitive level that provokes intervention. In both cases, competition is understood analytically and treated judicially as a market-place phenomenon. In regard to the assertion that regulation theory’s neglect of the law derives from its neglect of (nonlabor) markets, however, there remains a second issue that demands elaboration and substantiation. If one reads more or less any overview of the regulation approach, one encounters a list of the five main institutional “forms” that are generally taken to comprise the sphere of regulation (Figure 2.1), and one of these is the competition form (the others being the money form, the wage form, the

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state form, and the international regime).21 On what basis, therefore, can one reasonably claim that regulationists have downplayed markets and the competition that occurs in them if the “form” of competition in fact constitutes one of the pillars of regulation theory’s institutional fix? Moreover, have not regulationists—much like writers such as Paul Baran and Paul Sweezy—distinguished historically between a “competitive mode of regulation” characterizing Western capitalism up until the early decades of the twentieth century and a “monopoly mode of regulation” existing thereafter?22 The first thing to note concerns a simple question of relative focus. Both theoretically and empirically, the so-called competition form has invariably been one of the least examined of regulationists’ institutional forms. Here the expression “the exception proves the rule” is indeed apt. Aglietta’s highly influential study of U.S. capitalist history from the regulation perspective, A Theory of Capitalist Regulation (1979), stands out precisely for its extensive investigation of competition; the bulk of the second half of the book (two of three chapters) is given over to this subject.23 Yet even in this case a number of caveats are important. For one thing, Aglietta offers a relatively restricted reading of “competition.” There is, for instance, no sign of the critical dialectic of monopoly-competition that we extracted from Marx in the previous chapter, even though he assesses both centralization and competition (separately). For another thing, and perhaps more significant, the discussion of competition, for all its scope and richness, tends to be sidelined within the context of the book as a whole and its overarching argument. As Jessop remarks, the examination in the second part of the book of “the structural forms which governed the rivalry among capitalists inherent in the law of competition” was “overshadowed . . . by a detailed examination of changes in the money and credit forms.” Empirically, “the changing forms of money and credit were emphasized in explaining the specificity of the crisis of Fordism.”24 Furthermore there was, labor law aside, scant attention to the law’s regulatory mechanisms. Aglietta’s own leanings were and are representative of—perhaps because also constitutive of—biases in the regulation approach more generally. The spotlight has typically been trained upon the money form, the state form, and perhaps most especially of all, on the wage form. “The competitive mode of regulation,” observe Robert Brenner and Mark Glick, “is distinguished from the monopoly mode, most crudely, as follows: in the former, there is craft control and the competitive

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determination of prices and especially of wages; in the latter, there is scientific management, an oligopolistic system of pricing, and, most characteristically, the determination of wages through a complex system of capital-labour and governmental institutions.”25 The distribution of chapters in Part II of Boyer and Yves Saillard’s Regulation Theory: The State of the Art (2002)—“the five institutional forms revisited”—is also highly instructive, insofar as it is also broadly representative of the wider field: four chapters on the state form, three on the labor form, two on money and credit, and just one each on international regimes and forms of competition.26 All of which enables us to draw a conclusion, with the help of Jessop and Ngai-Ling Sum, that helps substantially to explain the neglect of economic laws such as IP and competition law by the regulation school. In sum, market exchange and market-based competition, which are the concerns of such laws, are not—and never have been—a genuine focal point of regulationist inquiry. Jessop and Sum’s contribution in this respect is to offer what can be read as essentially an admission of this neglect, by two of the tradition’s most authoritative internal chroniclers. In their critical retrospective, they state that “while far from forgetful about the essentially anarchic role of exchange relations (market forces) in mediating capitalist reproduction, the [regulation approach] stresses the complementary functions of a wide variety of other mechanisms in structuring, facilitating and guiding (in short, ‘regulating’, regularizing or normalizing) accumulation.”27 “Far from forgetful” is, surely, a mea culpa of sorts; when scholars feel compelled to claim that they have not neglected something, it is usually a sign that they have, or, at the very least, that they are widely seen to have done so. One of this chapter’s (and book’s) key premises, therefore, is simply a paraphrasing of Jessop and Sum: Regulation theory—political economy’s most concerted collective effort to theorize the regularization and stabilization of capitalist accumulation and growth—has been conspicuously forgetful of exchange relations and market forces, and of the competition dynamic embedded in those relations and forces. Peck and Tickell express the same point somewhat differently. Their claim is that regulation theory not only has underplayed the competition/market “form” but that it has actually underplayed the mode of regulation in general. This might sound like an odd argument, given that regulation theory is ostensibly in large part about this mode of regulation, but Peck and Tickell’s thesis is worth considering. Recalling the accumulation

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regime’s two linked “parts” (the accumulation system and the mode of regulation), they maintain that although the two are in theory accorded “equal analytic value,” in practice the literature “has tended implicitly to subordinate the [mode of regulation] to the accumulation system.”28 Witness here, for instance, Aglietta’s above-cited definition of the mode of regulation as “the structures that reproduce a determining structure, the mode of production.”29 Or the fact that while Boyer insists that for regulationists “a regime of accumulation is more than a production process,” he nonetheless invokes, on the very same page, the “determining role” of “production relations.”30 On Peck and Tickell’s reading, regulation theory remains an altogether productionist narrative. Behind the puzzle of the absence of the law in regulation theory, in other words, there in fact lies a deeper puzzle concerning the absence therein of market and exchange relations; and a proper explanation of the former demands an examination and explanation of the latter. The question “why the neglect of the law?” is more productively posed, in short, as “why the neglect of markets?” This is the question we turn to now.

Markets in Marx The first point to observe in considering this question is that regulation theory’s traditional focus on the sphere of production as discerned by Peck and Tickell—which is the corollary of its relative de-emphasis of market and competitive relations—is by no means a feature unique to regulationism. All late twentieth and twenty-first century Western political economy, to one degree or another, analytically prioritizes relations of production. “The overriding concern with production in its entirety,” as Michael Watts has remarked, “is central to political economy.”31 Political economy is, to use Jim Kincaid’s term, “productivist.”32 To understand this prioritization we need to consider the intellectual influences that have principally shaped the evolution and form of political economy in its latter-day guise. And as for the regulation school of political economy in particular, Marx looms large over modern political economy in general. This is not to say that all contemporary political economy is Marxist. Far from it. However, of the “classical” political economists, Marx has had a disproportionate influence on what “political economy,” subsequent to the neoclassical revolution in economics, has become. Modern “Ricardian” political

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economy, for example, pales beside Marxian variants (and asks, in any event, many of the same production-oriented questions, even if it offers different answers).33 Adam Smith, meanwhile, exerts a much larger influence within mainstream economics—with its focus on the exchange and allocation of goods, as opposed to their production— than within the political-economic scholarly community, notwithstanding attempts by figures such as (most recently) Giovanni Arrighi to reinstall Smith as a central source of vital, even critical, politicaleconomic insight.34 The reason for pointing this out is simply as follows. If, as shall be argued here, regulation theory’s neglect of market and exchange relations relates specifically to its Marxist heritage, then the same is actually true of modern-day political economy much more widely. For in explaining regulationists’ productionist focus, far and away the most significant factor is that Marx himself largely overlooked markets. This statement might strike some readers as wrongheaded. Yet Marx demonstrably had very little to say about the capitalist institution (the market) that many people assume to have borne the brunt of his critique—a fact that constantly surprises newcomers to Marx and Capital. Marx, as David Harvey has argued, consistently minimized or even excluded “the ‘accidental’ and social particularities of distribution and exchange and even more so the chaotic singularities of consumption.” Instead, he focused relentlessly upon production, which he sought to theorize, furthermore, at “a law-like level of generality.”35 (Where production relations were lawlike, exchange relations were as far from lawlike as imaginable: “essentially anarchic,” in Jessop and Sum’s above-cited words.) In placing production at the center of their own inquiries into the constitution and evolution of capitalism, modern political economists have repeatedly and forcefully reproduced the Marxian bias. Another pertinent feature of Capital that raises eyebrows in many quarters, notably, is the fact that this prioritization—and generalization—of production at the expense of exchange was not a Marxian idiosyncrasy. Indeed it was, in a sense, the very opposite: Marx actually borrowed this conceptual framework from Smith and the other “bourgeois” economists. The particular framing of capitalism in which all the “moments” of capital circulation outside production were theoretically marginalized was, originally, theirs—not Marx’s. Again, Harvey makes this point clear. In building his understanding of capital, Marx sticks, Harvey claims, “as closely as he can to the bourgeois conception,” and

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to this particular extent Marx’s political economy “is stuck in the framework preferred by classical political economy.”36 Why, though? Why does Marx not only mirror the “bourgeois” conception but, in doing so, apparently diminish the materiality of economic dynamics—distribution, exchange, consumption—that most observers would reasonably consider central to an appreciation of the capitalist economic system? To this question we can posit three possible answers. The first concerns the immediate intellectual objective of Capital. Marx established his theory not “through direct historical, anthropological and empirical enquiry and induction” but rather “through a critique of classical political economy.” This, Harvey maintains, is critical; we need to read Marx’s approach explicitly in this light. If “Marx’s fundamental aim was to critique classical political economy in its own terms,” Harvey reasons, “then he had to accept the general nature of those terms in order to identify their inner contradictions and deconstruct their absences.” More specifically: “If the distinctions between generalities, particularities and singularities were foundational to the bourgeois mode of thought then he had to work on that foundation too.” Needless to say, just because he discussed markets and exchange relations in terms of accidents and particularities does not mean that Marx deemed them irrelevant, nor that he agreed with Smith et al.’s reading of the structure of their implication in capital circulation. We have seen already (Chapter 1) how essential to capitalist growth dynamics Marx considered market-based competition to be, and how his interpretation of the “coercive” laws of competition distanced him from Smith. Marx also foregrounded the even more basic necessity of markets to capital’s productive economy per se. As George Henderson and Eric Sheppard argue, for Marx “the market is necessary for capitalism’s existence. . . . In so far as market exchange is perpetuated, so are the social relationships that define capitalism.”37 Marx himself highlighted the implied departure from Smith: “As to how far the external and apparently accidental circumstances are but the expression of a necessary course of development, political economy teaches us nothing. We have seen how exchange itself appears to it as an accidental fact.”38 We have also already alluded to the second reason why Marx seeks to establish the “laws” of production while sidelining competition, markets, and exchange. Recall from the previous chapter one of the central conclusions of Marx’s analysis of competition under capitalism, namely, that “everything appears reversed in competition.” By this, Marx meant

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that competition appears to explain things—such as levels of profitability and, behind these levels, the fixing of value—that in reality it cannot. This notion of things being “reversed” in competition—of effect appearing to be cause—is one that Marx broadens out to the realm of exchange and markets in the widest sense. It was not only the case that exchange did not explain. Perhaps more significantly, it obscured. Specifically, it “obscur[ed] the nature of capitalist production.”39 Place too much emphasis on markets and what takes place in them, Marx was effectively saying, and one risks obscuring what capitalism is really about. The third and final answer to the puzzle of Marx’s de-emphasis of exchange and competition is, however, the most significant one. It is provided by Marx’s discussion in volume two of Capital of the process of value realization (in the sphere of what he called “circulation”), by which he means the conversion of commodities into money through sale on the market—that is, exchange. To effect this conversion, Marx writes, “costs of time and labour-power,” yet not, he emphasizes, “for the purpose of creating value.” What occurs is merely “the conversion of value from one form into another.”40 The quantum of value does not change when buyer and seller meet to determine price. Marx repeats this argument in volume three: “No value is produced in the process of circulation, and, therefore, no surplus-value. . . . If a surplus-value is realised in the sale of produced commodities, then this is only because it already existed in them.”41 Marx focuses on production, therefore, because it is in production that value is created and because value is his central theoretical concern. Value is not created in exchange, and hence exchange can be (relatively) sidelined. Marx’s marginalization of market relations is secured in Capital—volume one in particular—through his assumption that commodities trade at their (labor) values; finding a market is unproblematic, as is realizing value therein.42 For in making this simplifying assumption, Marx effectively assumed markets away. Jean-Christophe Agnew captures this degradation of the market’s analytical status in striking terms. Marx’s ideas, he writes, do not “enact within themselves the contradictory experience and practice of the market culture they were originally intended to unmask” because market relations “have taken on the status of ‘givens’ in his analysis; they have become mere markers, as it were, to which he may affix his recomputation of the capitalist calculus furnished by political economy. . . . Labor time, not the market place, becomes the pre-emptive

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frame of reference.”43 Marx adopts this attenuated (Smithian) figuring of market operation, and thus sidelines the wider exchange “question,” not, however, because he thinks this is how markets function in practice, but because isolating and neutralizing the anarchic particularities of exchange in this way enables him to focus on the “laws” of production and on rewriting the classical interpretation thereof. Yet this simplifying analytical maneuver inevitably had, and has, all sorts of important consequences. An obvious one was for Marx’s own treatment of the phenomenon at the center of our conceptual concerns, namely, competition: “Competition is treated as a mere executor and enforcer of inner laws of motion of capital that are established by other forces.”44 It has, moreover, led regulation theorists and other political economists of the contemporary era to focus, like Marx, on production. So what should it mean for us? If, more pointedly, we are to be guided by Marx (including on the dynamics of competition and its relation to monopoly), should we not also downplay markets and exchange—especially given the risk of fetishization that these two categories, and the category of competition in particular, avowedly bear? Yes; but only if Marx’s own bias—his own relegation of markets, exchange, and competition to the conceptual margins—is defensible and sustainable. Whether it is or not is the subject of the next section.

From Marx to Market The question of whether political economy’s Marx-inspired focus on production remains viable demands consideration of various subquestions because it is itself the product of a number of interrelated concerns. The first of these subquestions relates to the scope of political economy per se. What is political economy? Where do—or should—its limits of scholarly consideration lie? This issue is critical insofar as the conventional narrowing of political-economic analysis to the productive sphere is predicated on a particular understanding of political economy’s remit: namely, that its core concern is value creation. Marx, as we saw, focused on production because it was there that value was seen to be generated. But should political economy be only—or even mainly—about value creation? In one sense this is an impossible question to answer. Political economy can ultimately be about whatever we think it should be about. Yet whether we take a capacious definition with generic applicability— that political economy is concerned to identify and explain the principal

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political-economic structures and dynamics of the prevailing mode of socioeconomic organization—or a definition more closely geared to the objectives of this book—where political economy is charged with understanding how capitalism reproduces itself historically in a relatively stable fashion—it would be difficult to argue that value creation should be our sole analytical object. It is, for instance, self-evident that capitalism cannot reproduce itself even in the short term, much less the long term, in the absence of a stable, market-based regime of value realization. The products and services provided by capitalists must be monetized in exchange, and the value in them thus realized, otherwise capital circulation grinds to a halt. “It is not sufficient to produce commodities,” observes Lipietz, “a buyer must also be found.”45 Not for nothing, in the petrified wake of the September 2001 attacks, did President Bush urge his fellow Americans to “Get down to Disney World in Florida.”46 Furthermore, it would be wrong to imagine that either Marx or his most ardent disciples believed that his theory, with its strict emphasis on the “laws” of value creation, constituted the final say on all matters relating to capitalism at large. Marxists would and do argue that his productionist account of capital can explain, in broad outline, a great deal about capitalist societies and their historical-geographical evolution—from class and wider socioeconomic inequalities to phenomena of fetishism, alienation, and so on. But no Marxist would suggest that Marx’s abstract production-oriented theorizing can explain everything, least of all those very things—consumption, distribution, exchange— rendered static and mute in his schema. After all, “exchange,” as Marx himself argued, “has a history of its own.”47 Hence, precisely, Harvey’s observation that although Marx produced a general theory of the laws of motion of capital, “the achievement of this general theory came at a cost. The general theory constitutes a straitjacket which limits the applicability of these laws and leaves us with a lot of work to do to understand particular conjunctures.” Here Harvey gives a very specific, and helpful, example: “No-one interested in building an historical-geographical account of the recent crisis, for example, will find immediate explanations for what happened from considering Marx’s laws of motion alone.”48 At the very least, Harvey argues, one needs to factor in questions of rampant consumerism, rising levels of private-sector debt, the role of urbanization, and distributive (e.g., rent) relations. But the basic point, as Agnew had earlier observed, is a more general one. Noting that by “singling out the commodity of labor power

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as the centrepiece of his argument, [Marx] is able to enter the concrete world of production, exploitation, and struggle,” Agnew, like Harvey, wondered “whether this sharpened sense of focus is not secured at the cost of a certain narrowing of the depth of field”—especially inasmuch as Marx’s account omits “the material and social geography of exchange in which the productive impossibilities of capitalist economy are soldered and made to kiss.”49 This worrying about the applicability of Marx’s theory to empirical historical-geographical reality is not only, it is vital to recognize, confined to the relative theoretical statuses of production on the one hand and of exchange (and distribution and consumption) on the other. For Harvey, at any rate, the issue is also one of the conceptual relations between the “active” production moment and the “passive” moments outside of the productive realm. Harvey’s argument is that Marx borrowed from the classical political economists both a focus upon production and a wider framework in which exchange, distribution, and consumption connected to production in only a “weakly syllogistic” fashion. For Harvey, this is clearly inadequate, particularly when one is dealing with the nitty-gritty of empirical realities in which the relations between the various moments are infinitely closer and more complex than Marx’s schema allows. Harvey thus says of Capital: “The political economy is stuck in the framework preferred by classical political economy while actual history demands an approach to an unfolding (even immanent?) dynamic totality in which generalities, particularities and singularities are in perpetual interaction.”50 In short, there are numerous forceful grounds for maintaining that political economy needs to be about much more than just value creation and that Marx’s account is not in itself sufficient to understand the relations between the putative sphere of such creation (production) and capital’s other “moments”—not least, one might add, when one’s main concern, as it is here, is with the reproduction of capitalism over time. Yet framing the issue in this way raises a second, equally important subquestion: is value indeed only created in production? For if it is not, then we would be required to expand our lens beyond the productive sphere even if value creation remained our sole object of concern. In the present context we do not need to do much more than simply pose this question—to recognize that the question is a valid one. But it bears brief consideration nonetheless, if only because the answer no longer appears quite as self-evident as it once did. Given Marx’s repeated insistence that it is only in the sphere of production, where capital

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exploits labor, that value and surplus value are created, the belief that value cannot be generated outside of the productive sphere has long been a sine qua non of Marxist political economy. Yet in recent years certain skeptical voices have begun to be heard. Perhaps the key catalyst in this respect has been the rise of finance to a position of ever-greater prominence in the Anglo-American economies in particular.51 In the Marxian schema, financial activities belong outside the productive sphere; they are part of the sphere of circulation. But with the finance sector capturing an ever-greater share of profits in the so-called financialized economies, the question has increasingly been asked: How is it possible for “finance” to capture so much value if it is not also, to one degree or another, creating it? As such, a growing number of—at least nominally—Marxian commentators have begun to question the traditional restriction of value creation to the productive sphere, to argue that value is being created in circulation, specifically through finance, and even, in some cases, to question the core underlying Marxian distinction between production and circulation (David Harvie, for instance, asserting that circulatory activities are “really part of production”).52 Needless to say, such conceptual moves bear potentially enormous ramifications for Marxian theory. This growing questioning of the rigid alignment of value creation with production opens the way to our third subquestion concerning the sustainability of the Marxian focus on production—and more pointedly, of the related conceptual and historical sidelining of markets, exchange, and competition. This question can be best articulated thus: What if we continue to insist, not only that value is only created in production (the classical Marxian position), but also that value creation should indeed remain our primary, if not solitary, point of focus? In such a scenario, what is the appropriate conceptual and analytical status of the market and competition categories on behalf of which the previous chapter has sought to claim a much greater emphasis? The significance of this particular question lies in the answer that will be advanced—which is that even if we continue to hold to these axioms (and this book, to be clear, is not necessarily recommending that we do), it is still the case that exchange and competition are far from irrelevant, for a Marxian focus on production alone is not in itself sufficient to understanding the creation of value in production. Marx, it turns out, was not unaware of this. Recall first his argument that circulation, the sphere of the merchant capitalist, creates no value.

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But then consider the following modestly caveated restatement of the same proposition: “Merchant’s capital, therefore, does not create either value or surplus-value, at least not directly.”53 Marx immediately gives two examples of how such capital, circulating in markets, impacts back on value creation in the productive sphere: “In so far as it contributes to shortening the time of circulation, it may help indirectly to increase the surplus-value produced by the industrial capitalists. In so far as it helps to expand the market and effects the division of labour between capitals, hence enabling capital to operate on a larger scale, its function promotes the productivity of industrial capital, and its accumulation.”54 The critical importance of these passages lies in their substantiation of Marx’s recognition that, in Harvey’s words: “Distribution, exchange and consumption reciprocally affect each other. But they also affect the production of surplus-value.”55 “The spheres of production and exchange,” Harvey writes elsewhere, and focusing on market exchange more particularly, “mutually condition each other.”56 They are “separations within a unity,” a notion perhaps best expressed by Arghiri Emmanuel, whose theory of “unequal exchange”—one of the primary exceptions to Marxist political economy’s traditional productionism— relied on the observation that for Marx, exchange is not “something that complements production at a level external to the latter and at most a condition for capitalist production; it is an essential moment of that production.”57 As Murray Smith writes, “the process of exchange ‘reacts back’ upon the sphere of production.”58 And it does so in such a way that it shapes value creation in production. As such, any interpretation of Marx “in which production is conceived in isolation and reified to the point where labor mystically injects value into commodities regardless of exchange” makes, Dick Walker says, a “fundamental error.”59 The reason this recognition is so important, in turn, is for what it implies about the requirements of political-economic analysis conducted in Marx’s spirit. Markets must be studied not only for their own sake but also, Marx recognizes, for their direct salience to the productive—and in his terms, singularly value-creative—sphere. Value creation may not occur in the process of exchange, but the latter does format the former. All of this has an acute relevance for our purposes in this book. Given that production is not unaffected by market and competitive conditions and that Capital (simplifying) “accepts the Smithian vision of a ‘hidden hand’ of a perfectly functioning competitive market,” we need to ask, as Harvey recently has, “what happens to the law of value and the laws

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of motion of capital when exchange does not conform to this utopian vision.”60 For one thing is sure: capital does morph. Alluding to exactly the kind of competitive reconfigurations—oscillations in the balance of the monopoly-competition dialectic—with which our analysis of the law is concerned, Harvey makes a forceful case for placing markets and competition at the very center of our analysis. When the sphere of exchange is dominated by “monopolistic and oligopolistic organisation” as opposed to Smith’s “perfect liberty,” Harvey insists, “then the laws of motion of capital (and even value itself) look very different.”61 Harvey fails to mention him by name or to credit his insights, but lurking in the background here is an important if shadowy figure in the Marxian tradition: Michal Kalecki. Where the materiality of monopoly and oligopoly in exchange relations is the question, Kalecki was one of the key innovators of twentieth-century political economy. We will consider his arguments—which sit alongside Emmanuel’s, (arguably) Harvey’s, and most recently, Kojin Karatani’s as perhaps the most significant Marxian explorations of the seldom-trod terrain of markets and exchange relations more broadly—in the next chapter.62 Finally, in concluding our discussion here of the defensibility or otherwise of Marx’s—and, following Marx, of subsequent generations of political economists’—relative neglect of markets, we can turn to a critical question of historical conjuncture: the significance of the long period since Marx was writing. For markets have widely proliferated under capitalism since Marx’s day, and especially in recent decades with the enacting of neoliberal political-economic policies across large parts of the capitalist world. The introduction of market mechanisms to untapped realms has been a core dimension of neoliberal ideology and practice, resulting in the emergence of new markets in—and associated intensification of commodification of—water, health care, education, environmental pollution, and plenty of other spheres besides. By comparison, markets were a rather limited phenomenon in Marx’s day. And hence if, as the political philosopher Michael Sandel recently asserted, markets “have come to govern our lives as never before,” the problems with a political-economic theory that essentially shunts markets to the margins of analysis would seem to be getting larger rather than smaller.63 In sum, for all of the various reasons identified here, we shall proceed from the premise that relegating markets and competition to the sidelines of political-economic analysis is simply not sustainable—irrespective of whether we continue to believe that value creation is the essential question

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of political economy, or whether such creation occurs only in production. There is, therefore, a pressing requirement to move beyond those traditions, of which the regulation school is indubitably one, that have continued to focus primarily on the realm of production. We need to place exchange, markets, and competition in the political-economic spotlight.

Markets and Capitalist “Fixes” This imperative to move markets and market-centered economic activities to the core of political-economic analysis applies fully to situations in which our main interest is in mechanisms of regularization and stabilization of capitalist economies. But how might we effect this conceptual development? What conceptual frameworks are best suited to retraining the analytical lens of political economy in this way? The previous chapter posited an answer, arguing that Marx’s suggestive—but by no means fully developed—discussions of the relations between competition and monopoly offer a productive optic for figuring the role of the law in regulating capitalist profitability and growth dynamics. Does the existing political-economic secondary literature, however, really offer no credible existing heuristic devices? It actually does. There exists already a great deal of instructive and useful theorization, not least in the regulation approach itself. In particular, and as noted, the so-called competition form is one of the five main institutional forms that collectively constitute the institutional fix theorized in classical regulation theory.64 Boyer, for example, recognizes that the type of competition existing in an economy plays an important role in channeling economic reproduction. Hence his differentiation between what he calls “oligopolistic” and “traditional price” competition.65 Regulation theory’s competition form, in the final reckoning, does not belong in an entirely different conceptual register from the competitionoriented framework advocated earlier, in Chapter 1. Yet as a useable framework for enabling historical analysis, the competition form falls far short of requirements. It is simplistic and overly static in its basic formulation—especially when compared with Marx’s richer figuration. And except in the isolated instances previously identified, regulationist scholars have singularly failed to follow through on the promise latent in the competition form’s original articulation. Even then, furthermore, the concept has been mobilized in a limited fashion and, crucially, with no explicit consideration given to the types of

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economic law prioritized here—Aglietta’s influential analysis of the historical U.S. experience being the key exemplar. If not regulation theory’s competition form, therefore, are there other viable existing candidates for guiding a political-economic analysis of capitalism’s regularization with an eye particularly to the materiality therein of markets and competition? Given what we know about political economy’s longstanding focus on production, it should not be a surprise to learn that with one crucial exception—an exception we shall now consider in detail—the answer to this question is an unequivocal no. And given what we know too about David Harvey’s concerns with the limiting implications of the classical Marxian fixation on the productive sphere, neither should it be a surprise to learn that this exception is found in Harvey’s own work. Harvey’s oeuvre obviously ranges extensively across a vast number of political-economic issues, in both historical and contemporary registers. But of particular relevance here is his conceptualization of various types of capitalist fix, which can be usefully read alongside the regulation school’s institutional fix, where the latter represents adjustments in the mode of regulation that enable the regime of accumulation to rebalance in the face of emergent crisis tendencies. Harvey’s fixes also encompass regularization and stabilization of capitalist accumulation dynamics; and although questions of competition per se are relatively peripheral to the fixes in question, market forces and exchange relations certainly are not. It was in The Limits to Capital that Harvey offered his fullest theorization of these fixes.66 He did so in the process of trying to piece together from his reading of Marx a more comprehensive, discrete, and workable theory of crisis formation than Marx himself ever offered. Although the arguments are complex ones, Harvey’s thesis was essentially as follows. For Marx, capitalism is inherently contradictory and crisis prone. Yet although he alluded to numerous ways in which crises can begin to form and capital can alleviate—if only temporarily—the attendant problems, Marx only ever formalized, and then somewhat ambiguously, a “firstcut” of a theory of crisis formation. This first cut, says Harvey, comprises Marx’s famous theory of the tendency of the rate of profit to fall. For Harvey, however, this first cut is only a part of the story of crises—and their “fixing”—under capitalism. It is against this backdrop, therefore, that Harvey develops what he terms second and third cuts at a theory of crisis. The second cut

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incorporates a “temporal fix” insofar as crisis is seen to be displaced/ delayed temporally, with the credit system playing a key role. The third cut, meanwhile, crystallizes various types of “spatial fix” (one of Harvey’s most celebrated concepts), with geographical expansion serving to shift the locus of crises and delay their onset. Three particular aspects of these respective fixes, and their conceptualization, deserve emphasis. First, this is Harvey offering a genuine extension of Marx—not merely summarizing him. Second, the concept of overaccumulation is pivotal in all three cuts. Elsewhere, Harvey defines overaccumulation as a situation in which “too much capital is produced in aggregate relative to the opportunities to employ that capital”; it is invariably this problem of overaccumulation that, for Harvey, needs to be “fixed.”67 And third, markets and market reconfiguration perform a critically important role in facilitating capitalism’s fixes, particularly—although not only—in the case of the spatial fix. The close parallels between Harvey’s spatial and temporal fixes and the institutional fix of the regulation approach should not be hard to spot, and neither should they be underplayed. In both cases there is a conviction that capitalism is unstable and that, unless remedial action of some form is taken, its inherent contradictions will lead ineluctably to full-blown crisis formation. Equally, in both cases there is a recognition that capitalism historically has succeeded in averting such a scenario by nipping incipient crisis tendencies in the bud—through institutional transformation in the regulationist paradigm, and through spatial and temporal transformation in Harvey’s figuring. It is significant, in this regard, that one of the regulation school’s main Anglophone protagonists—Bob Jessop—has arguably done most to popularize Harvey’s fixes and to weave them together with the regulationists’ own fix theory.68 Harvey’s conceptualization of spatial and temporal fixes offers a unique perspective on the dynamics of historical capitalist regularization and in principle could certainly help guide an empirically oriented enquiry into such regularization. His crucial contributions to explaining some of the principal mechanisms through which capitalism can reproduce itself are acknowledged both implicitly and explicitly in this book, which, moreover, draws directly upon his recognition of the materiality of market and exchange relations. Nevertheless, Harvey’s specific spatial-and-temporal-fix framing is ultimately not the one needed here; and thus it is not the one adopted.

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For one thing, Harvey, much like the regulationists, has practically nothing concrete or conceptual to say about the law and its role in the stabilization of growth and profit dynamics. This is where a critical gap in the theoretical and empirical-historical literature lies; the intention of this book, bluntly, is to plug it. But the legal interventions examined in what follows are definitively not figured as alternatives to Harvey’s spatial and temporal fixes in the facilitation of capitalist reproduction. To the extent that capitalist history has witnessed spatial and temporal fixes, rather, the law’s work of regularization is seen to be complementary, not substitutional. To be sure, the application of the law clearly has important spatial and temporal dimensions and implications, but the laws considered here should not and cannot be treated as forms of spatial or temporal fixes. The law’s functions in regularizing capitalism are not primarily spatial or temporal. For another thing, Harvey’s concepts are not unproblematic where one’s objective is to understand and explain historical empirical realities at a relatively concrete, granular level. Harvey frequently points out that part of the difficulty of “working” with Marx lies in mobilizing theory formulated at an extremely high level of abstraction in relation to capitalist historical geographies that in all sorts of ways resist “master” narratives.69 Yet much of Harvey’s own work, including his theorization of spatial and temporal fixes, is arguably no less abstract, and thus no less tricky to operationalize. The pivotal role played by the concept of overaccumulation represents a case in point. As numerous scholars have discovered, it is terrifically difficult either to “prove” the existence of overaccumulation or causally to link spatial or temporal “responses” to the problems ostensibly associated with conditions thereof.70 Harvey has himself tried to operationalize his second- and third-cut crisis theories, most explicitly in The New Imperialism, in terms of what he calls a “spatio-temporal fix.”71 And a small number of other scholars have also tried to put spatial and temporal fixes to work in analyzing concrete political-economic dynamics.72 But the relative dearth of such efforts is a testament, inter alia, to their not-unproblematic nature. Hence, here, instead of seeking—à la Harvey—conceptually to extend Marx through adding incremental mechanisms of stabilization to his theory of capital accumulation and its identification of inherent crisis potential, the preferred strategy is to do something arguably more straightforward. This, simply put, is to go back to Marx, specifically,

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to what he wrote about competition and especially to competition’s intimate and dialectical relationship with monopoly—albeit very much guided, in the process, by Harvey’s insights into the limitations of a classical, productionist Marxian account. The likes of Harvey and the regulationists have been working to fashion new conceptual explanations for the successful reproduction of a mode of economic production and reproduction doomed, on most readings of Marx, inevitably to fail, but the outlines of a crucial regulatory dynamic were already inherent in Marx’s original account—a dynamic that is amenable to being readily operationalized, but that has not hitherto been adequately fleshed out. This dynamic consists not of spatial, temporal, or even institutional fixes, but of the law: the law as leveler.

Conclusion With the rest of the book taking us explicitly onto the terrain of the law, first in conceptual terms and then (in Part II) in historical practice, we can usefully pause at this juncture to take stock of where Chapters 1 and 2 have left us. To the extent that it has concerned itself with mechanisms of stabilization, modern political economy, we have seen, has essentially envisioned the application of protective patches. Fixes—whether spatial, temporal, or institutional—patch over capitalism’s underlying problems, containing or releasing pressures temporarily, and allowing for renewed rounds of accumulation in the process, but always storing up trouble for the future. The underlying contradictions within capitalism, after all, are never resolved—only deferred, and often moved around. Such scholarly work has been carried out within a political-economic mindset still largely dominated by the classical Marxian focus on the productive sphere where capital meets labor. For nominally good reasons, including Marx’s own cautionary words, this work has been highly suspicious of any kinds of explanation centered on markets and exchange. Harvey’s work constitutes an important partial exception in this regard. But even then there is very little to be found specifically about competition’s mediation of exchange relations. The regulation school appeared historically to offer the prospect of a much greater attentiveness to competition in the regularization of its “regimes of accumulation.” Yet the “competition form” it provisionally conceptualized was ultimately a theoretical promissory note never satisfactorily settled in empirical-historical practice.

Exchanging Production for Markets

The remainder of this book therefore takes up the challenge of showing that competitive configurations do matter. It does so informed and inspired not by the regulation approach’s static competition form but rather by Marx’s dynamic dialectic of monopoly-and-competition, and the latter’s role in facilitating capitalism’s negotiation of the knife edge between excessive centralization on the one hand and excessive decentralization on the other hand. In relation to this constellation of forces and flows, competition-related laws act in the manner of a pincer, leveling profitability dynamics from either side of the knife edge as historical and structural circumstances require. Crucially, however, the law does not ever “fix” capitalism, even temporarily. Fix would be the wrong metaphor to apply. Rather than patching up holes only to see leaks subsequently spring elsewhere, the law’s work has been to enable capitalism to maintain an unstable path predicated upon the achievement and repeated renewal of a precarious but precious degree of balance; this is a work of leveling, not plugging. In sum, the law’s repeated reconstitution and realignment of competitive forces shapes market conditions and exchange relations in such a way that value can continue to be realized and profits captured—and those profits reinvested in production, hence driving ongoing growth—in a relatively stable fashion. A conceptualization of the respective (but intimately connected) roles of IP and competition laws in effecting this work is provided in the following chapter.

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How might we seek to conceptualize intellectual property (IP) laws and antitrust/competition laws from a political economy perspective? In relation to this question, two main observations emerge from a consideration of existing secondary literatures. First, until very recently there has actually been very little investigation of such laws within the political economy field, and especially from what we might term a critical perspective. Christopher May noted in 1998 that although “work has started to appear on intellectual property in the global political economy, this has been largely ‘problem solving’ and not ‘critical.’”1 He could have said much the same about antitrust; and the previous chapter offered one possible explanation for such historic absences. Second, that politicaleconomic work that has appeared on these laws, especially in the past fifteen years, constitutes a very particular type of political economy. It is, for the most part, political economy of an expressly “Strangian” bent, concerned above all to elucidate the relevance of institutional power relations to economics (and economic law).2 What it is not is political economy in a classical Smithian or Marxian guise—cognizant of power (especially in Marx), to be sure, but concerned primarily with the underlying dynamics of wealth/value and its creation and distribution. It is explicitly this latter type of political economy of antitrust and IP laws that this chapter develops. It makes two main arguments. First, there is much to be gained from thinking about these laws in terms of the particular figuring of capitalism we elaborated from Marx in Chapter 1: that is, a capitalism that needs to maintain long-term (albeit perennially unstable) balance in the dialectic of monopoly and competition in order safely to reproduce itself and its characteristic value form. This is not to say that such laws can only be conceptualized through this optic; they can be and have been productively understood in many

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other ways. It is to argue rather that capitalism’s successful historical reproduction—and in particular its success in avoiding the perils of excessive monopolization on the one hand and excessive competition on the other hand—does need to be understood in the light, inter alia, of the work of the laws in question. Second, the chapter makes a forceful conceptual argument about the particular way in which antitrust and IP laws shape regimes of capital accumulation and thus trajectories of capitalist development. The previous chapter hinted at this mechanism, but no more than that. In essence, the argument is that in their interpretation and application, antitrust and IP laws influence rhythms of accumulation through their implication in a much wider drama of “perpetual interaction” between the different “moments”—production, exchange, distribution, consumption—of the “dynamic totality” that is capital.3 These laws, notably, tend not to directly format production processes. Indeed, their main sphere of intervention is (or at least, appears) quite distant from the productive realm: They are concerned with market competitiveness, and hence their immediate traction is ordinarily with exchange relations. Yet as we saw in the previous chapter, production is not unconnected to exchange; the latter “reacts back” on the former, conditioning it accordingly. Production— of value and of profit—cannot and does not proceed in blind oblivion to developments in the markets where competition crystallizes and value is realized (or not), nor therefore with indifference to the laws that format such competition. In conceptualizing how antitrust and IP laws affect the development of capitalism over time, we need to move beyond Marx’s “weakly syllogistic” framing of the relations between production on the one hand and exchange (and distribution and consumption) on the other hand.4 These arguments are developed through the chapter’s three sections. The first sets up our conceptualization of antitrust and IP laws by considering the types of problems for capitalism’s reproducibility that emerge if the all-important balance of monopoly and competition—the knifeedge balancing act envisioned earlier—is substantially disturbed. In other words: What starts to happen if capitalism becomes too competitive or, alternatively, not competitive enough? The argument is framed this way because it is in such circumstances that our two sets of competitionrelated laws enter the picture and perform, either individually or in combination, vital work of political-economic stabilization: a leveling work (keeping capitalism competitive enough but not too competitive) that

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is conceptualized here, before being illustrated in historical practice in Chapters 4 through 6. The second part of the chapter focuses on antitrust law, its basic forms and premises, and the leveling work it in theory performs. The third and final section examines IP law.

An Exercise in Finding the Golden Mean If we are correct that capitalism ordinarily displays a sustainable balance between monopolistic tendencies on the one hand and competitive tendencies on the other hand, in what primary ways would it look different if one of those sets of tendencies were to gain, more than just ephemerally, the upper hand? Indeed, is it actually possible to conceive of capitalism existing without the balance in question—or do the obverse tendencies automatically engage where and when required to do so? It is these questions we consider now, starting with the theoretical case of too much monopoly, which is to say, too little competition. Too Much Monopoly Our starting point is to return to a statement by David Harvey previously encountered in Chapter 2: that, when exchange relations are dominated by “monopolistic and oligopolistic organization,” the “laws of motion of capital (and even value itself) look very different.”5 Given our indebtedness to Marx for the guiding concept of the monopolycompetition dialectic, together with the fact that the “laws of motion” referred to by Harvey are Marx’s, Marx is the obvious first place to turn in considering this proposition. What would he have made of it? An answer appears to be available toward the end of volume three of Capital, where he discusses monopoly and monopoly pricing. This is what he says about the effect of the latter: “The monopoly price of certain commodities would merely transfer a portion of the profit of the other commodity-producers to the commodities having the monopoly price. A local disturbance in the distribution of the surplus-value among the various spheres of production would indirectly take place, but it would leave the limit of this surplus-value itself unaltered.”6 The limit of (surplus) value is, Marx maintains, unaffected. In other words, he seems emphatically to repudiate the notion—advanced by Harvey—that monopolies somehow transform the law of value. The “limits fixed by commodity value” are, he insists, not “abolished.”

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So what is going on here? Is Marx really saying, contra Harvey, that capitalism—and value—look no different in a monopolistic scenario? No, and for two linked reasons. First, we need to be crystal clear about the scale at which Marx establishes this claim about value and its tolerability of monopoly pricing because it is extremely material. Note especially here the words “certain commodities.” What Marx is in fact saying is that if monopolistic tendencies emerge in one sector of the economy, this does not affect how much value (and surplus) is generated, and how much profit is realized, in the economy at large. Rather, one sector’s extra profit—predicated on that sector’s higher prices—becomes another sector’s (relative) loss. Far from being disturbed, the “laws” of value creation remain steadfast; all that changes is the distribution of surplus among capitals. Wedded to the Smithian conception of competition as, inter alia, a force for leveling rates of profit between sectors, Marx focuses on monopoly and its implications at a sector-specific level. But this raises a crucial question: Can we not contemplate the issue of monopoly and monopoly pricing more generically, in other words, at the scale of capitalism in toto, as opposed to that of one particular sector? Can we not contemplate what capitalism would look like, and the nature of the “value” it potentially generates, where consumers—and laborers—confront capital as generally, not narrowly, monopolistic? In such a scenario, what would we expect to happen not just to “value” as a conceptual category (pace Harvey) but to, more tangibly, the share of total income accruing to corporate profits versus that accruing to—most notably—labor? Marx certainly hinted at such a framing. He claimed, for example, that monopoly prices are typically paid not only (as per the above quotation) “from the profit of other capitalists” but also “by deduction from real wages.”7 Yet his inquiry along these lines essentially ventured no further. Why? The answer to this question represents the second reason why Marx is not really disputing Harvey’s thesis about monopoly “changing” the value form. For, essentially, Marx saw no point in considering the aforementioned scenario of generic monopoly pricing—because he did not believe it was remotely likely. Recall another critical quotation from a previous chapter, this time from Marx himself (in Chapter 1): namely, his view that monopolization, or the “centralisation of existing capitals in a few hands,” would “soon bring about the collapse of capitalist production if it were not for counteracting tendencies, which have a continuous decentralising effect alongside the centripetal one.”8 Two aspects

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of this quotation are particularly salient. First, Marx clearly does think capitalism and value would look different—they would “collapse”— if monopolistic tendencies became generalized. (When his optic, like Harvey’s, is capitalism generically, he comes to the same conclusion.) But second, Marx sees such generalization as unlikely, and hence not worthy of detailed examination. Why? Because of the “counteracting tendencies” that militate against excessive centralization. Monopoly creates competition. Other writers, however, including those writing from an overtly Marxian perspective, have been less convinced. Arguably most compelling and important among these was Rudolf Hilferding, Austrian born and raised but later (twice) briefly German finance minister. In his opus Finance Capital (1910), Hilferding closely considered monopoly power and did investigate conceptually the likely implications for capitalism if monopolization were to become a generalized phenomenon—concluding that in such an eventuality capitalism would indeed be so disfigured that Marx’s value theory would no longer apply. Hilferding explored both formally incorporated “trusts” (using the American term, which had emerged in the latter decades of the nineteenth century) that he referred to as “monopolistic mergers,” and more loosely based “cartels” that he called “monopolistic consortia.”9 But although he recognized differences between them, he argued that their objectives were equivalent: “to increase profits by raising prices,” and to maintain those increases.10 Moreover, he saw very clearly—as the authors of antitrust and IP legislation also would—that the key domain for effecting monopoly power was not production but that of exchange relations and markets, which as he saw it meant primarily (to use Marx’s phrase) “commercial capital”: retail, wholesale, and the like. It was here that price, and by extension profit, crystallized, thus putting a premium on direct control of exchange. “The monopolistic combination,” Hilferding surmised, “will therefore strive to eliminate all forms of independent commerce, since only then will it be able to bring its full influence to bear upon the level of prices.”11 Crucially, Hilferding extended the Marxian analysis beyond the point at which Marx himself cut it short. He did not discuss the “counteracting tendencies” to centralization; if he was aware of them at all, he clearly did not think they were powerful enough to offset capital’s monopolistic dispositions. Thus, where Marx saw monopoly in one sector eroding profits in another but not extending much farther afield,

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Hilferding depicted a wavelike effect—one sector’s centralization rapidly precipitating consolidation in others.12 Monopolization, he argued, “will penetrate one branch of capitalist production after another.” Precisely because other branches were becoming centralized and relatively more powerful, unconsolidated sectors came under increasing pressure to consolidate “until a point is finally reached when they are also ripe for cartelization, or for incorporation into an already cartelized industry.”13 How far might this process go? There were, Hilferding sensed, “no absolute limits”: “On the contrary there is a constant tendency for cartelization to be extended.” Conceptualizing the progress of this sequential consolidation process to its logical conclusion, furthermore, Hilferding conjured a powerful image not only of the eventual configuration of productive forces in such a generally monopolized world but also, pointedly, of what such a world would entail for the differential capture of income by capital and labor. “The ultimate outcome of this process would be the formation of a general cartel,” Hilferding wrote. “Price determination would become a purely nominal matter, involving only the distribution of the total product between the cartel magnates on the one side and all the other members of society on the other.”14 What problems, therefore, would this wholesale dissolution of Marx’s monopoly-competition balance pose for the reproducibility of capitalism? We can answer this question at two different levels. At the first, abstract level, the answer is straightforward: Capitalism could not be reproduced because the world envisioned by Hilferding is no longer capitalist—at least, not in Marx’s terms. Indeed, Hilferding explained exactly how and why generalized monopoly “tends to undermine [Marx’s] theory of value.” It does so because, as we saw in Chapter 1, it is through competition that prices come to conform to (labor) values; competition “brings out” such prices. “If monopolistic combinations abolish competition,” Hilferding hence observes, “they eliminate at the same time the only means through which an objective law of price can actually prevail.” In a death-knell for capitalist political economy, price loses its relation to (labor) value and becomes merely “an accounting exercise for those who decide what it shall be by fiat, a presupposition instead of a result, subjective rather than objective, something arbitrary and accidental.”15 At a more concrete level, the scenario of not enough competition— whether it reaches Hilferding’s ultimate “general cartel” stage or somewhere less extreme but no less problematic—endangers capitalist

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reproduction in three linked senses. The first of these was especially clearly appreciated by Hilferding. Like Marx, Hilferding too saw monopoly prices (or as he put it, “cartel profits”) being “paid” out of two alternate sources: They are either “a participation in, or appropriation of, the profit of other branches of industry” and/or they are extracted “from the consumers” who pay “higher prices for the cartelized products.” The former, of course, was only possible where monopolization was sector specific. The latter, however, allowed of generalized cartelization. Yet only up to a point. If there were no limits to the process of cartelization, there was a limit to the level of monopoly prices and profits. This was the case, Hilferding explained, because laborers always need to receive a sufficient share of income in order to be able to continue to fulfill their other equally vital role within the totality of capital circulation—that of consumers. Unless the fruits of price rises above competitive levels were shared with labor in the form of higher wages, such increases risked unsettling this fundamental balance between wages and spending power; monopoly-based price and profit rises, in short, are self-limiting insofar as they “must not reduce consumption too severely.”16 Otherwise, Hilferding warned, capital would cease to circulate, and the conditions for ongoing value accumulation would not exist. Later, Michal Kalecki would reorient and lend theoretical substance to Hilferding’s basic insights concerning the links between excess monopoly and potential seizures of circulation. Kalecki, however, focused less on the prices charged to consumers and more on the share of income accruing to those consumers as laborers. He reaffirmed the common view that a squeezing of this share risked precipitating a crisis of realization, consumers not being in a position to pay for the very goods they produced. His singular advance was then to show that this income share was intimately related to the prevailing balance (or imbalance) of competitive and monopolistic forces. Kalecki sought to capture this crucial dialectical relation in a single variable—the so-called degree of monopoly—and he demonstrated that changes in this variable were “of decisive importance for the distribution of income between workers and capitalists.” Specifically, “the relative share of wages in the value added” was determined by the degree of monopoly in conjunction with two other factors: industrial composition and the ratio of raw material to wage costs.17 Of the three, however, the monopoly-competition relation was key: Capital’s share of income was “with great approximation equal to the average degree of monopoly.”18 “A rise in the degree

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of monopoly or in raw material prices in relation to unit wage costs,” Kalecki concluded, “causes a fall of the relative share of wages in the value added.”19 Declining realization and growing stagnation, much à la Hilferding, would result.20 If a lack of effective demand represents one of the concrete problems for capitalism associated with relatively insufficient competition, a second, linked problem concerns investment and the rationale for capitalists to invest and seek to accumulate. Certainly, firms need to believe that effective demand exists, or at least can be created; otherwise they will tend to hoard their profits. But as Chapter 1, after Marx, argued, capitalists invest to grow not only because they believe they can but because they have to; and it is competition that compels them. Competition, we can recall, “makes the immanent laws of capitalist production to be felt by each individual capitalist, as external coercive laws. It compels him to keep constantly extending his capital, in order to preserve it, but extend it he cannot, except by means of progressive accumulation.”21 Without a sufficient degree of competition to keep capitalists on their toes and sufficiently wary of being left behind by competitors, there potentially remains little by way of stimulus to invest, innovate, and grow. Why, in the extreme case, would Hilferding’s general cartel bother to invest? What meaningful rationale would it have for doing so? The danger, in other words, is that in a world without adequate competition to keep capitalists (capitalistically) “honest,” dynamism would diminish and capitalism would ossify. Third and finally, if conditions of relative excess of monopoly power can impair capital’s vitality and thus healthy reproducibility in this “negative” sense (by not compelling capitalists to innovate and invest), they can also do so in a more “positive” sense. For whereas vigorous competition militates against individual capitalists’ control of markets, monopoly power provides it. It provides power, above all, to control price. And if capital is concerned to keep price (and profit) high, it can do so by maintaining scarcity of supply. The latter, in turn, can be facilitated by a stringent regulation of investment and output that, pursued widely across the economy, would fundamentally jeopardize accumulation and growth dynamics. It is important to note here that by no means all economists concur with the conceptual equation of monopoly with stagnation and, conversely, of competition with dynamism. Most famously of all, Joseph Schumpeter posited that an increase in monopoly power would be likely to see an

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increase in innovation, a monopoly position generally being “no cushion to sleep on.”22 This view was later popularized by J. K. Galbraith.23 Yet on balance, the view persists that excess monopoly does imperil dynamism— a view given flesh, as we shall see in Chapter 5, by historical empirical trends. It also bears recognizing that innovation, as David Hart notes, has historically been “one of many objectives” of antimonopoly competition policy, even if “not necessarily the most important one.”24 Significantly, meanwhile, Hilferding’s discussion of creeping monopolization was not merely a conceptual one. Where Marx elided the theoretical question of generalized monopoly because he saw it as practically unrealistic, Hilferding confronted it precisely because he disagreed. And not only did he think it possible—he believed it was actually happening, all around him. That Hilferding saw actually existing capitalism as becoming more and more monopolistic in nature around the turn of the century is, of course, highly pertinent in the context of this book. It is not coincidental that the period about which, and in which, he was writing was also the period in which competition law—with its ambition to curb monopolization—originally rose to prominence. Moreover, various later commentators, not least Paul Baran and Paul Sweezy in Monopoly Capital (1966), agreed with him: What Hilferding had essentially predicted, a supplanting of “competitive” capitalism by a generically centralized, monopolized form, they claimed had indeed come to pass.25 Yet this is simply not true. Monopolistic tendencies have never developed—or never been allowed to develop—as far and as wide as Hilferding imagined they would and Baran and Sweezy maintained that they had. Notwithstanding multiple periods of shakiness during which the essential dialectical balance between monopoly and capitalism has come under pressure (including from the side of insufficient competition), such balance has ultimately been sustained and reproduced. In other words, we must side with Marx against those who depict a monopoly-induced rewriting of capital and value; his sense about the strength of those “counteracting tendencies” has, effectively, been proven right. And one of those counteracting tendencies—almost certainly unforeseen by Marx—has been antitrust law. Below, we consider how exactly, in theory, such law provides a counteracting force; first, however, we need to address the question of the problems that arise for capitalism’s reproducibility if it starts to veer in the other direction—that is to say, in the direction of too much competition as opposed to too little.

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Too Much Competition For the sake of symmetry, and in view of the importance of his conceptualization to our account, let us begin again with Marx. What, if anything, did he have to say about “excess” competition and about the problems it might generate for capital? For at least two reasons, Marx had even less to say on this matter than he did about the opposite scenario, of widespread monopoly. First, as we know, he was loath to “allow” competition to explain anything beyond its disciplining effect on individual capitalists (and on individual profit rates). Why dig too deep into the intensity of a phenomenon that merely appeared—to vulgar economists—to explain more than it actually did? Second, and more important, there is of course the other component of his vital aphorism: Competition creates monopoly. For Marx, it was difficult to imagine competition becoming “excessive” because competition tended by his understanding to provoke centralizing responses. Just as with generalized monopoly, then, there was simply no sense for Marx in considering a hypothetical scenario that he considered inherently unlikely. And yet—again, as with the notion of too little competition—there have been important thinkers who have conceptualized excess competition and the question of what such a phenomenon would entail for capitalism. In this case, perhaps the most important such thinker came not, as with Hilferding, after Marx but before him. (Although Karl Polanyi, in the mid-twentieth century, painted a particularly dystopian picture of unrestrained competition corroding the social infrastructure of the capitalist markets in which it theoretically thrived.)26 Just as Hilferding envisaged monopolization occurring first in individual sectors and then spreading, viruslike, to other branches of industry, so Adam Smith had conceptualized excess competition doing much the same thing—and with attendant implications for prices, profits, and ultimately the reproducibility of capital. Smith’s best known summation of this idea comes in book one of The Wealth of Nations and reads as follows: “The increase of stock, which raises wages, tends to lower profit. When the stocks of many rich merchants are turned into the same trade, their mutual competition naturally tends to lower its profit; and when there is a like increase of stock in all the different trades carried on in the same society, the same competition must produce the same effect in them all.”27 Three brief

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points are important to highlight. First, Smith’s remarks on competition are made not in isolation but specifically in the context of his wider argument—an argument later echoed, although substantively reworked, by both Ricardo and Marx—about the tendency of the rate of profit to fall under capitalism; it was precisely because of this relation that such competition could be considered “excessive” (it depressed profits). Second, as per Hilferding with monopolization, the effect spreads from one trade to “all the different trades.” And third, competition is clearly not the only variable implicated in profit depression: levels of (capital) stock and of wages are deemed material too.28 It is common today for Marxian political economists—mindful of Marx’s warning about overburdening competition as an explanatory mechanism, and eager also to argue the case for his different theory of falling profits—to scorn this aspect of Smith’s work. Indeed, they are even more scornful of those (nominal?) fellow Marxists who are seen to “lapse” into such an excessive competition explanation for declining profits, labeling them with perhaps the ultimate in Marxian put-downs— Smithian.29 For such critics, Smith’s argument falls down primarily for underplaying the role of labor and wages: Just as monopoly can only become generalized and can only augment generic levels of profitability if it cuts into labor’s share of income, so competition can only be considered generally excessive and can only depress generic profitability if labor is able to extract a higher average share of income at large. These critics are both unfair on Smith and—at least in this particular context—overplay the distance between Smith and Marx. In book two of Wealth, Smith expands on the above-quoted précis in such a way that the significance of labor’s share is clearly highlighted. The section in question is worth citing at length: As capitals increase in any country, the profits which can be made by employing them necessarily diminish. It becomes gradually more and more difficult to find within the country a profitable method of employing any new capital. There arises in consequence a competition between different capitals, the owner of one endeavouring to get possession of that employment which is occupied by another. But upon most occasions he can hope to jostle that other out of this employment by no other means but by dealing upon more reasonable terms. He must not only sell what he deals in somewhat cheaper, but in order to get it to sell, he must sometimes, too, buy it dearer. The demand for productive labour, by the increase of the

Law as Leveler funds which are destined for maintaining it, grows every day greater and greater. Labourers easily find employment, but the owners of capitals find it difficult to get labourers to employ. Their competition raises the wages of labour and sinks the profits of stock.30

Marx would perhaps quibble with the “easily find employment” bit, not least in view of capital’s ability to resist ceding income to labor through the incorporation of new technologies and production methods. Nevertheless, Smith, especially in his assertion of the materiality of the difficulty of finding “a profitable method of employing any new capital”—with all its overaccumulation connotations—actually comes across here as relatively Marxian. In Adam Smith in Beijing, Giovanni Arrighi pushes this particular nominal rapprochement to the extent of arguing that Smith was an advocate for labor vis-à-vis monopoly-hungry capital, seeing vigorous intercapitalist competition as essential to national economic well-being inasmuch as it checked both corporate profits and consumer prices.31 Writing some thirty years earlier about “the relation of forces between labour and capital,” Arrighi had himself prepared the conceptual terrain for this thesis. “One of the primary factors determining this relation of forces is the scale of concentration of capital. The wage-earners, both when they sell their labour power and when they buy what is needed for their own existence, confront a class that—by virtue of its monopoly of the means of production—deals with them from a position of strength. Nevertheless, this position of strength is weakened by the effects of intercapitalist competition.”32 Smith, Arrighi latterly recognized, had not only been aware of this effect but encouraged it. The only necessary caveat to such an argument is that Smith, as we have just seen, clearly thought also that the strengthening of competition could feasibly tilt the balance of forces between labor and capital too far in favor of the former. Competition, in relative terms, could become excessive. More important, just as we had both a theoretical consideration and claims as to actually existing historical trends (Hilferding offering both) in the case of too little competition, with excess competition too there have been commentators who seek to explain real-world politicaleconomies in the conceptual terms in question. We will return to such historical claims more fully in Part II, but they merit brief foregrounding here. There have been two main periods in which such claims have been elaborated.

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First, and ironically, some economists saw excess competition as having developed in exactly the same period that Hilferding identified the emergence of the opposite—that is to say, in the final decades of the nineteenth century and the early decades of the twentieth. Such economists tended to be opponents of the new antitrust laws that were introduced in the same period, arguing that trusts (and cartels) were actually necessary in order to temper what the lawyer-economist Benjamin Javits called the “evils” of “free” or “unrestrained” competition, and what others more typically referred to as “ruinous” competition: competition, namely, that was ruinous for capital.33 These economists were not just empiricists. Part of their contribution, as they saw it, was to expand conceptually on what such “ruinous” competition actually meant—beyond Smith, and beyond the basic proposition that it lowered prices and profits. In what specific sense, for capital, was it ruinous? Oswald Knauth defined ruinous competition as “that which forces prices to a point where the capital invested receives no return, and even fails to maintain its value intact.”34 Others, while also focusing on implications for profitability, accepted a less exacting definition; Eliot Jones maintained that competition could still be ruinous even if the capital invested received a positive return, if it were the case that it “fails to establish a normal level of rates sufficiently remunerative to attract the additional investments of capital that recurrently become necessary.”35 This, in other words, was precisely an argument about problems with the reproducibility of capitalism. Meanwhile, such ruinous competition was identified (in historical practice) and problematized primarily in relation to railroads.36 But as Jones observed, such arguments were sometimes extended to other branches of industry too.37 Second, excess competition has also been invoked to explain historic developments in profitability and attendant problems for capitalism much more recently—specifically, in relation to the crisis conditions of the early to mid-1970s. In particular, the Marxist historian Robert Brenner effectively identifies expanded competition to U.S. industrial hegemony—especially from Germany and Japan, in manufacturing—as the root cause of lowered capitalist profitability in the late 1960s and early 1970s.38 Profit rates were treacherously squeezed, he argues, not just in the United States and not just in manufacturing, but much more widely both sectorally and geographically. In addition, labor was seen to secure a materially larger share of total income in the process.

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But if Brenner is right about the underlying tendency of the era (toward intensified, and indubitably problematic, capitalist competition)— and Chapter 6 submits that he is—he is wrong about the eventual outcome. For as Martin Thomas observes in an extended commentary on Brenner’s thesis, there is, for Brenner, a crucial durability to the phenomenon of excess competition. According to Brenner, notes Thomas, “the ‘ruinous competition’ which suddenly hit capitalism in 1965–73 then became semi-permanent”: “it remained ruinous.”39 No, it did not. If it had, we would not have seen the share of income accruing to corporate profits recover across the Anglo-American capitalist world in the way in which it ultimately did, particularly from the mid1980s (see fig. I.1). If Hilferding’s monopolistic tendencies have never developed as extensively as he predicted, nor in reality have the obverse tendencies identified by Brenner and others. “The competition was ruinous,” remarks Thomas of the era examined by Brenner, “but not (or not allowed to be) ruinous enough.”40 In Marx’s terms, the dialectical balance between monopoly and capitalism had come under profound pressure and had been significantly disturbed; but the necessary balance was eventually regained and retained. Competition creates monopoly; and in the 1970s and 1980s, Chapter 6 argues, the monopoly powers in question were increasingly (re)assembled with the aid of a whole new raft of powerful IP laws. This, though, is to get some way ahead of ourselves because before we can consider how IP and antitrust laws have served in historical practice to balance out capitalism’s contradictory tendencies toward competition and monopoly, we need to do so in conceptual terms. We shall examine antitrust first before then turning to IP protection. Doing so, however, is not entirely unproblematic, for the simple reason that these two sets of laws cannot ultimately be cleanly disentangled. They are, rather, deeply imbricated with one another, so their relationship—dynamic, complex, and as Spencer Waller and Noel Byrne observe, “often a baffling one”—must always be closely considered.41 Part II will demonstrate this entangling empirically, by exploring the laws’ interactions in historical practice. Here, it is vital that we similarly acknowledge, from our specifically political-economic perspective, their conceptual common ground and thus intersections.42 Perhaps the best way to understand this common ground is to picture antitrust and IP laws, and their respective materiality to the successful reproducibility of capitalism, in terms of two sides of the same coin. That

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coin is the dialectic of monopoly and competition theorized by Marx. Stand the coin on its side, and it is easy to envision the knife edge that capitalism is required to negotiate to remain capitalism. In the face of recurrent tendencies for the coin to lean in one direction or the other, the requirement frequently arises—for all the “natural” counteracting tendencies alluded to by Marx—for state legislative action to restore balance. Hence, there is an understandable tendency to see antitrust and IP laws as oppositional—as on “a collision course” with one another, to use Daniel McClure’s expression—but it is far more productive to recognize and explore their shared objective: namely, to maintain capitalism’s balance and reproducibility.43 Ariel Katz arguably comes closest to doing so, reading the history of the intersection between IP and antitrust laws, and fluctuations in their relative prioritization and prominence, as an ever-evolving exercise in calibrating and recalibrating a trade-off between “incentive” and “access”: between the private incentive to invest represented by profit, and the need to provide public access to the “fruits” of private investment. He thus describes this history as “an exercise in finding the golden mean between the conflicting aims of both sets of laws.”44 The imagery is a powerful one, but for our purposes there are two key departures from Katz. First, we need, as noted, to resist seeing the laws’ aims as conflicting, and to focus instead on the objective they share. And second, we should see this objective—which is the “golden mean”—as the balance, not primarily between incentive and access, but between too much competition (and not enough profit) and too little.

The Antitrust Dampener What we recognize today as modern competition/antitrust law was essentially born in the United States in the final decades of the nineteenth century. There were, however, two important sets of legal precedents for such law. The first of these, in particular in its U.S. variant, was corporate law based on preclassical theories of the corporation. The second and, ultimately, more important in the long run, was common law of contracts in restraint of trade, especially as it had historically been practiced in the United Kingdom. As we shall see in more detail in Chapter 4, the 1870s and 1880s were a crucial period in the history of American capitalism insofar as they saw the first significant moves toward centralization of resources

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and power into large, consolidated firms. What were those opposed to such centralization—and by no means all policymakers and economists were—to do about such centralization? As Herbert Hovenkamp explains, corporate charters initially appeared to contain powerful weapons for state administrators: among other things, they could prohibit corporations from doing business outside of their incorporating state and prohibit one corporation from owning shares in another. But first, the firms in question used common law “trust” arrangements to seek to evade these limitations (hence the terms trust and antitrust); then, when these arrangements proved inadequate, firms instead secured new state incorporation statutes that permitted what had previously been prohibited, thus eradicating “most of the remaining vestiges of the pre-classical corporation.”45 Thus, for these and other reasons, the antitrust laws that were put into place in the United States from the 1890s onward, at both federal and state levels, came to be based on restraint of trade law rather than corporate law. And this included the first and most important of the U.S. federal antitrust statutes: the Sherman Act of 1890. What, in essence, would be the nature and use of this new statute? A basic appreciation thereof is crucial because the act would eventually become the benchmark and model for competition law around the wider industrialized world. Its goal was expressly to stimulate competition, but this “competition” was not of the type promoted by the common law of restraint of trade. The specific meaning of competition historically expressed by the latter emphasized “liberty and freedom from coercion” (as per the concept of competition-as-condition discussed in Chapter 1, and conveyed by Smith’s “perfect liberty”). “A voluntary price-fixing agreement was not ‘anticompetitive’” by this line of thinking because nobody’s “freedom to act” was necessarily being “artificially restrained.”46 By contrast, Hovenkamp demonstrates, the Sherman Act, in the hands of the Supreme Court in particular, “quickly became, for all practical purposes, a price-fixing and antimerger statute,” and one predicated therefore on more classical-economic understandings of competition and the centrality of price effects.47 But the act was not—or at least, for its first few decades it was not—only that. From the start, it was concerned “with protecting small businesses from larger competitors” as well as “with protecting consumers from wealth transfers deemed unfair.”48 Chapter 4 focuses on the development, application, and impact of antitrust laws through to the midpoint of the twentieth century. For all this

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period, as we will see, the United Kingdom—our other main territory of interest—lacked the formalized and largely coherent competition law regime possessed by the United States. Domestic U.K. economic policy, certainly from the end of the World War I to the end of the World War II, simply had higher priorities than perceived anticompetitive practices; common law continued therefore to be applied on a case-by-case basis. A formalized competition law regime did not cohere until 1948 and the passage of the Monopolies and Restrictive Practices Enquiry and Control Act, which was “the first [U.K. competition policy] statute of modern times.”49 And even then there was, initially at any rate, a rather different complexion to the constellation of motivations for such a law, with “wartime concern that full employment policies may be frustrated or at least weakened by cartels or restrictive agreements” still very much in evidence.50 Considered explicitly in relation to our earlier discussions of capitalist political-economic dynamics and especially of the problems putatively faced by capitalism in a scenario of excessive monopolization, how, therefore, should these competition/antitrust laws be conceptualized? What work do such laws theoretically do—or are such laws theoretically intended to perform—to keep capitalism broadly in balance? They can be productively conceptualized as simultaneously preventing and enabling: preventing the situation described above, in which centralization leads to uncompetitiveness, a lack of dynamism, and monopolistic combinations profiting at the expense of society’s consumers/laborers by enabling competitive conditions to crystallize and endure, thus dampening prices and profits. To posit as much, however, is immediately to invite all sorts of potential objections, and the most important of these must be confronted head on: How can the work of competition law be summarized thus when, in historical reality, its aims and objectives have clearly varied across time and between places (even within the relatively narrow geographical ambit of the territories discussed in this book)? This is a valid question. We have already noted, after all, that protecting small businesses was an important goal of antitrust practitioners in the early years of the Sherman Act; such a goal does not naturally square with the conceptualization just offered. And perhaps more materially, it is widely accepted that under the influence of the Chicago School of law and economics, U.S. antitrust policy and practice underwent dramatic transformations

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(which will be examined closely in Chapter 6) from the beginning of the 1980s as efficiency and “welfare” goals became increasingly ascendant. In relation, especially, to the changes of the past three decades, the answer to this question is as follows. We can conceptualize antitrust in the singular way suggested because, when Chicago School adherents began to invest its theory and practice with alternative aims, the law’s power to perform the leveling work identified here was diminished, thus it de facto ceased to be antitrust/competition law. Through its influence from the early 1980s, the Chicago School not so much changed U.S. antitrust as sterilized it. Consider Crane and Hovenkamp’s observation that this school represented “a broad theoretical attack on interventionist antitrust thinking.”51 The wording is significant: To the extent that it succeeded, the Chicago School rendered antitrust noninterventionist, which is to say, toothless. Writing at the very dawn of the new era, Frederick Rowe offered a similar assessment. “Carried to its logical rigor, as it has been by the Chicago School of economics,” Rowe wrote, “economic analysis keyed solely to ‘efficiency’ and ‘consumer welfare’ has revealed with stark simplicity that there will be very little remaining of antitrust.”52 Using instead the international terminology for antitrust—competition law—arguably makes this feature and impact of the Chicago School revolution clearer still. It does so because a policy increasingly reduced to efficiency imperatives automatically loses any direct and necessary link to questions of competition—historically, the very sine qua non of antitrust. Indeed, advocates of the new efficiency agenda lost no time in emphasizing that “policies to promote efficiency and policies to promote competitive markets are not necessarily identical” and in insisting that efficiency was “the more inclusive goal, with competitive market prerequisites being a possible means to that end.”53 This, needless to say, was—and is—heresy to many in the competition law community, especially internationally. The objectives invested in competition law have indeed varied somewhat over time and between places, yet its historical geography does illustrate sufficient continuity to offer a unifying conceptualization of its political-economic work. Antitrust/ competition law, whatever else it may also be concerned with, is definitively concerned with monopoly and competition, and with price and profit. “As history teaches,” observes Eleanor Fox, “‘efficiency’ is not the reason for antitrust.”54

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Hence, we will proceed with the idea that there are two related components to the practical efficacy of antitrust: those of first preventing, and second by enabling. It is instructive to consider each separately before merging them, even if they are ultimately just alternate sides of the same monopoly-competition dialectic. “Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony.”55 One of the key clauses of section 2 of the Sherman Act, this represents a crucial subtext in the history of competition law internationally as well as just in the United States, for it is, above all else, monopoly that such law has consistently sought to prevent. Such monopoly does not necessarily have to appear in textbook, one-company-taking-the-whole-market form; cartels (Hilferding’s “monopolistic consortia”) and oligopolies are generally also targeted for prevention. Indeed, Fox is surely correct to indicate that the actual generic economic tendency that competition law has historically targeted is that of excessive concentration.56 But the word monopoly has long been a powerful and central one within antitrust theory and practice; not for nothing, for example, was the United Kingdom’s antitrust regulator, the Competition Commission, called the Monopolies and Mergers Commission until 1999. And when, exactly a century earlier, Henry Rand Hatfield attended the Chicago Trust Conference, an event that “considered the trust problem in its political, economic and social aspects” and which attracted some four hundred delegates from “all sections and almost every class of society,” he observed how already antitrust had become equivalent to antimonopoly: “The critics use trust and monopoly as synonyms; their corrective measures are aimed at the monopolistic features.”57 Why exactly is it, however, that it is seen to be necessary to prevent monopoly/concentration? The answer given has usually been a simple one: because such concentration enables uncompetitive pricing and profits. Adam Smith was and is an important influence here. He has always been a major figure for the traditional antitrust movement. He, like many other classicists, objected not only to commercial monopolies but to state-authorized monopoly too. He was, moreover, an opponent of the very idea of corporations per se, regarding their “exclusive privileges” as “a sort of enlarged monopolies.”58

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In articulating and rationalizing the type of preventative politicaleconomic work that antitrust can do, however, its advocates have never been reliant on Smith. One of the enduring fascinations of economic thought of the late nineteenth and early twentieth centuries is that arguments against monopoly on the grounds of its nefarious price and profit effects came from so many different, and often ostensibly divergent, quarters. Hilferding, for one, said much the same thing as Smith. But so too— and much more influentially in terms of antitrust theory—did the leading lights of the emergent neoclassical paradigm. Perhaps most important of all for our purposes was Alfred Marshall. The year of the passage of the Sherman Act (1890) was notable not only for the publication of the fourth German edition of Capital (in which, as we saw in Chapter 1, Engels added his footnote about English and American trusts striving to attain the goal of a single centralized capital) but also for the publication of Marshall’s seminal Principles of Economics. And in this he wrote: “The prima facie interest of the owner of a monopoly is clearly to adjust the supply to the demand, not in such a way that the price at which he can sell his commodity shall just cover its expenses of production, but in such a way as to afford him the greatest possible net revenue.”59 If disproportionate prices and profits were and are—through the targeting of monopoly—the focus of antitrust prevention, the phenomenon to be enabled (at least partly, of course, by forestalling monopoly) is competition. Competition is the condition and dynamic that antitrust positively strives for; the U.K. regulator’s 1999 name change thus represented an emphasizing of its enabling function alongside a deemphasizing of its preventative one. And although champions of antitrust have frequently claimed that competition redounds to “the benefit of all—consumers, entrepreneurs, and ‘the public good,’” it is the first of these constituencies whose interests have ordinarily been prioritized in the delimitation of antitrust’s economic work.60 “I say if you let these two manufacturing interests compete together and create competition,” implored senator George Vest in encouraging enactment of Sherman’s statute in 1890, “you then secure lower prices to the consumer.”61 Yet despite competition being conceived as antitrust’s positive outcome, it remains striking that it has so often been enunciated in double-negative terms, that is to say, in terms of what is being foreclosed. At the Chicago Trust Conference of 1899, for instance, Hatfield observed that “in general, trusts are criticized because they are held to destroy competition”;

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and section 7 of the U.S. Clayton Antitrust Act of 1914 proscribed acquisitions whose effects were “to tend to create a monopoly” or “substantially to lessen competition.”62 The critical element of our conceptualization of antitrust’s efficacy, meanwhile, relates to the mechanics of how, in preventing monopoly and enabling competition, it is seen to impact prices and profits. Before considering this question, however, one other important point about the holy grail of competition merits recognition. Under the influence of the Chicago School, as mentioned, competition’s preeminence has recently been substantially threatened. For the bulk of competition law’s history, however, and perhaps especially in the United States, it has been considered so sacrosanct as to brook no effective practical resistance. One point of intellectual dissension, notably, in the early decades of U.S. antitrust law consisted in the argument that the law risked pushing capitalism too far in the other direction: in other words, that instead of stabilizing capitalism by rooting out excessive centralization, it risked encouraging excessive (and equally destabilizing) competition. This was the “ruinous competition” argument we encountered earlier. As we saw, some economists regarded such a phenomenon as a genuine threat in the era of the Sherman Act, arguing that excess competition militated against profitability, and thus ongoing viability, in industries with high fixed costs. And such economists were by no means some pesky minority; largely on account of such fears, Hovenkamp claims, “the majority of economists were either opposed to the Sherman Act or deeply skeptical.”63 Yet antitrust’s judicial arbiters nonetheless privileged competition to the extent that it was demanded even at the risk of it being ruinous. Prior to World War II, Hovenkamp reports, some eighty federal court decisions featured a “ruinous competition” defense, “but the courts consistently held that ruinous competition could not defend against an anticompetitive practice.”64 How then does antitrust, and the competition it fosters, serve to dampen the inflated prices and profits associated with monopolistic conditions? To answer this question we need first to signal the central importance of the concept of power. Competition law has always emphasized this concept because it is regarded as the crucial link between monopoly and competition on the one hand and price and profit on the other hand. Monopoly confers power to dictate prices; competition denies it. Here once more, ever observant, is Henry Hatfield on the learnings of the 1899 Chicago Trust Conference: “If a monopoly be defined as the power

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on the part of producers arbitrarily to maintain high prices, all agreed that such power could not wisely be vested in private control.”65 Fifteen years later, those arguing for the passage of the Clayton Act similarly stressed their desire, above all, “to properly control and regulate and bring under proper subjection . . . the great industrial corporation that really has power—the power to arbitrarily control prices and thus exact unjust profits from the people.”66 “Distrust of power,” affirms Fox, “is the one central and common ground that over time has unified support for antitrust statutes.”67 Power, however, can be a slippery concept at the best of times, in terms of both substance and scope. We therefore gain little by way of understanding of competition law efficacy unless we dig deeper into the nature of the corporate powers it envisions, and especially into the locus of purported exercise of such powers. Where, according to antitrust theory, does that power circulate that enables companies—or not—to influence prices? The answer to this question has invariably been the same (indeed, there is arguably no other issue within the antitrust field on which all parties to its theorization and practice, even in the Chicago School era, have been so unanimous): the power in question is market power, for it is in the market that prices are seen to be established. The significance of this point cannot be overstated. Insofar as it is perceived to be the site of pertinent power, the market, not production, has always been the principal locus of the competition-law worldview and, hence, of its calculative and legislative practice. “Market power is a key concept in antitrust law,” stated the prominent contemporary Chicago theorists William Landes and Richard Posner in 1981. “A finding of monopolization in violation of section 2 of the Sherman Act requires an initial determination that the defendant has monopoly power—a high degree of market power. . . . Section 7 of the Clayton Act also requires proof of market power; in fact, the main purpose of section 7 is to limit mergers that increase market power.”68 Similarly in the United Kingdom, where the detection of “significant” market power remains the calculative crux of the assessment of a market’s level of competitiveness, and where, as in the United States, such power is defined as that “which endures over time and gives [firms] the ability to maintain prices above the competitive level.”69 The Chicago School reformation has chipped away somewhat at the hegemony of the “market power” concept in the United States in particular—Posner now concedes to “misgivings” about the term, and as early as the late 1970s the phrase “market impact”

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began sometimes to replace it—but it remains central to the practice of antitrust there, and there are plenty of commentators who believe the new shibboleth of efficiency can be comfortably cast in its terms.70 What competition law ultimately does, therefore, is seek out evidence of market power—either extant or, in the context of merger investigations, prospective—and endeavor to eliminate or preclude it. Its objective in so doing is to eliminate or preclude monopoly pricing and monopoly profits. Its methods for detecting market power will be discussed more closely in Part II, but they are not incidental here. One is to examine profit levels—an explicit recognition of the fact that market competiveness is seen to be linked to industry profitability and is valued accordingly. Another, more indirect, is to examine levels of industry concentration. Significantly, in view of the preceding discussion of market power, concentration (as a proxy for power) is measured in terms of shares not of productive assets but of market revenues. In the language and conceptual architecture of classical political economy, competition law’s primary concern is with the sphere of exchange. It examines and—where it is deemed necessary—seeks to (re)format the terms on which firms (capitals) confront both consumers and one another and, in the process, establish prices: the terms, that is to say, that constitute the interactions we label “competition” and “markets.” The prices that emerge from out of these interactions are material for all sorts of reasons: for competition law, in view of their degree of “fairness” to customers and competitors; for us, ultimately, in view of the profits they crystallize and hence their influence on capitals’ (and capital’s) viability, stability, and reproducibility. If, for instance, the law finds one firm sufficiently influential in the sphere of exchange to be able to dictate prices without customers simply switching to substitute suppliers and products when prices become uncompetitive, it steps in and says to that firm: something needs to be done about these exchange relations because it is your power in the market that enables you to price uncompetitively and profit in kind. The law has numerous means at its disposal to try to restore competitiveness to such uncompetitive markets, or to try to maintain it where it is seen to be threatened. Where it discovers price-fixing through cartelization, for example, it may choose to introduce firewall provisions and strict monitoring thereof. Where it finds manufacturers using exclusive dealing contracts explicitly to prevent distributors from selling rival products, thus denying competitor manufacturers market access, it may ban such arrangements. And where it finds evidence of excessive pricing

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in markets where competition is seen to be difficult to facilitate, it may even introduce direct price controls. Yet in all such cases the locus of intervention is exchange relations; in its attempt to dampen the prices and profits firms are able to generate, antitrust law reformats the terms on which and conditions under which value is realized. It stimulates competition in order to erode one or more firm’s power to price for monopoly profit. To conceptualize antitrust as dampening monopoly-derived profits through its manipulation of exchange relations is not, however, to abandon Marx. It is not to gainsay the importance of production. It is to insist, rather, that exchange is important too, both in and of itself and by virtue of its influence on production; and hence it is inadequate to figure competition, as Marx does in Capital, as a mere passive “executor” of relations established exclusively by productive forces. Competition law may not interfere directly in the production process (although, as we shall presently see, it frequently does reshape macroconfigurations thereof) or, often, in capital’s immediate relations with labor. But capital, in production, cannot afford to ignore what antitrust declares is and is not legitimate in the sphere of realization. A firm with a market monopoly has a distinctive productive configuration. If the law takes that monopoly away, production—be it of services or physical commodities—cannot stay as it is, immune to the prospects for value realization. Production volumes, production infrastructures, capital-labor relations: all are necessarily in play. This is part of the explanation for how a primarily competition-oriented (competition) law can serve to shape rhythms of value creation and accumulation. Equally important, and conversely, this conceptualization does not somehow entail the kind of fetishization of competition and exchange about which Marx warned. It would be all too easy to fall into this particular trap, given that the bulk of the economic theory that underpins antitrust, historically and more recently, tends to assume a largely (neo) classical guise, with even nominal outliers—the concepts of monopolistic and imperfect competition associated with Joan Robinson and Edward Chamberlin, for example—still relatively mainstream. But if competition is no mere passive “executor,” neither does it shape price and profit in isolation—a fetishistic illusion requiring, as Bob Jessop observes, neglect of labor processes and of wage relations.71 Competition is, instead, bound up in perpetual interaction with the other essential “moments” of the dynamic totality of capital—production included.

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Indeed, and to conclude this section, it is important to appreciate that the practice of antitrust often itself gives lie to the more fetishistic notions embedded in its mainstream theorization. Consider antitrust’s main “structural” remedy for anticompetitive markets—to take monopolistic entities and break them up by requiring them to divest themselves of parts of their operations (a cohort of branches, say, in the case of a monopolistic, multibranch commercial bank). This approach assuredly represents the reshaping of exchange relations posited by antitrust’s theorists and intended by the remedy, inasmuch as it reconfigures the scale and resources with which a firm encounters competitors and customers in the marketplace. Self-evidently, however, the remedy represents no less a reshaping of productive forces, inasmuch as it reconfigures the scale, assets, and competences with which a firm fashions the products and services that it takes to market. Clearly, both (linked) vectors of intervention will potentially be material to dynamics of price and profitability. The key point to take away, meanwhile, is that here, rather ironically, antitrust’s practice demonstrates the materiality precisely of production to the “market powers” its theorists tend to reify.

The IP Injection If competition law helps maintain capitalism’s balance by disassembling market monopolies and hence dampening prices secured and profits produced, then IP law essentially does the same but in an inverse relation. It too privileges exchange relations, and thus capitalist structures for realizing value, as its locus of intervention and adjustment in regimes of accumulation. Yet it is concerned to assemble monopoly powers and facilitate profit generation in contexts where the threat to capital is not excessive profits but, rather, the opposite. To begin with, though, what do we mean by “intellectual property” (IP) and thus, by extension, by IP law? Conceptually, Justin Hughes defines IP as “nonphysical property which stems from, is identified as, and whose value is based upon some idea or ideas.” Or, more succinctly still: “the use or the value of an idea.”72 These abstract definitional suggestions are useful because they highlight the three cardinal features of IP: It is something owned (hence “property”) or at least seen as amenable to ownership; it has no physical basis, but is instead a creation of the mind (hence “intellectual”); and it has, or is believed to have, value (hence, of course, the application of the law).

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IP law, in turn, is simply the set of institutional mechanisms designed to formalize and protect exclusive private rights to such property: the “series of legal principles and domains that create exclusive rights in intangible property of the mind,” as Dan Hunter puts it. IP laws, Hunter goes on, “all confer in one shape or another state-sanctioned exclusive rights of use for . . . specific types of intangible things”; or to express matters in the adversarial framework in which they materialize in court, such laws “create a type of property right that the plaintiff has to establish, and upon which the defendant may or may not be infringing.” The centrality of such laws to contemporary capitalism is well established, and is pithily articulated by Hunter. “If it can be said that the Industrial Age was built out of legal and social control of land, plant, and heavy equipment,” he writes, “then the post-Industrial Age is built around control over intangibles such as brands, information, celebrity, and ideas. And these are the province of intellectual property.”73 As Hunter explains, there is something intrinsically peculiar about the idea of thus protecting something nonphysical, such as an idea. Physical property protection makes sense to us because its use is, as economists put it, “rivalrous.” If one person owns a physical commodity (a car, say), and another person uses it, that third party deprives the original owner of the object’s use—hence the perceived need legally to protect it. Yet the same tends not to be true of intellectual property, which is typically nonrivalrous; if I have a clever idea, and somebody else uses it for their own ends, this does not usually prevent me from using it also. So why protect it? There are numerous justifications for doing so, as we shall presently see. But the most important answer, from our perspective, has to do precisely with problems in capitalism’s monopoly-competition balance in circumstances where such protection is not afforded. Meanwhile, Hughes enables us to be more specific still about the nature of the laws in question here. “At the most practical level,” he observes, “intellectual property is the property created or recognized by the existing legal regimes of copyright, patent, trademark, and trade secret.”74 Copyrights et al., in other words, are best conceived not as things as such but strictly as the legal mechanisms used to turn an idea or ideational creation into intellectual property and to grant it similar legal-economic protections to those enjoyed by physical property. A very brief introduction to each of the main types of intellectual property law and to their respective origins and early histories is in order here, before we then turn to the various justifications for their

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use and to the central question of the nature of the political-economic work they perform.75 Let us begin with patents, which, like trade secret laws, protect ideas and inventions. A patent “may be granted on any new and useful process, machine, manufacture, composition of matter, improvement and plant as well as to new, original and ornamental design for an article of manufacture.”76 As Christopher May notes, an idea or invention generally has to fulfill certain key criteria to be patentable; it has to be considered novel, not obvious, and useful or applicable.77 The patent right is, according to Besen and Raskind, “the most powerful in the intellectual property system, enabling the patent holder (patentee) to exclude all others from making, selling, or using the subject matter of a valid patent for a [specified] term.”78 Historically, as May (together with Susan Sell) explains, patents “emerged initially to allow the dissemination of particular technical advances.”79 They date back to at least the fourteenth century, at which point in time they typically took the form of “grants of privilege by the particular sovereign into whose territory such [advances] were being introduced.” And as in so many other areas of critical innovation in protocapitalist institutional forms and practices (financial instruments were another), it was the Italian city-states that led the way. Venice was a particularly important proving ground for the new system of granting patents, and one of the main ways in which this legal-economic system “spread further afield was through the migration of Venetian glassblowers.”80 Copyright can be distinguished from patents principally inasmuch as protection relates to works of authorship, and thus to the expression of an idea rather than the idea per se—although the line distinguishing the two has always been a blurry one, and is getting blurrier. A work is eligible for copyright protection if it is original and “represents a modicum of intellectual activity” (there would be no protection for a work authored by a chimpanzee).81 The types of eligible works include such things as musical recordings, audiovisual works (like films), literary works, dramatic works, and so forth. Meanwhile, the rights afforded by copyright include—but are not limited to—the right to reproduce the work in question, to distribute copies of it, and to perform such works publicly. The early history of copyright mirrors that of patents in two important respects.82 First, its geographical center of gravity was in Venice, where the earliest formal provision for copyright protection was made in the sixteenth century.83 Second, technical advances played a vital role.

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Whereas such advances were the subject of protection in the case of patents, however, copyright was stimulated by such advances, and one in particular: “Following the fifteenth-century invention of cheap printing, the ‘Gutenberg revolution’, printing and book selling emerged as major industries. And once printers were producing books for sale, they sought some right to restrict copying to ensure that other printers did not ‘pirate’ their books.”84 The final major category of intellectual property protection consists of trademarks. If patents require newness and copyright demands originality, then “the counterpart of these terms for trademark is,” as Besen and Raskind argue, “distinctiveness.”85 The function of the trademark “is to show origin, to identify.”86 Each of these related roles is important. Trademarks are intended to help consumers both to recognize that the product in question is what they think it is (and not a different product), and to link the product to its originating source. In short, trademark protection is designed to give consumers confidence in the integrity of the product they are purchasing: They are getting the “real,” distinctive thing (from the “real,” original manufacturer), and not a mere replica. Note too that the trademark does not have to be a physical mark as such; trademarks (the legal term) can include such things as trade names, symbols, labels, packaging or product design features, and so on. Historians have traced trademarks as far back as Roman law and the protection of makers’ physical marks on products.87 They became particularly important in medieval times, when craft guilds became aware of the value of their specialist knowledge and instituted the practice of “affixing an identifying mark to a goblet or like product” (hence the origin of the suffix “mark”).88 In modern times, of course, trademarks have become omnipresent. In a consumerist society where the acquisition of material possessions is seen not only as an end in itself but as a means of social differentiation, distinctiveness—or as Pierre Bourdieu put it, “distinction”—is seemingly supreme and it is exactly this that the myriad brands and logos protected by trademarks confer.89 Trademark is the generic legal regime that turns something as seemingly innocuous as a name or a pattern into a proprietary right that can be leveraged, ultimately, for economic gain. Legal protection in the formative periods of all three main types of intellectual property (patents, copyright, and trademarks) across Europe was very much on an ad hoc basis. There was nothing systematic about it—“no formalized legislative procedure.” Rather, rights were granted

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by the relevant state or crown “as privileges or indulgences,” “on the basis of individual petition,” and “subject to the vagaries of political power and personal relationships with the holders of such power.” This remained the case until “the formalization of patents in the 1624 [English] Statute of Monopolies and for copyrights in the Act of Anne in 1709.”90 IP law as we know it today was thus essentially born in the seventeenth century. But if we know broadly what IP and IP law are, and something about their origins, what of their rationale? On what grounds have states increasingly sought to introduce and systematize IP rights and laws to recognize and protect these rights? Writers on the philosophy of intellectual property typically highlight two separate sets of justifications for its existence: Lockean and Hegelian.91 The Lockean justification is often also termed a labor-desert theory. The idea here is that because creating something valuable requires labor, the individual who expends that labor deserves to realize any value (the “deserts”) accruing from her creation. Proponents of this theory, which has been mobilized to justify all sorts of private property rights, claim that it has a particular resonance in the case of intellectual property because whereas other types of property—such as land—may require little labor input to make them (capitalistically) valuable, arguably very little IP could exist without the application of some mental labor. The Hegelian justification circulates in a register altogether more removed from such worldly considerations. Its alternative label is the personality theory of property. Boiled down to its essence, the Hegelian argument is a primarily ethical one, and claims that a person’s ability to genuinely be in the world and to fully experience her sense of self and identity (her personality, that is) is predicated in part on the right to property—intellectual or otherwise—to which that individual has a strong attachment. Such a justification may seem entirely incongruous in the thoroughly commercialized world of modern IP, but as Hunter observes, it still has elements of contemporary relevance, for all its classical heritage: in providing “moral rights” for authors, the German and French copyright systems, for example, both invoke personality-based justifications.92 Hunter’s wider discussion of rationales for IP rights and laws is especially useful for our purposes because it adds a third justification to the two normally identified: a utilitarian economic justification.93 This justification, not entirely unconnected to the Lockean one, can be very simply stated and is in fact the one most often marshaled today: IP rights

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increase overall social utility because they increase investment and innovation. Take copyright or patents (the utilitarian justification is, as Hunter explains, somewhat different in the case of trademark).94 What would be expected to happen in a world without such protections? The danger, IP advocates argue (and by no means everyone agrees), is that new inventions and works of authorship would not be produced in the first place. Why, after all, as a rational economic being, would I spend my time creating something that others could then benefit from—by copying it, for example—without having to pay, as I have done, for the privilege? Providing an exclusive property right ensures that the goods to which such rights are attached actually get produced. But there is, of course, a danger embedded in such rights, that inherently threatens the social utility argument and reality—namely, the danger that those who invest and innovate merely hoard the things they produce, protected by the rights they have been granted, rather than allowing society at large to benefit therefrom. Thus “any system of intellectual property protection” must have, says Keith Maskus, not one but “two central economic objectives.” First, the aforementioned objective to promote investment, and second, the objective “to promote widespread dissemination of new knowledge by encouraging (or requiring) rights holders to place their inventions and ideas on the market.” Moreover there is, as Maskus goes on to say, “a fundamental tradeoff between these objectives. An overly protective system of intellectual property rights could limit the social gains from invention by reducing incentives to disseminate its fruits. However, an excessively weak system could reduce innovation by failing to provide an adequate return on investment.”95 IP rights, notes Katz, generate this tradeoff between access and incentive, while IP laws calibrate it “by limiting the length and scope of IP rights and by crafting exemptions to the IP holder’s exclusiv[ity].”96 They must offer incentives while minimizing social costs. If the latter risk identified by Maskus—that of reducing innovation by failing to provide an adequate return on investment—appears to echo a risk identified much earlier in this chapter, then so it should. So-called ruinous competition was considered risky for capital, we saw, in the sense that it lowered prices and profits to the point at which the returns necessary to justify investment were no longer available in the marketplace. Both excess competition and weak IP protection, in other words, are held to suppress profitability to the extent that the investment required to reproduce and grow capital may not be forthcoming.

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Is this parallel coincidental or is there something more to it than that? There is nothing coincidental about it at all. Indeed, there is not only a parallel but, effectively, equivalence. A scenario of limited protection for IP is at the same time—or can be read as—a scenario of “excess” (perfect?) competition in markets for the goods to which the property rights would theoretically apply. This is the case because in such a scenario there is limited or no economic scarcity attached to the goods in question, and in the absence of scarcity competition is given free rein. Or to put things in a language with which we are by now more familiar: Where the intellectual “good” is not invested with property rights, there is no monopoly power over it; and, dialectically speaking, a deficit of monopoly constitutes an excess of competition. Here, then, from a political-economic perspective, we can begin to see what it is that IP rights and IP law actually do—the work they perform for capital. As May states, the creation of IP rights is essentially the “construction of scarcity in knowledge.” This construction is vital, for “only when a commodity is scarce can it be accorded commodity status, allowing it, most importantly, to command a price.”97 Or again, using our alternative terminology: IP rights confer upon “owners” of intellectual goods the monopoly power necessary to price such goods and to extract profits from commerce in them. (Recall, after Harvey, that the “monopoly power of private property” is “both the beginning point and the end point of all capitalist activity.”)98 This conferral, and the capital accumulation it enables, represents the fundamental political-economic function of IP rights and IP law. The existential threat to capitalism to which it constitutes the solution is the lack of such scarcity/monopoly— the excess of competition—and its constraining of profit potential and of investment and innovation incentives. Hence an age-old and very much ongoing debate around the perceived conflict between “the competitive ideal” on the one hand and, on the other hand, “the recognition of exclusive, ‘monopolistic’ property rights in the form of patents, copyrights, trademarks, and the like.”99 All of this clearly requires some fleshing out, however. Our starting point can be simply to affirm that the granting of exclusive rights in “intellectual property” does in practice represent a creation of economic monopoly. Those rights are, as Christopher Leslie emphasizes, exclusionary as well as exclusive. Hence the power, Leslie further submits, of a perspective that sees in competition law—preoccupied as it is with monopoly and its scope—society’s means of definition of the limits of

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what IP owners can do with their rights.100 “Standard economic analysis,” says Katz, indeed views IP rights as “legal instruments that create monopolies.”101 Historians have recognized this as a practical reality over the course of centuries. “Monopoly,” Raymond de Roover states, “was the essence of the guild system.”102 It is also a commonplace of IP textbooks. In granting state-sanctioned exclusive rights for intangibles, writes Hunter, IP laws “create a monopoly right for certain types of imaginary property.”103 And it has led some commentators, albeit writing from a particular normative stance, to go so far as to substitute “intellectual property” for “intellectual monopoly.”104 To maintain that IP rights create legal monopolies, however, is not to suggest, as often seems to be presumed, that commercial trade in the goods to which such monopolies attach is devoid of all competitive dynamics. It rarely, if ever, is. We would do well to remind ourselves here of two of Marx’s vital observations concerning monopoly and competition: that capitalism requires both, and that the former tends to precipitate the latter. So it typically is with the monopoly that is IP, a point made especially powerfully by Edward Chamberlin, a thinker to whom we will have occasion repeatedly to turn in what follows. In his Theory of Monopolistic Competition (1933), which reproduced many of Marx’s insights but in different form and toward different theoretical ends, Chamberlin posited that monopoly was inherent in product differentiation: “With differentiation appears monopoly, and as it proceeds further the element of monopoly becomes greater. Where there is any degree of differentiation whatever, each seller has an absolute monopoly of his own product.” But at the same time he dismissed the notion that the presence of monopoly implied the total absence of competition. More of one typically meant less of the other, but they were not mutually exclusive. A seller with a monopoly in her own product is nonetheless “subject to the competition of more or less imperfect substitutes.” Such sellers collectively, including (but not only) sellers with monopolies in intellectual goods, thus represent “competing monopolists.”105 In his illuminating discussion of these competing monopolists specifically in the IP world, Katz, for his part, makes two vital related observations. The first is that IP rights are self-evidently designed “to confer market power upon their holders.”106 The significance of the emphasis here should be obvious given our earlier discussion around competition law. Owners of IP rights enjoy and exercise power emphatically, if not exclusively, in regard to exchange relations; hence IP law’s primary

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locus of direct intervention in capitalist political economy is, in turn, the sphere of market exchange (although with ineluctable implications for the productive sphere given the aforementioned “dynamic totality” nature of capital). Consider, for example, trademark, where the raison d’être of the protection granted to rights holders subsists entirely in the moment of market exchange: enabling the consumer to be certain of the integrity of the item being purchased. And although the rights bound up with copyright and patent protection encompass restrictions on thirdparty (re)production as well as on sale, the right to the former activity, in a market economy, is largely superfluous in the absence of the right to the latter. IP jurisprudence typically recognizes this in categorical terms. With respect to patents, for example, the European Court of Justice has ruled that “a patent guarantees the patentee the exclusive right to use an invention with a view to manufacturing industrial products and putting them on the market for the first time, either directly or by grant of licenses to third parties.”107 Economically speaking, the power vested in all types of IP is quintessentially market power, and it is thus configurations of market exchange that IP laws essentially seek to (re)configure. Katz’s second significant observation, meanwhile, is that among IP rights it is “especially patents and copyrights” that economics treats as “legal instruments that create monopolies.”108 “Patents,” the U.S. engineer and lawyer Edwin Prindle wrote in 1906, “are the best and most effective means of controlling competition. They occasionally give absolute command of the market, enabling their owner to name the price without regard to cost of production.”109 Katz’s later point was that historically there has been a stronger consensus regarding the monopoly-making nature of patents and of copyright than is the case with trademark. Daniel McClure says much the same thing: “A patent or copyright which gives a monopoly in a product or literary work is inherently anticompetitive,” whereas the issue is typically considered “less clear-cut” with trademark because although they cannot use “similar marks” or other “identifying symbols,” competitors can produce identical or similar products.110 Recognizing this ambivalence is important. But does this mean, therefore, that in our own analysis we should exclude trademark from the suite of IP regimes that confer monopoly power, or perhaps treat such power as substantively less robust? For a number of reasons, no. Trademark, like copyright and patents, should be regarded in political-economic terms as a source of monopoly. On what basis? There are strong grounds both historically and

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conceptually. In the case of the former, McClure convincingly shows that there has always been broad recognition of the private-property nature of trademarks and therefore of the monopoly privileges invested in them. Hence in part, he argues, the United Kingdom’s reluctance to recognize trademark rights in terms of property when parliament first considered trademark law in 1862; this reluctance reflected a very real “fear that this might lead to the creation of monopolies,” such fear being rooted in the belief “that to give a monopoly in language would lead to a monopoly in production.” In the United States, courts did use the language of property for trademarks from the start, and such property was equated with monopoly—even if both courts and commentators frequently endeavored “to de-emphasize the extent of the monopoly which the holder of a trademark possessed.”111 Conceptually, far and away the strongest and most influential ascription of monopoly to trademark is Chamberlin’s. He begins by dealing with patents and copyright, identifying their monopolistic qualities but also the above-noted coexistence of monopoly with competition. Patents, he says, “are instances where the principles of monopoly value are true without qualification,” although “the fact that they are monopolies does not preclude their being in competition with each other. Every patented article is subject to the competition of more or less imperfect substitutes.” And: “It is the same with copyrights. Copyrighted books, periodicals, pictures, dramatic compositions, are monopolies; yet they must meet the competition of similar productions, both copyrighted and not.”112 Then noting, like Katz and McClure much later, that economics had tended to be more circumspect about the monopoly status (or otherwise) of trademarks, Chamberlin proceeds to make a forceful case for eschewing such ambivalence. His principal argument concerning trademark is fairly straightforward. “The [trade] name stands for a certain quality, a certain product, not a certain producer,” he insists, “and to permit only one producer to use the name is to grant him a monopoly of this product.”113 As such, it is clear to Chamberlin that “the protection of trade-marks from infringement and of business men generally from the imitation of their products known as ‘unfair trading’ is the protection of monopoly.” “Furthermore,” adds Sigmund Timberg in a subsequent embellishment of Chamberlin’s argument, “in an era when the consumer is beleaguered by a host of commodities of whose production he can know nothing, he must order by ear rather than sight or touch, and a monopoly of the only familiar or convenient way to describe a

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commodity to a consumer—‘Worcestershire sauce’ or ‘linoleum,’ for example—gives the owner of this semantic monopoly a strong competitive advantage.”114 About the “work” performed by IP law, specifically when it supports plaintiffs’ assertions of trademark infringement, Chamberlin is, accordingly, categorical. “In all these cases,” he submits, “there can be no question as to what the law is doing. It is preserving, not competition, but monopoly.”115 Two decades previously the influential institutional economist Thorstein Veblen had made a somewhat similar case, labeling the monopoly thus preserved a “monopoly of custom and prestige” and highlighting the important function in this regard of advertising. “Frequently sold under the name of good-will, trademarks, brands, etc.,” such a monopoly was the explicit “end sought by the systematic advertising of the larger business concerns. . . . The great end of consistent advertising is to establish such differential monopolies resting on popular conviction.”116 Yet Chamberlin makes a secondary argument concerning trademark that is arguably more powerful still, drawing as it does on the essential fact of competition and monopoly’s coexistence on a political-economic continuum that variously sees the two conjoining in different combinations. Deriding those who would see only one aspect of the monopolycompetition dialectic or the other, he asserts: “Both patents and trademarks may be conceived of as pure monopoly elements of the goods to which they are attached; the competitive elements in both cases are the similarities between these goods and others. To neglect either the monopoly element in trade-marks or the competitive element in patents by calling the first competitive and the second monopolistic is to push to opposite extremes and to represent as wholly different two things which are, in fact, essentially alike.”117 “Each”—the patent and the trademark—“makes a product unique in certain respects; this is its monopolistic aspect.”118 At this juncture we can return momentarily to our core argument about the political economy of IP law: the contention that, in contradistinction to competition law, it intervenes in situations where there would otherwise (in the absence of such law) be too much competition—and thus too little profit to sustain investment incentives—by enabling monopoly and the profits it buttresses. We have established the monopoly element of this argument. But what of the connection to profit? Here again Chamberlin is perhaps our most compelling guide, although he is by no means alone in making the connection. One of

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today’s most insightful writers on the political economy of IP, for instance, is Ruth Towse, who posits copyright in particular explicitly as a mechanism of profit generation, envisioning it thus “as a compromise between the need to reward creators and the higher prices that result from protecting them from unauthorized copying.” This does not imply, of course, that stronger protection inevitably means higher rewards/ profits; price elasticities have a big part to play in this equation. But it does imply that in the “trade-off between the incentive to create and the costs to users” that we encountered earlier and saw to be pivotal to IP, the costs are indubitably economic as well as social.119 Chamberlin made all of this perfectly clear. He did so in the process of elaborating a trenchant critique of what he labeled “the theory of pure competition.” This theory failed, he argued, in large part because it systematically ignored the product differentiation which underpins monopoly and, thus, monopoly prices and profits. The theory, he concluded, “falls short as an explanation of prices. . . . By eliminating monopoly elements (i.e., by regarding the product as homogeneous) it ignores the upward force which they exert.”120 There were and are two critical components to this argument. First, Chamberlin maintains that profits realized above the level of “competitive returns” are “due solely to monopoly elements.” Second, he claims that they are in a very real sense “permanent profits.”121 This latter claim is worth expanding upon; on what basis does Chamberlin advance it? Consider what happens, he says to the reader, when there is no such thing as IP; in, that is to say, a situation of pure competition. What happens, he shows, is that differentiation is only ever ephemeral—the economic system adjusts through standardization—and thus so too are the profits derived from such differentiation. “When one producer copies the name, symbol, package, or product of another, the result is goods more nearly standardized, and, if the imitator is successful, a reduction in the profits of his rival.”122 Monopoly profits dissipate. Where there is a system of IP rights protection, by contrast, the economic system simply does not—cannot—respond in this way. It “never adjusts itself at all.” And why not? Because “the law prevents it.” Thus IP law, according to Chamberlin, is and must be understood politicallyeconomically as a foundation for “sustained monopoly profits.”123 (“The trade-mark ‘monopoly,’” confirms Timberg, “is a perpetual one.”)124 It injects into and sustains profits within an economic environment in which they would not otherwise materialize; in so doing, it assists in the

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wider maintenance of the balance between monopoly and competition at the heart of capitalism and of its ongoing reproduction.

Conclusion and Segue to Part II Edward Chamberlin has always been an intriguing and somewhat confusing writer for those influenced by Marx. On the one hand, he produced an analysis of monopoly and competition and the interrelation between them that was, in many respects, quite similar to Marx’s own. On the other hand, however, this analysis was, as discussed in Chapter 1, a highly static one, far removed from the essential dynamism in Marx; moreover, Chamberlin ultimately remained within the economic mainstream, not least in relation to value theory. One example of Marxists’ equivocal relationship to Chamberlin is found in an article by the well-known Marxist sociologist John Bellamy Foster. In discussing various Marxian works on “monopoly capital,” Foster notes approvingly that in the 1930s “mainstream academic economists,” with Chamberlin (and Joan Robinson) to the fore, also “finally began to deal with monopoly.” And yet, “the theory of ‘imperfect competition’ that was to emerge from these analyses had a formal character that was usually divorced from real historical processes.”125 This observation is significant for us here because of a central irony it contains. To be sure, Chamberlin’s theory of imperfect (monopolistic) competition was formal and abstract; but no more so, of course, than Marx’s own theory of capital. Marx did write about “real historical processes,” but he did so almost entirely separately from his conceptualization of capitalism. Furthermore, the relationship between Marx’s “‘scientific’ political-economic writings” and his “historical writings” is, as Harvey recently acknowledged, a “deeply fraught” one.126 Many scholars writing, to one degree or another, in a Marxian tradition have sought to negotiate this latter relationship by examining historical (and geographical) developments explicitly in the light of Marx’s abstract theorization; this is always a challenging and hazardous endeavor. And some of them have done so specifically with reference to the question—explored in the previous chapter—of how capitalism has managed to reproduce itself relatively smoothly over time despite its inherent contradictions and crisis tendencies. Harvey is himself one such. Scholars of the regulation school represent others.

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But perhaps most pertinent of all, for our purposes, are the Pauls Baran and Sweezy, in a book published in 1966 and to which we have already had occasion to refer more than once: Monopoly Capital.127 The reason for the particular pertinence of this book is that the central question they posed concerned the aforementioned issue of capitalist stabilization and reproduction, and explicitly with regard to the dialectic of monopoly and competition. American capitalism, they argued, had had in the first half of the twentieth century to confront head on the existential threats posed by excessive monopolization. But it had survived and arguably, from their vantage point in history, even prospered. How? Baran and Sweezy advanced a number of different answers to this question; we shall examine them later. They overlooked, however, a field of political-economic intervention and governance that had, in preceding decades, been assuming increasing sway in the United States and the industrialized world more generally: the field of economic law. This, then—a consideration historically of the role of the law in enabling capitalism to negotiate the instabilities of the monopolycompetition dialectic—is the task of what follows in Part II. It is a task undertaken in the light of, and directly informed by, the conceptual insights developed in Part I. And the investigation begins, in the next chapter, in the time and place to which Baran and Sweezy’s own book pertains: the United States in the first half of the twentieth century.

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4 D E S I G N S O N M O N O P O LY

The final few decades of the nineteenth century and the first half of the twentieth represented an era of extraordinary historical-geographical tumult in the world economy, and not least in the economies of the United States and the United Kingdom. At its outset, Eric Hobsbawm’s Age of Capital was seguing into the Age of Empire; by its conclusion, the Age of Extremes was already three and a half decades old, the Great Depression had been sandwiched between two Great Wars, and laissez-faire political-economic ideology had been widely supplanted, seemingly securely, by the “embedded liberalism” of the immediate postwar economic order. Capital and labor, money and state, production and exchange—the core components of capitalist political economy all underwent profound reconfiguration during this period, which is the period examined in this chapter. And so too did the competition-related laws of the leading capitalist economies. It was, in fact, during this period that such laws came to assume, to varying degrees in different places, what we recognize today as their modern forms. It was thus also in this period that we can begin to discern in historical practice the leveling work theorized in Part I. As they materialized as increasingly coherent legal doctrines, and as they began to be implemented as increasingly substantive legal realities, antitrust and IP law became increasingly important mechanisms through which certain underlying capitalist instabilities were recognized and resolved, if only ever imperfectly. Where the monopoly-competition dialectic at the heart of capitalist accumulation dynamics swung too far in favor of the former, antitrust was—at least in the United States, and at least in theory—available to effect a countervailing tendency. If competitive forces temporarily overpowered centralizing ones, meanwhile, IP protections could be utilized to enable the (re)assembly of monopoly powers.

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For the most part, however, this period represented a kind of historical proving-ground for the law as political-economic leveler. That is, the leveling work performed by these laws in the United Kingdom and the United States, although certainly material, was not quite as clear, consistent, and consequential as it would be in the later periods examined in Chapters 5 and 6. Why was this the case? In short because the laws in question were only now consolidating (and in the United Kingdom in the case of competition law, essentially did not exist); because they were unevenly enforced not only geographically but temporally; and because their work was repeatedly interrupted by, and reconceived in the light of, major ruptures both economic in nature (depression) and not (wars). With that said, we are nevertheless able to discern a relatively distinctive overall pattern to the form and effect of the legal leveling dynamics at work in this period, even if this pattern was, to be sure, often disturbed and occasionally even reversed. In terms of the direction in which the law impacted our central dialectic of monopoly and competition, it was primarily supportive of the former and suppressive of the latter. Stated another way, IP law mostly had the upper hand, with antitrust relegated to the sidelines. There were, as we shall see, very many reasons for this, but the main— even unifying—reason is one that foregrounds the power of the preceding theoretical discussion. Chapter 3 posited antitrust and IP laws as mechanisms whereby health can be restored to capitalist profit generation and accumulation dynamics in situations where the necessary degree of balance between competitive forces and monopoly powers has been lost and imbalance in one direction or the other threatens smooth socioeconomic reproduction. Supporting this conceptualization, this chapter emphasizes precisely such a stabilizing and regularizing role. The law largely reinforced monopolizing tendencies, in other words, because in the context of the U.S. and U.K. economies of the day, it largely needed to. At the outset of the period, and for much of its duration, powerful competitive forces were the ones chiefly threatening capitalism’s knife-edge navigation. The chapter begins by examining these starting conditions in the 1870s, 1880s, and 1890s. Political-economic developments from midcentury had increasingly unsettled the fragile balance between monopoly and competition on which industrial capitalism’s ongoing reproductive health relied, with key traditional sources of monopoly power clearly being eroded. Over ensuing decades, monopoly powers had to be realized and reinforced anew. Legal instruments were not the only means

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available and exploited in this (successful) endeavor, of course, but they were unquestionably significant ones. The chapter illustrates this first of all for the United Kingdom, where the evidence is perhaps most clear, as the users and enforcers of IP law could (and did) go about their work effectively unimpeded by competition regulation. The United States, which is the subject of the final section, presents a somewhat more complicated picture, as 1890, as we have seen, was the year of the passing of the Sherman Antitrust Act, thus crystallizing, on paper at any rate, a countervailing legal regime for the following decades. Yet the overall political-economic nature and impact of the mobilization of competition-related laws through to the end of the 1940s was, ultimately, much the same in the United States as in the United Kingdom.

The First Great Depression One of the most notable economic trends identified in histories of the late-nineteenth century U.K. and U.S. economies is the increasing challenge of generating profits in the face of falling price levels. Prices began falling in the United States in the 1860s—subsequently falling there, notes Tony Freyer, “throughout the entire post–Civil War era”—and in the United Kingdom midway through the 1870s.1 In both places the reason was intensifying competition that manifested itself first and foremost as price competition. In the United States “fear of price cutting” had become “increasingly pervasive” by the 1880s, and the competition that this fear reflected was often referred to as “cutthroat.”2 Naomi Lamoreaux, referring to “abnormally serious price wars,” observes that in that decade some of the first U.S. casualties of such price and profit pressures were the paper and sugar industries.3 But in the United States, as in the United Kingdom, it was not until the 1890s that price competition became a pervasive, systemic phenomenon for “capital-intensive, mass-production industries in which firms were closely matched and in which expansion had been rapid.”4 Between 1892 and 1896 alone, prices in the United States fell by more than 10 percent.5 Moreover such “price competition,” claims Lamoreaux, again in the U.S. context, “rarely divided firms into winners and losers. Rather, as in the case of tin-plate and wire-nail producers, the competition inflicted damage on them all.”6 To summarize, then, we can follow Giovanni Arrighi who, surveying the period from 1873 to 1896 as a whole, concluded that the

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aforementioned tendency for both “the level of prices” and “the rate of profit” to fall rapidly and continuously “can be explained, above all, by the low level of concentration of capital and the powerful competitive drives which characterized the capitalism of this epoch.”7 In seeking to understand this intensification of competition and the concomitant, widely increased pressure on prices and profits, manifested over an extended period of time, scholars have generally emphasized the significance of the erosion of extant sources of competition’s dialectical counterpart: monopoly power. In particular, from mid-century onward, certain spatially constituted foundations of monopoly began to unravel, and new competition then emerged to threaten those economic agents previously protected from competition’s disciplines. The effects of the dissolution of these spatial monopolies were comparable, but the forces precipitating such change were different in the U.S. and U.K. cases. In the United States, developments in transportation and communication technologies were pivotal, as Peter Kunzlik, among others, has stressed: “The trigger for change, in the mid- and late nineteenth century, was the finding of coal and the coming of the steam railway, the telegraph, and, shortly thereafter the oil pipeline and the telephone. The economic and social effects of these innovations in the United States were cataclysmic. More specifically, this technology overcame geographic isolation to the extent of creating a domestic market that was continental in scope. In doing so, it facilitated revolutionary new methods of business organization, production, distribution, and marketing. . . . The railways were critical to this process.”8 Two points especially bear exemplification here. The first is that such developments put paid to the “natural” geographical monopolies enjoyed by many producers in earlier periods, when local markets were effectively separated by space; what Marx referred to as the “annihilation of space with time,” and David Harvey calls time-space compression, led ineluctably to greater competition. This, after all, was in Eleanor Fox’s words an age of “revolutionary industrialization. Sprouting transportation networks brought into competition hundreds of firms that had enjoyed local monopolies. Prospects of expanding markets led to over-investment in productive facilities. Fierce and disabling competition ensued.”9 The second is that among such “sprouting” networks, the railroads were, as Kunzlik writes, “critical.” The final three decades of the century witnessed their strongest growth, total U.S. mileage mushrooming from approximately 50,000 miles in 1870 to approximately

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200,000 in 1900.10 As the railroads expanded, local monopolies were ruthlessly exposed.11 The U.K. situation was markedly different. To the extent that spatial monopolies continued to flourish in the 1850s and 1860s, they had generally been national rather than local ones. For one thing, the distances involved in internal trade were so much smaller than in the United States. For another, transportation developments, occurring earlier, had already broken down vestigial local monopolies: first, from the late eighteenth century, through the canal system; and then through the rapid buildout, concentrated principally in the 1840s, of a national rail network. Meanwhile, for all the proliferation of international free-trade rhetoric since the 1820s, the national U.K. economy remained in many industry sectors strongly protectionist—much more so than popular histories would have it—well into the 1850s.12 Spatial monopoly at the national scale thus persisted. This scheme of things gradually unraveled, however, over the next three decades, which saw the ascendancy in practice, as well as prose, of laissez-faire political economy and free trade. Average tariff levels declined far and fast through to the early 1880s, and then remained at historically low levels until the 1910s and World War I.13 Companies accustomed to nationally circumscribed competition and, in some cases, national dominance, increasingly found themselves confronted by competition from abroad.14 Prices and profits fell accordingly. Thus where in the U.S. case it was technological developments that were principally responsible for disintegrating spatial monopolies and growing price pressure in the 1870s and 1880s, in the U.K. case it was policy developments that were mainly accountable. If prices fell across the board, however, they fell at different rates for different commodities. And one commodity for which the rate of fall was conspicuously slower than the generalized average was one of the most important and special commodities of all: labor power. Recall here one of the central theoretical propositions encountered in the previous chapter: Michal Kalecki’s argument that as the degree of monopoly increases, so also, ceteris paribus, will the share of income accruing to capital in the form of profits, with labor’s share falling. Where competitive forces progressively assume the upper hand, by contrast, one would expect labor to be able to negotiate a higher share. This, Arrighi suggests, is exactly what happened in the final decades of the nineteenth century: Generic prices “tended to go down much more swiftly than that

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of money wages. Real wages (taking into account the cost of living) thus tended to rise.”15 Meanwhile, the aggregate, economy-wide impact of declining price and profit levels—they fell “alarmingly from 1870 to 1896” in the United States, according to James Livingston, and the drop was no less evident in the United Kingdom—was and is clear to see, to contemporaries and historians, respectively.16 Private investment dried up; and why indeed, with profit seemingly so hard to realize, would it not? In the 1870s and 1880s it remained at sufficient levels in both the United Kingdom and United States to maintain growth; but systemic crisis developed in both places in the 1890s. A major economic downturn began in the United Kingdom in 1890 itself, only bottoming out in early 1895.17 A similar trajectory applied across the Atlantic where, from 1893, the U.S. economy felt the “sharp downward pull of declining investment in railroads, manufacturing, and agriculture.”18 Generalizing geographically, therefore, Michael Perelman observes that under the influence of “powerful competitive pressures that ravaged the economy . . . toward the end of the nineteenth century, the world economy suddenly fell into a period of prolonged crisis, which became known as the Great Depression—at least until the 1930s, when the world experienced what we now call the Great Depression.”19 This, needless to say, represented a real, nontransitory problem for U.S./U.K. capital—a problem assuming exactly the form conceptualized in Chapter 3 in regard to the hypothetical scenario of the competitionmonopoly relation becoming unsustainably weighted in favor of the former dynamic. For capitalism to be stabilized and regularized, thus effectively reproduced, it was imperative that conditions be put in place that would encourage—as opposed to inhibit—investment and growth. Balance in the forces of monopoly and competition needed to be restored. For this to happen, it was necessary that existing sources of monopoly power be reinforced and better exploited and/or that new means of assembly of such power be found.

IP Unchallenged: The Reemergence of Monopoly Powers in the United Kingdom In the United Kingdom the law rapidly became a major part of the answer to how over the next half-century capital successfully negotiated this live existential threat. The codification, strengthening, and vigorous

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mobilization of IP laws served exactly the aforementioned purposes. That is to say, such laws became directly and materially implicated in shoring up capital’s frayed monopoly powers, in underpinning renewed profitability potential, and thus in reinvigorating investment. To demonstrate this, we can begin with these laws’ consolidation and bolstering during the period concerning us, which runs, as indicated, from the late nineteenth century to the middle of the twentieth century. A word of caution on terminology is in order first, however. As Christine MacLeod and Gregory Radick have recently pointed out, the term “intellectual property,” although useful for our own purposes, “was used only rarely in Britain” in the decades either side of the fin de siècle. Nor is this merely a terminological point. Part of the reason no single concept was invoked, as MacLeod and Radick explain, is that the different types of IP were typically not envisioned associatively. So “in general Britons did not use any collective term, or treat the different legal instruments as a unity, but continued to regard a patent as a patent, a trademark, a trademark; and so on.”20 In their seminal book The Making of Modern Intellectual Property Law, Brad Sherman and Lionel Bently identify 1860 to 1911 as the key period of “consolidation and entrenchment” in the United Kingdom during which “the categories of modern intellectual property came to take on an institutional reality.” At mid-nineteenth century, such laws had still exhibited “a fragile and precarious existence”; by 1911, which year marked the passage of the Copyright Act, they had become “an entrenched part of the legal tradition.”21 Although certainly fortified by multilateral developments—1883 and 1886 saw the adoption of the two major international IP conventions of the prewar era, in the shape of the Paris (patents and trademarks) and Berne (copyright) Conventions, respectively—the United Kingdom’s new, modern IP regime was very much its own creation. The second half of the nineteenth century and the first two decades of the twentieth saw major reform and reinforcing of the patent system in particular, taking in such key statutes as the Patents, Designs, and Trademarks Act of 1883 and the Patents Act of 1902, and culminating in the Patents and Designs Act of 1919.22 Meanwhile, during the same period U.K. trademark law went from being, in the 1850s, “not recognized or even considered as a possible candidate for inclusion” within the emergent IP regime to a position where it had assumed its “now familiar shape.”23 Further modernization and fortification of trademark law then occurred during the interwar years,

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particularly under the 1937 and 1938 Trade Marks (Amendment) Acts.24 The single, relatively minor exception to this overall story of consolidation and strengthening concerned copyright, which although also greatly modernized during the long period in question received something of a watering down when the 1911 Copyright Act enacted (limited) compulsory licensing provisions.25 It is vital to appreciate, at the same time, that the robust formalization of U.K. IP law in this period represented a discursive as much as doctrinal evolution. This is another of Sherman and Bently’s core insights: that changes in the discourse of IP not only accompanied but to some degree underwrote doctrinal developments. The central dimension of such discursive transformation, they argue, entailed an earlier emphasis on “the labour or creativity embodied within a work” being supplanted by prioritization of “the contribution, typically judged in economic or quasi-economic terms, that the work made.” More generally, “the language of classical jurisprudence was replaced by the language of political economy and utilitarianism.”26 This transition, and more specifically the heightened appeal to concepts of (political) economy, was apparent, inter alia, in the often conflictual debates that attended IP law’s steady entrenchment—for this process of consolidation was far from uncontested. Where opposition did surface, it was often couched explicitly in political-economic terms: stronger IP law was opposed precisely because it performed the political-economic work with which we have imbued it, namely, that of enabling monopoly. The greatest opposition was marshaled against patents, and not only in the United Kingdom; in fact, in some parts of Europe such opposition led to patents being abolished, “on the grounds” indeed “that they were monopolies.”27 In the United Kingdom, the battle between champions and opponents of the patent system was joined especially fiercely in the 1860s.28 For the latter group, patents not only represented “a damaging restraint on trade” and “an unjust monopoly that inflated prices,” but they also harked back to the patronage-based “ancient régime in which the Crown granted individuals exclusive monopolies over particular trades.”29 Yet the battle was ultimately lost, with the above-discussed increased foreign competition of the 1870s, significantly, boosting the patent champions’ cause. For all that they prevailed in this debate, however, trust in the patent system did not cohere overnight; it took a considerable time for what was traditionally seen as a creature of Crown prerogative to become accepted as “a specifically legal (and administrative) instrument.”30

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Bolstered, then, by ongoing discursive and doctrinal strengthening of IP, U.K. companies were increasingly able in the late nineteenth and early twentieth century to call upon IP laws to secure and defend market power, in an environment where such power otherwise was—and had for some time been—under substantial threat. These laws were actively, vigorously, and widely mobilized. The most comprehensive and persuasive evidence of this is available in respect of patents. The number of patents issued in the United Kingdom rose inexorably over the course of the second half of the nineteenth century, from fewer than 500 per annum in 1851 to around 14,000 per annum by century’s end.31 Crucially, it is clear that patenting activity was stimulated directly by laws that made patents not only more robust but also easier to get hold of, in terms both of cost and of bureaucracy. Thus the 1852 Patent Law Amendment Act led to more than 2,000 patents being issued in 1853, up from just 455 in 1851; and three decades later, after the 1883 Act cut the patent filing fee from £25 to £4, issued patent numbers immediately doubled to over 9,000 per annum in 1885.32 A number of important studies, many of them conducted only very recently, have emerged to demonstrate just how crucial patenting and patent management were to the establishment of market dominance in numerous U.K. industries, particularly in the very final years of the nineteenth and first two decades of the twentieth century. The aeronautical/ aviation industry was one such forum of feverish patenting in the context of jostling for market power.33 Another was the steam engineering industry.34 A third was the chemicals industry.35 The most significant study in this vein is Stathis Arapostathis and Graeme Gooday’s book-length treatment of patents and patent disputes in four fledgling—but eventually enormously material—industries that cohered around vital new(ish) technologies in turn-of-the-century Britain: electrical power, lighting, telephony, and radio.36 The idea and reality of monopoly was so central to the emergence and evolution of these industries and to the mediating role of patent law in these processes that Arapostathis and Gooday make it the core concept on which their entire account turns. Yet their invocation of monopoly, and their use of this concept to explain industrial and economic development, is anything but heavy handed. To be sure, at one level the story they tell is of naked “corporate imperatives to growth via patent-based monopolies,” as embodied in the “monopolistic strategies of UK companies linked to [Alexander]

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Bell, [Thomas] Edison, [Charles] Brush, and [Guglielmo] Marconi that sought master patents.”37 But sophistication characterizes the account in two vital ways. First, patenting strategies and tactics varied considerably between industries; control of the market in incandescent light bulbs, for instance, singularly featured the use of so-called patent pools.38 And second, monopoly is shown to have been uppermost in mind not only for patent holders but also, frequently, for those who became embroiled in legal disputes with them. For “highly combative conditions were precipitated both by a particular mode of monopolistic capitalism and by a widespread sense of the opportunities for financial gain engendered by controversies over patent claims.” It is in the light of this recognition that Arapostathis and Gooday figure the myriad patent disputes of the day as “competitions for inventive credit in which the victor determined how (far) that credit could be deployed to operate a patent-based monopoly.” Although patent holders did not always win these disputes, they usually did, and as Arapostathis and Gooday show they used the courts strategically, specifically as a means to make monopoly manifest—in the authors’ words, to “bankrupt or otherwise eliminate all inventive rivals in their field. Such was the route from patent as instrument of monopoly to the actuality of monopoly as legally sanctioned exclusive control over a technological market.”39 One of the most important insights of this emergent literature is that in the field of patents, IP became in this period of vibrant activity a meaningful industry in and of itself—constantly shaping and all the while being shaped by those industries with which it intersected. Lawyers obviously represented a crucial component of this industry, but they were not alone. Alongside them, a new breed of patent agents materialized to manage their clients’ patent-related interests from a commercial as opposed to strictly legal perspective. Jonathan Hopwood-Lewis, for example, relates the fascinating case of Griffith Brewer, one of “the first professional patent agents specializing in aeronautics,” and who built up a large clientele of British aircraft manufacturers between 1914 and 1940.40 As Arapostathis similarly shows in the context of the electricity meters industry from 1880 through to the World War I, such agents, together with patent lawyers, played a vital role in strengthening patent protection in the Patent Office and the law courts.41 Agents, as well as lawyers, were equally prominent in the world of trademark law, which likewise became an important vehicle for the realization and maintenance of market power in the late nineteenth and

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early twentieth century. One such agent was the Liverpool-based W. P. Thompson—“perhaps Britain’s best known trade mark and patent agent” at the turn of the century—who, among other products, assisted Lever with the trademarking of its famous Sunlight and Lux soap brands in 1884 and 1900, respectively.42 Alongside such agents were the specialist trademark departments established by innovative advertising agencies like T. B. Browne’s, which numbered Cadbury and Rowntree among its clients. This, after all, was the era in which U.K.-based consumer capitalism was born, bequeathing household (trademarked) brands associated with rapidly dominant consumer-goods manufacturers such as Bass (beer), Lyle’s (Golden Syrup) and Lea & Perrins (Worcestershire Sauce), alongside Lever and many others. For the first time, the United Kingdom began to drown under “a plethora of branded and mass-produced consumer goods.”43 And, as with patents, trademarks were, at heart, about assembling monopoly powers and establishing market dominance in the process. Lever was a quintessential example: “The marketing activities by Lever in Britain . . . were heavily influenced by the fact that Lever tried to acquire a monopoly for soap products. By the end of the 1920s, the Lever group had acquired forty-nine soap-manufacturing companies and produced some sixty per cent of all soap consumed in the United Kingdom. Moreover, until the mid- and late 1920s, Lever in Britain had no major competitors as Colgate-Palmolive only entered Britain in 1924 and Procter & Gamble followed in 1930 with the acquisition of Thomas Hedley Ltd.”44 It would be wrong to imagine that the embedding of stronger IP laws and the intensified mobilization of such laws to assemble monopoly powers proceeded untroubled from the late nineteenth century through to the middle of the twentieth century. This was demonstrably not the case, and for several reasons. One we have already mentioned (and will reencounter shortly): opposition, on the ground, in the marketplace, to strong(er) IP protection and to the political-economic work it effected. Another, materializing in various forms, was events of major politicaleconomic disorientation in United Kingdom and global society at large: two world wars and, between them, global depression. During these periods the “work” of IP law came under multiple, atypical pressures. It is, however, extremely difficult to generalize about what war, in particular, “meant” for IP. MacLeod, for example, argues that the effects were somewhat ambiguous; war stimulated research in many parts of the technosciences, but “it also effectively suspended the patent system

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wherever military interests were concerned.”45 And although the state indeed could (and often did) simply override the patent system during wartime, war also provided a platform for some constituencies to manipulate that system to their own monopolistic ends—as was the case, most notably, with Marconi and wireless telegraphy.46 There were also hazards to the successful commercial exploitation of IP of another, much more fundamental kind. As we saw in Chapter 3, IP rights always entail a trade-off at some level between protection and access. Allow, or enforce, too strict an interpretation of IP protection, and one risks throttling commercial exploitation altogether. This danger was widely recognized in the time and place we are concerned with here, and it often took highly intelligent and flexible management of IP to ensure that nascent, IP-intensive industries could develop at the same time as rights holders were sufficiently protected. Once again, the case of patent agent Griffith Brewer and the early British aviation industry is instructive. As Hopwood-Lewis explains, Brewer was (and had to be) extremely careful not to press the Wright brothers’ U.K. patent claims too early and too forcefully, for fear of damaging the growth prospects of a local industry that was struggling to get off the ground.47 The gradual strengthening of capital’s monopoly powers from the late nineteenth century, to which IP law and its mobilization substantially contributed, slowly but surely helped to extricate U.K. capital from the problems that bedeviled it in the early 1890s. Prices stabilized and then, from the beginning of the 1900s, began to rise.48 So too did investment, although of course during the first half of the twentieth century its rate of growth would oscillate markedly as wars and depression intervened. And as output grew in response to the rise in investment levels, it proved increasingly profitable output. Of especial importance in this regard was the fact that labor, no longer confronted by fragmented and highly competitive capitals, was largely unable to negotiate for a higher income share. The interwar period was critical. Even surging unemployment and industrial unrest in the first half of the 1920s “did little to strengthen the hands of the trade unions, which continued to be powerless to stop wage reductions large enough to cause loss of membership.”49 And, despite the tentative rapprochement between capital and labor effected by the Mond-Turner talks of the late 1920s, capital was nonetheless able to profit from the mini boom between 1927 and 1929 “without being subject to claims for increased wages.” Indeed, it took until 1930 for real wage rates to recover to their 1913 levels.50 All of this was possible

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because competition had been increasingly suppressed as monopoly powers, with the help of IP law, were consolidated. Underpinning rising profitability in the interwar years, in short, was what Nicholas Crafts describes as a “considerable increase in market power.”51 Indeed, the very success of the United Kingdom’s modernized, fortified, and widely exploited IP laws in crystallizing monopoly powers and lifting profitability led, before the end of the period under examination, to a reemergence of the IP critique that had threatened to derail such laws’ consolidation in the first place back in the mid- to late nineteenth century. To various observers in interwar Britain, the political-economic efficacy of IP protections was plain to see—and was to be lamented, not applauded. The most outspoken among such voices hailed from a new generation of economic thinkers who would later come to be associated with a label with which we are today very familiar: that of neoliberalism. Such voices began to be heard in the United Kingdom in the early 1930s, and were concentrated in the emergent bastion of free-market economics that was the London School of Economics. Two particularly important figures, not least in terms of a renewed assault on IP laws, were, as Keith Tribe has discussed, Arnold Plant and Lionel Robbins. Both would later be members of the notorious Mont Pèlerin Society (MPS); Robbins drafted the final version of the society’s statement of aims.52 And both were highly critical of what IP laws had “done” to capitalism, U.K. style. Plant’s views on the matter were published in twin 1934 articles in Economica on the essentially monopolistic character of patents and copyrights.53 Five years later, Robbins wrote of his support for newly floated approaches to IP—and to patents in particular—that, if implemented, “would sweep away the whole network of monopolistic practice which rests on the present system.”54 Another (from 1933) U.K.-based critic of the country’s IP laws was the polymath Michael Polanyi, who would also come to be a prominent MPS member. As Adrian Johns has observed, Polanyi saw patents as playing a pivotal ideological as well as material role in the constellation of industrial capitalism. Not only, in market practice, were patents “tools for cartel-building . . . employed repeatedly to consolidate trade monopolies extending far beyond new inventions”; moreover, it was in opposition to patents, Polanyi maintained, that the sacrosanct ideology of free trade had itself originally emerged.55 As we now know, the United Kingdom, both in the interwar years and for more than two decades into the postwar era, was not receptive to the

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emergent neoliberal critique. There are of course all manner of explanations for this. But one, especially where the neoliberal critique specifically of IP laws was concerned, may be that the augmented strength and utilization of such laws had clearly not been the only response to the intense competition and price and profit pressures of late nineteenthcentury industrial Britain; nor, relatedly, had it been the only means of (re)assembling monopoly powers and returning corporate Britain to profitability. That is to say (from our own perspective), while recognizing the materiality of IP laws in stabilizing an unbalanced U.K. capitalism and in enabling its relatively smooth reproduction, we obviously must not neglect other contributory dynamics. What were the most important other such dynamics in constraining the relative excess of competition that prevailed in the late nineteenth century, and in reinstituting the monopoly and market powers required by U.K. capital? One was the ultimate abandoning of free trade and the return to protectionism, as occurred most substantively with the erection of tariff barriers in late 1931 in the midst of the Depression. As Barry Eichengreen and Douglas Irwin have noted, the Conservative Party “had long advocated protectionism and had already moved the country in that direction in the early 1920s; it now gained power in the National Government formed at the height of the crisis. The Labour Party, which had supported free trade and been in power during the crisis, was discredited, leaving a protectionist Conservative Party to drive policy by default.” A primary goal of tariff adoption was to strengthen the United Kingdom’s weak balance of payments.56 Of course, trade protectionism existed—and exists—in a complex relationship with the IP protectionism we have been examining thus far. Until the penultimate decade of the nineteenth century, IP protection, as Susan Sell and Christopher May emphasize, had been “strictly a national matter.”57 But the steady expansion of international trade, lubricated by laissez-faire policies, had increasingly strained this nationally differentiated “patchwork.” Furthermore there was, as Polanyi later remarked, an ideological tension between free trade and IP rights. The Paris and Berne treaties of the 1880s sought to resolve these tensions, extending basic rights-holder protections across borders (within a thoroughly antiprotectionist framework), while allowing individual states to massage the minutiae of the local protections afforded. Contra Polanyi, then, “support for international free trade,” Sell and May argue, was now “deemed perfectly compatible with support for strengthened intellectual

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property protection.”58 But it was, and indeed still is, an uncomfortable rapprochement; and in many respects the strengthened intellectual property protection referred to by Sell and May, and documented above for the U.K. case, was much more compatible with the growing tariff-based protectionism of the 1920s and 1930s. Meanwhile, the final years of the nineteenth century and first half of the twentieth witnessed other developments that were more important still to redressing the imbalance in the United Kingdom’s monopolycompetition dialectic. These developments amounted, in short, to the direct constitution of market monopoly, or at least of monopolistic market behaviors. They took two main forms. One was corporate consolidation—the production, if you will, of de jure monopoly (Hilferding’s “monopolistic mergers”). The other was cartel-based collusion—a kind of de facto monopoly (“monopolistic consortia” was how Hilferding described the phenomenon). Hairs can all too easily be split over the differences between the two forms; but for our purposes, at least, they can be treated collectively because the underlying rationale—to limit competition, particularly on price—was consistent and bore unequivocally on the dialectic that concerns us. We will return shortly to the relationship between such monopolizing tendencies and the work of IP laws, but one question merits brief immediate consideration. Why merge, or collude on price, if IP protection was now robust and, as such, a powerful foundation for monopoly powers? There were and are, of course, numerous answers to this question. Sometimes one company acquired another specifically to access their IP. In other cases, companies operated in industries where IP did not significantly feature—those based on commodity products that generally lacked distinguishing features, for example, and/or that were not amenable to branding. In still other cases, these alternative means of securing monopoly power were required because IP protections were not (yet) available.59 It is, in sum, impossible to generalize about strategies for monopoly power realization and the complicated relationships between them. What we do know, however, is that alongside the bolstering and increasingly wide utilization of the United Kingdom’s IP laws from the late nineteenth century, cartelization and consolidation proceeded apace.60 We can take cartelization first, which occurred both vertically between manufacturers and wholesalers/retailers, as well as (more commonly) horizontally among putative competitors.61 Among the institutional

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forms encouraging the rapid proliferation of explicit as well as implicit price-fixing in the first two decades of the twentieth century, trade associations were in the vanguard. “By 1919,” Freyer reports, “there were over 500 local or national [trade] associations operating throughout British industry, directly or indirectly controlling output and prices.”62 Cartelization continued to spread throughout the interwar years. Estimates suggest that by the middle of the 1930s approximately a third of U.K. manufacturing output was regulated by cartels.63 At the same time, companies acquired or merged with one another in increasingly large numbers, beginning in earnest in the 1890s. Already by the turn of the century major consolidation had taken place in the textiles, chemicals, mineral extraction, iron and steel, and alcoholic beverages sectors.64 “Few people recognize,” opined the London-based Financial Times in 1900, “how deep a root the principle of amalgamation has struck into our country.”65 The cautionary, even alarmist, tone was perhaps understandable given events of the preceding two years. “Between 1898 and 1900,” according to Freyer, “approximately 650 British firms, valued at £42 million, disappeared in 198 separate mergers.”66 If the pace of consolidation slackened somewhat through to the end of World War I, it picked up once more in the 1920s, which witnessed another significant merger wave. By 1935, the share of the largest 100 firms in U.K. manufacturing output is estimated to have risen to 23 percent.67 It is important to appreciate, nevertheless, that compared to the degree of consolidation that had simultaneously been taking place in the United States (as discussed in the next section), this was small beer; and to appreciate too that there were good reasons for this. Freyer, who is arguably the most helpful guide to U.K. “big business” in this era, explains that whereas “Americans favored tight, managerially centralized corporations . . . the British relied on looser, anticompetitive combinations” (in a word, cartels) because in the United Kingdom, unlike in the United States, there was nothing to stop such combinations from forming and operating. There was, in particular, no law against cartelization. If companies did not merge where they might have been expected to do so, therefore, it was at least partly because they did not need to: “The law’s toleration of loose restrictive agreements reduced the incentives to form large corporate structures.”68 It was easier simply to fix prices. In fact, not only were there no government restrictions on price collusion but at times such collusion was actively supported by the government,

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as indeed was consolidation.69 This was true especially, although not exclusively, during periods of economic shock such as war and depression, when it was believed that the last thing the country required was excessive internal competitiveness; “togetherness” was deemed in order. Hence during World War I the U.K. government “permitted and even encouraged various forms of combination.”70 Policy remained broadly supportive of both mergers and cartels during the 1920s.71 And then came the Great Depression of the early 1930s. “Faced with world deflation, the coalition government pursued a ‘managed economy’ strategy to restore profitability by raising prices relative to wages”—a strategy that included “increasingly encouraging cartels and collusive behavior.”72 Last, World War II again saw renewed explicit government support of monopoly power accretion, particularly in the shape of cartelization.73 All in all, there were numerous dynamics that contributed alongside strengthened IP laws, over the course of several decades, to edging the U.K. economy back toward balance of monopoly/competition from the position of monopoly-light imbalance that had characterized it toward the end of the nineteenth century. These dynamics, it is clear, often mutually reinforced one another; as Freyer observes, cartelization in the United Kingdom during the Great Depression “was facilitated by the adoption of tariff protectionism.”74 And as well as reinforcing each other they also, crucially, reinforced IP law and vice versa. Legally based IP protection may not always have been necessary for the realization of monopoly (and where necessary, was not always sufficient). But it evidently played a central, co-constitutive role in a wider, extended process of monopoly-power accumulation within the U.K. economy. IP’s materiality to the stabilization of hitherto unstable economic terrain lay, in particular, in encouraging capitalists to innovate in the knowledge that they had a degree of enduring market power and thus that profits were attainable. Consider, for instance, the interwar years of the 1920s and 1930s, and the industries that largely drove U.K. investment and growth in that period. What these so-called expanding industries—electrical engineering, vehicle manufacture, electricity supply, and others—shared was their IP-intensive nature. “Many of these industries witnessed a constant stream of innovations in the inter-war years,” Derek Aldcroft noted. “Some of the most outstanding changes occurred in the electrical and automobile industries where techniques and methods of production and organization were transformed out of all recognition to those prevailing before 1914.”75 Those changes were

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rooted in monopoly power and they (re)produced monopolistic, or at least oligopolistic, industries. Sidney Pollard, for example, writing of the same period, observed growing concentration “in all the industries which relied heavily on scientific or technological innovation.” “Restrictive” agreements, “especially those providing for the exchange of patents and the exclusion of newcomers from them,” were seen to be “particularly rampant” in electrical engineering, an industry “so dependent on constant inventions and patents.” Comparable developments were observable in the motor industry, where, by 1929, three firms controlled approximately 75 percent of output.76 At least as important as the materialization of an array of monopolyenhancing dynamics, meanwhile, was the dearth of dynamics to offset the effects of the former. We have, in Part I, conceptualized economic laws as operating like a pincer on the forces of capital accumulation and value creation, applying pressure from either side of the monopolycompetition knife edge as and when required. But although IP laws were available in the United Kingdom in this period to help configure monopoly power where it was lacking, competition law, as already intimated, was not available to counteract such configurative work. This absence of a countervailing legal dynamic served to redouble the efficacy of the IP laws’ political-economic performativity. The United Kingdom had, in short, no meaningful statutory provisions in support of competition and against monopoly—in any shape or form, de jure or de facto—until after World War II. Rather, to the extent that the courts ever intervened in this commercial arena, they did so through ad hoc interpretations of conventional common law regarding conspiracies in restraint of trade. For most of the nineteenth century the courts had in fact been relatively interventionist against perceived monopoly, making the United Kingdom something of an exception to a wider European trend of increasing government acceptance of business “cooperation.”77 The U.K. tradition of hostility to trade conspiracies was effectively reversed, however, in the final decade of the century, which was of course the decade of the so-called first “great” depression.78 The 1891 Mogul Steamship Company decision, which “made such conspiracies in restraint more permissible rather than less,” was symptomatic.79 In any event, by the turn of the century, under the ongoing influence of laissez-faire free-trade ideology, the United Kingdom’s longstanding restraint of trade doctrine had, according to David Gerber, virtually evaporated.80

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This hands-off approach to monopoly would essentially prevail for the next half-century. This, though, is not to suggest that all commentators were agreed upon the absence of a need for antitrust. They were not. A recurring theme of this book will be that when “rebalancing” of the economy occurs, and a situation of “excess” monopoly or competition is redressed, the perception frequently arises—sometimes accurately, sometimes not—that this rebalancing process has gone too far. In other words, voices suggesting, explicitly or implicitly, that the process of rebalancing has been too successful, begin to be heard. For such commentators, not only is intervention from the originally burdened “side” of the competition-monopoly dialectic no longer required, but it is now needed from the other side since the polarity of imbalance has inverted. During the period that concerns us here, however, such a perception emerged in the United Kingdom only considerably later than it did in the United States. For all the Financial Times’s foreboding in 1900 regarding the principle of corporate amalgamation “taking root,” serious misgivings about monopoly and its effects were not widely raised until the end of World War I. Even then, such misgivings were typically much less forthright, and were more caveated, than across the Atlantic. Generally speaking, most people were of the view that a competition policy, and with it a competition law, were not needed, despite the fact that the various anticompetitive dynamics discussed above were plainly in evidence and frequently acknowledged. “From the 1880s to the [first world] war,” Freyer summarizes, “neither British academic economists nor the press considered the new corporate giants to be a threat to the nation’s welfare.”81 Indeed, not only were such “giants” not a threat; for some commentators, perceived weaknesses of the British economy in the 1900s and 1910s could be attributed, at least in part, to a failure to build more such giants.82 For Freyer, this relative equanimity, even hostility, regarding a possible need for antitrust had two separate sources. The first had its roots in a growing disjuncture between representations and realities of the U.K. economy. Even as the economy became more and more characterized by monopoly dynamics in the first two decades of the twentieth century, the perception remained that it was still the competitive territory that it had been in the 1870s and 1880s. Alfred Marshall was one extremely influential purveyor of this view.83 Here, helpfully summarizing, is Freyer: “Compared with American economists, much of the apparently cavalier attitude of British economists to combination was because Britain had

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a very small geographically compact market in which there was a lot of competition between firms, in the sense that was generally not true between firms in New York, San Francisco, and Chicago. Also, many British industries faced considerable competition from abroad, which American tariffs stopped.”84 Second, there was a crucial political dimension that served equally to differentiate from the U.S. case the United Kingdom and its prevailing attitudes to antitrust. Whereas in the former “voters considered the leaders of giant corporations to be the agents of corruption” and big business was seen to threaten “the hope of individual opportunity,” in the United Kingdom “shared class values [among Liberals and Conservatives] sustained bipartisan opposition to government intervention along the lines of American antitrust.”85 To these two explanatory factors, meanwhile, Helen Mercer adds a third: the influence on the evolution of U.K. competition legislation (or rather, the lack of such legislation) of powerful business interests.86 On the solitary occasion that concern over anticompetitive practices did cohere sufficiently to encourage action to be taken, such action, and the concern underlying it, proved to be short-lived. Prices had been broadly rising from the turn of the century through to World War I, and during the war the rate of increase strengthened. Bowing to a widespread conviction that monopolistic practices were the cause, the government appointed a Committee on Trusts in 1918 to investigate. Its report highlighted the potential for abuse of private market power, especially once wartime price controls were removed, and led to the passing of the 1919 Profiteering Act that—at least theoretically—empowered the Board of Trade and its new Standing Committee on Trusts to investigate and act on complaints of profiteering associated with trusts and other combinations.87 Genuine political appetite for action appears to have been very limited, however, and amidst clear external pressures on the board the act lapsed after less than two years.88 More generally, the period from the turn of the century to the outbreak of World War II was one of such extraordinary political-economic tumult that with a robust antitrust philosophy not having materialized in the United Kingdom by its outset (which, as we shall see, it had in the United States), there was never a period of sufficient stability, continuity, and duration for such a philosophy to gather momentum and to crystallize in a durable policy position. The “shock” events of the era tended, as we have seen, to elicit government acceptance of, and often support for, anticompetitive practices of various kinds, which repeatedly took

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competition policy advocates back to square one. This only began to change during World War II. True, the U.K. government endorsed cartelization then too; but the belief was nonetheless now growing among a larger-than-ever political constituency that some sort of antitrust mechanism was required. Such a mechanism, as we will see in the next chapter, would soon begin to take formal shape.

Intellectual Monopoly in the United States: The Legal Exception Sources of Monopoly Power If the sharp U.S. depression of the mid-1890s reflected a relative excess of competitive forces and thus required American industry better to exploit sources of monopoly power both old and new, IP and the laws protecting it would, over the next half century, serve an equally important role as in the United Kingdom. Such laws would be just as vigorously exploited; and they would contribute just as materially to the successful ongoing reproduction of capitalism. While the earliest roots of IP rights can be traced farther back in time in the U.K. context, the beginnings of consolidation of a “regime” of IP, qua IP, are arguably apparent in the United States before anywhere else. Indeed, they date to 1787 and the U.S. Constitution. A clause allowing for patent and copyright systems—by explicitly recognizing the “rights” of “authors and inventors”—appears in the Constitution’s first article. The insertion of the relevant text by the framers of the Constitution has been deemed sufficiently material by historians of IP that “the result of their efforts” has been described as no less than “the world’s first modern patent institution.”89 Where patents specifically were concerned, the next significant development came in 1836 with the passing of the Patent Act. Already by this stage (indeed, by 1810) the capitalistically youthful United States had “far surpassed Britain in patenting per capita.”90 This was due in large part to the fact that, as Zorina Khan has shown, invention and innovation and (in particular) their commercial exploitation were much more “democratic”—which is to say, less restricted by socioeconomic hierarchy—than in the United Kingdom and other parts of northwestern Europe.91 Patenting rates then continued to trend upward for most of the nineteenth century, growing especially strongly from the 1840s

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through 1870s, boosted by the fact that, as William Fisher has observed, “the nineteenth century was characterized by ever more generous interpretation of the statutory criteria. Partly as a result,” he notes, “patents became important to many companies and industries.”92 So too did trademarks, although both the relevant legislation and the key period of initial growth in the commercial exploitation of such legislation occurred later than was the case with patents. The first enforceable national trademark law was not enacted until 1905. A trademark act had been passed in 1881, but it applied solely to international commerce. Up until 1905, therefore, common-law protections were all that were available to the increasing number of U.S. firms servicing the growing consumer economy with goods that they wanted officially to distinguish from competitors’.93 According to Robert Merges such protections were, in the event, “fairly effective stopgap measures,” and hence trademarking and the monopoly powers it crystallized were able to race ahead of the formalized statutes that would soon come to buttress them. “Sharp-eyed ‘first-movers,’” reports Merges, “quickly seized the opportunity to transform what had been regional, commodity goods into the first true national brands.”94 As in the United Kingdom, the support industry that rapidly emerged to help perform this work of transforming goods—and the trademarks that protected them—into brands included advertisers in addition to lawyers. As Stefan Schwarzkopf has argued, a trademark did not ultimately mean very much economically if consumers did not recognize the superiority that such a mark nominally protected; what distinguished trademarks from brands, then, was the meaning socially invested in the latter, and it was this meaning that advertisers strove above all to create. Here Schwarzkopf cites the revealing words, from 1923, of the advertising agency N. W. Ayer: “But a trade-mark, however beautiful, is not meant for decoration alone. It must be full of meaning to the people who buy.”95 Meanwhile, copyright, the third key leg of modern IP, had by this time also come to be substantially consolidated in U.S. law. Indeed, the first U.S. copyright statute had been passed just three years after the writing of the Constitution, in 1790. Subsequently, during the course of the nineteenth century, both the scope of the protections provided by copyright and the range of materials to which such protections could be attached expanded significantly.96 One distinctive and important element to these developments, which it is worth pausing to acknowledge, concerned

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their international dimensions. The legislation of 1790 was notable for excluding foreign works; these were disqualified from copyright protection within the United States, and would remain so for a century.97 The reason, as numerous historians have shown, is not hard to fathom. For most of the nineteenth century the United States was a net importer of IP of all types, whether copyright or otherwise. “Until approximately the middle of the nineteenth century,” notes Fisher, “more Americans had an interest in ‘pirating’ copyrighted or patented materials produced by foreigners than had an interest in protecting copyrights or patents against ‘piracy’ by foreigners.”98 Where patented technologies were concerned the balance of IP trade had definitively shifted by the 1870s, and hence the United States was at the forefront of efforts—culminating in the Paris Convention—to internationalize patent protection.99 But trade in copyrighted materials remained weighted against the United States until at least the late 1880s; correspondingly, it did not sign the Berne agreement, only reforming its laws to recognize international copyrights in 1891.100 More important still were simultaneous changes in the identity of those within the United States who, through the consolidating patent, trademark, and copyright regimes, sought domestic (as well, sometimes, as international) protection for their IP. As we noted earlier, invention and its commercial protection had from the early nineteenth century been considerably more widely dispersed within U.S. than in U.K. society. A corollary of this was that in many cases the legal registration of IP rights led to nothing remotely like commercial, large-scale corporate monopoly because the inventor-registrant was—in Merges’s words—the fabled “lone workshop tinkerer” who may have had the desire, and even the necessary product differentiation, but seldom the wider socioeconomic wherewithal, to build a powerful business. Indeed, as late as 1885 only 12 percent of patents issued in the United States were granted to corporations.101 But it was precisely from the beginning of the period we are concerned with here, in the last decade of the nineteenth century, that the socioeconomic source of the average IP application began rapidly to change. First, “inventions were more and more likely to be the product of large-scale corporate R&D”; and second, “a trend toward long-term attachments between highly productive inventors and particular firms became evident.”102 Or as David Noble, in his influential America by Design, puts it: “The professional engineers who emerged during the second half of the [nineteenth]

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century in America as the foremost agents of modern technology became as well the agents of corporate capital.”103 In sum, innovation became less democratic, increasingly corporatized, and more likely to furnish actually existing market power. Just as was the case in the United Kingdom, however, the growing market power that emerged in these decades to redress the competitionmonopoly imbalance of the 1890s was built on much more than fortified IP alone; and the other primary buttresses of renewed monopoly-power assembly are ones that have received significantly more attention in the historical political-economic literature. The first such buttress was trade protectionism. The United States had been largely protectionist throughout the post–Civil War era, but the need to protect the country’s economic borders was seen as becoming increasingly pressing in the 1870s and 1880s as transportation developments annihilated international (as well as intranational) space with time. Strong protectionist action was therefore taken in 1890 in the form of the McKinley Tariff, which substantially hiked import duties, and a robust tariff remained in place until the second decade of the twentieth century: The decisive shift toward freer trade occurred between the protectionist 1909 Payne-Aldrich Act and the 1913 Underwood Act, the latter of which set duties sufficiently low to enable substantial levels of importation.104 Even thereafter, however, protectionism would make numerous temporary but certainly significant reappearances, not least during the Great Depression with 1930’s Smoot-Hawley Tariff. Considerably more consequential for the materialization of monopoly powers in the turn-of-the-century U.S. economy, however, were widely studied developments in industry cartelization and, in particular, consolidation. These developments varied in a number of crucial ways from those we have traced above for the United Kingdom, and thus demand careful delineation and explanation. At a very general level, the most important observation is that the final decades of the nineteenth century and the first decades of the twentieth saw an immense shift toward uses of monopolistic practices of one kind or another—and frequently of various kinds at once— in U.S. capitalism. An enormous amount has been written about this trend. Contemporary observers frequently spoke in hyperbolic terms about what this shift meant for U.S. capital. Arthur Burns, for instance, in an influential study from 1936, saw the “rise of the ‘heavy industries’” and the associated “widening use of corporate forms of

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business organization” as “bringing, if they have not already brought, the era of competitive capitalism to a close.”105 Two decades later, Jack Blicksilver reflected that as early as the late nineteenth century it had seemed to “the average American” that “the combination movement was an irrepressible tide which would eventuate in the monopolization of the basic necessities of life.”106 But what forms did this “combination movement” actually take? The literature typically refers to four main ones: pools (which were effectively market- and price-controlling cartels), trusts, holding companies, and mergers. Trusts, the first of which was formed by Standard Oil in 1882, were legal devices employed in an attempt to circumvent often restrictive state corporation laws, and entailed the transfer of the securities of more than one company to trustees who were granted legal authority to run the cumulative entity as a single corporation. Holding companies, meanwhile, were (and are) somewhat similar: companies that simply own other companies’ securities rather than producing any products or services themselves, and which often represented stepping-stones to actual mergers. Blicksilver suggests that the centralizing tendency in late nineteenth-century U.S. capitalism assumed different primary manifestations at different points—pooling in the 1870s and early 1880s, trusts in the 1880s, and then holding companies and mergers—although he concedes that (with the exception of trusts after 1890) “all of the devices existed, in greater or smaller degree, during the entire period.”107 Burns provides an alternative lens, noting that cartelization was more common in the meat, steel, salt, and coal industries (among others), and mergers were more typical of the sugar, starch, oil, and tobacco sectors.108 Freyer, meantime, adds to this picture the fact that mergers were frequently vertical as well as horizontal: “Many large corporate manufacturers simply took over the distribution function themselves, ultimately destroying the middleman.”109 As is often the way of such things, this centralization in general— and merger activity especially—occurred in waves, rather than evenly, from the late nineteenth century through to the middle of the twentieth. Ralph Nelson identified three major merger movements: an initial wave of mergers between 1898 and 1902 that “laid the foundations for the industrial structure that has characterized most of American industry in the twentieth century”; a second wave between 1926 and 1930, stimulated in part by the emergence of new growth industries (as in the United Kingdom), and in part by “attempts to restore the industrial

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concentration achieved by the first merger wave, a concentration which had become diluted”; and a third wave in the mid-1940s.110 The most studied and arguably most important such wave was the first. Between 1895 and 1904 more than 1,800 firms were merged into new consolidated entities; 1,208 of these, valued cumulatively at over $2 billion, disappeared in the peak merger year of 1899 alone.111 As is also typically the way of such things, numerous different factors can be identified to help explain the nature and timing of events.112 Some historians argue that consolidation reflected a wider drive for production efficiencies that were furnished by economies of scale. Others, relatedly, emphasize technological change, and the fact that new methods of production required large production volumes in order to be economical. A third explanation, complementary rather than oppositional to the first two, is that the financial sector played an increasingly central promotional role, with the major banks on a newly ascendant Wall Street seeing in mergers not so much the nominal industrial efficiencies as the handsome fees they generated. There is also, fourth, a school of thought that stresses—seemingly perversely—the centralizing effects of the U.S.’s new antitrust laws; and we shall return in due course to this particular line of reasoning. Before doing so, however, it is critical to elaborate somewhat more fully a final explanation that has over time come to be seen as arguably the key underlying stimulus to centralization, and it is the one that Lamoreaux prioritizes in her seminal account, The Great Merger Movement in American Business, 1895–1904. Although she acknowledges the pertinence of the various aforementioned factors, Lamoreaux claims that the impetus to consolidate (or cartelize) ultimately stemmed from the intense price and profit pressures that we discussed in the first section of this chapter. Rapid industrial growth in the 1870s and 1880s, occurring against the backdrop of rapidly disintegrating local monopolies, occasioned a period of fierce price competition; and it was to such price competition that centralization, in its different forms, represented the logical commercial response. “A particular conjunction of circumstances—specifically the simultaneous rapid expansion of many capitalintensive industries in the early 1890s, followed by the deep depression of 1893—gave rise to abnormally serious price wars and consequently to the great merger movement.”113 Companies sought monopoly powers because the requisite balance between monopoly and competition had, over the course of the 1870s and 1880s, been grievously disturbed.

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As we shall also shortly see, the trend toward increasing corporate centralization, allied with—and in many instances, directly underpinned by—the application of strengthened IP laws, had much the same overall economic impact in the early twentieth-century United States as in the United Kingdom. It lifted investment and helped to boost prices and profits. But there was a very significant difference between the two countries in terms of the social and political response to centralization. Whereas in the U.K. context it took several decades before prominent voices could be heard impugning centralization and calling for regulatory or legal measures to counteract this trend, in the U.S. such opposition to centralization materialized almost immediately, in the 1880s, which witnessed the height specifically of the trust phenomenon. This is not to suggest that everybody promptly agreed on the need for procompetition measures; a sizeable cohort, notably including economists animated by the perceived problem of “ruinous competition,” vigorously defended so-called big business.114 But the majority, especially in civil society, saw a need for economic rebalancing—away from monopoly, toward competition—very, very early, and certainly long before such rebalancing was actually, for capital’s sake, required. Agitation for some sort of antitrust policy gathered momentum, as intimated, almost as soon as the trusts began to be formed in the first half of the 1880s. It was always a complex, heterogeneous discourse, emanating as it did from a broad assemblage of socioeconomic actors—primarily “farm, labor, and small-business groups,” says Freyer—but two pivotal lineaments stood out.115 The first was a critique relating, quite pragmatically, to the perceived economic distortions enabled by monopoly power. “Farmers, shippers, and other suppliers and customers were, or so they believed, overcharged and underpaid.”116 The second, which was related yet characterized by a subtly different set of social concerns, effectively amounted to the premise that monopoly somehow subverted the core tenets of the American Dream. Freyer expresses this point succinctly: “Voters considered the leaders of giant corporations to be the agents of corruption” and big business was seen to threaten “the hope of individual opportunity.”117 It was out of this wide-ranging and vociferous critique that the Sherman Antitrust Act of 1890 crystallized. It specifically targeted, the text of the statute tells us, “monopolization” and combinations in “restraint of trade.” But more fundamentally, James Hurst has argued, “the Sherman Act recognized that government must take positive responsibility to

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keep private competition alive.”118 This was its lasting legacy, both for the United States and for the industrialized world more generally. And although U.S. companies could be (and were) prosecuted under the Sherman Act at both the state and federal levels, the latter increasingly became the principal locus of antitrust enforcement, so that by the beginning of the 1910s federal action dominated prosecution; and by their end, state enforcement, which mirrored federal policy, was essentially superfluous.119 Indeed, Hurst, in reference to the enormously powerful centralizing forces at work in the late nineteenth-century U.S. economy, maintains that the Sherman Act had itself recognized that “only the national government could muster the resources to deal with such private concentrations of economic, social, and political influence.”120 Even after the Sherman Act had been passed, moreover, antitrust, and the forces of centralization that it sought to curb, remained for many years a vital social and political issue in the United States in a way that it never was, and in fact never would be, in the United Kingdom. Martin Sklar has demonstrated this particularly clearly, describing the rise of large corporate enterprises and the competitive concerns they elicited as “the preeminent set of issues in national politics in the years between the great depression of the 1890s and United States entry into World War I.”121 This may sound exaggerated to those unfamiliar with the U.S. political scene of the Progressive Era, but all three of the era’s major presidents—Roosevelt (Theodore), Taft (whose vice president was none other than James Sherman), and Wilson—discoursed widely and influentially on property and market relations in general and the dangers of monopolization in particular. That they did so is a measure of quite how powerful the centralizing tendencies were. Yet the critical point for our own story is that despite the passing of the Sherman Act in 1890 and for all the enduring political support for the principle of procompetitive laws, U.S. antitrust ultimately failed to provide an effective counterweight to (IP-supported) monopolizing tendencies throughout the period we are concerned with in this chapter. It did not—yet—constitute a meaningful leveling force in the way we have earlier theorized effectual competition law; after all, the various major merger waves that came to shape the evolution of U.S. capitalism in such profound ways all occurred after the Sherman Act had been passed. Given, moreover, that this act was followed twenty years later by a second major antitrust statute (the Clayton Act), the question of why antitrust failed to act as a significant dampener on monopolistic

Designs on Monopoly

practices and inflated prices and profits until after World War II clearly calls for explanation. Part of the answer to this question is that in the midst of recurrent political-economic turmoil during these decades, antitrust could not quite get going in the way that its most ardent champions had clearly hoped it would. Fox articulates this point, noting simply that from the passage of the Clayton Act in 1914 through to mid-century, “antitrust paled in the shadow of critical events.”122 Indeed it did. World War I saw “considerable ambivalence” in enforcement as a need for interfirm cooperation, as in the United Kingdom, was recognized.123 Then, during the Great Depression, cartelization—which, as we shall see, was for the most part successfully prosecuted by U.S. antitrust agencies— was officially instituted, if only briefly, through the National Recovery Administration, which temporarily suspended antitrust enforcement.124 The second half of the 1930s saw an expansion of enforcement, but it proved to be short-lived.125 Roosevelt (Franklin D.) had energized the field through the appointment of Thurman Arnold to the Antitrust Division of the Department of Justice, but then “World War II shelved the expanded effort.”126 The central reason why antitrust failed substantively to thwart the forces of centralization, however, is simply that it was largely powerless to prevent the one centralizing method that is often treated synonymously with monopoly: the merger (or acquisition). Especially through to the beginning of the 1920s, but also to an only marginally lesser degree for the following three decades, antitrust law represented barely a minor irritant in the face of a rapidly consolidating industrial economy. In the first of those two subperiods, for instance, the Supreme Court refused to break up either the United States Steel Corporation or the International Harvester Company; the former was estimated to enjoy approximately half of its domestic market, the latter nearly two-thirds.127 It is just such decisions that led historians to the conclusion that antitrust was simply not effective.128 As obstacles to corporations wishing to expand via acquisition, Charles Steele wrote in 1961, “the first two [statutory hurdles], the Sherman Act of 1890 and the Clayton Act of 1914, were failures.”129 The reason, in turn, why early U.S. antitrust law typically failed to prevent mergers is that it lacked the clear doctrinal power to do so. It could be, and was, used to prosecute cartels or comparable price-fixing configurations; indeed, the Sherman Act rapidly killed off the trust form per se, and aside from interruptions for war and depression the federal

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courts fought cartelization consistently and successfully throughout the first half of the twentieth century. But it lacked similar wherewithal in respect of mergers. And more than that, its assault on price-fixing not facilitated through merger prompted companies to adopt instead alternative institutional constellations of monopoly power, of which the merger was itself the most obvious. So as Burns observed, antitrust’s “condemnation of price and output agreements tended to induce the development of large units”; or in Freyer’s words, “the law’s intolerance of loose restrictive practices encouraged even efficient cartels to adopt tighter corporate consolidation.”130 This, then, is the sense in which antitrust perversely fostered monopolies. In short, “corporate mergers were often lawful whereas looser combinations generally were not.”131 There were important historical, doctrinal, and to a lesser extent, practical reasons for this state of affairs. One contributory factor, Herbert Hovenkamp explains, was that U.S. antitrust had been based from the start not on a corporate law model (which it might well have been) but on the common law of contracts in restraint of trade, which was “quite tolerant of business decisions within a single firm.”132 To this factor we can add, after Lamoreaux, the significance of the courts having gradually arrived at a particular interpretation of the Sherman Act that became known as the “rule of reason.” This was important because it posited that a practice only violated the law if there was conclusive evidence that its purpose was to monopolize trade. Cartels were caught by this rule because restraint of trade was seen to be inherent to collusion; with a merger, however, it was altogether more challenging to prove that its objective was to restrain trade rather than, say, to economize on production costs.133 Finally, there was a question of the government’s application. “For more than forty years, to enforce the Sherman Act and its supplements, the United States,” maintains Hurst, “made no investment even moderately commensurate with the challenge.”134 If antitrust’s defenses against mergers were relatively meager until midcentury, however, it would be wrong to suggest that all mergers were simply waved through. They were not. Assuredly, up until 1911, the common assumption within corporate America that mergers were essentially antitrust immune was a broadly fair one. But Supreme Court decisions against Standard Oil and American Tobacco in that year, says Louis Galambos, “put large corporations and their legal advisers on antitrust alert.”135 The Justice Department certainly now began to scrutinize mergers more closely (although it remained focused primarily on

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cartels), and a growing—albeit still very small—number of such mergers fell foul; there would likely also have been a deterrent effect. Hence why scholars such as Lamoreaux have sought to temper somewhat the previously widespread view that, insofar as it legitimized mergers, antitrust pre–World War II was simply ineffectual. Her own argument is that it was occasionally effective, especially where the government was able to prevent barriers to entry.136 We might, therefore, best sum up the issue by citing Hurst; “antitrust accomplishments in the span from 1890 to 1938,” he concludes, “were not negligible.”137 But by implication, they were not significant either. The Co-Constitution of the Antitrust and IP Laws In terms of the wider arc of our account in this chapter, the principal upshot of U.S. antitrust’s relative failure to arrest centralizing currents in these decades is that IP law—alongside co-constitutive forces such as protectionism—could perform its monopoly-supportive work largely unimpeded. To fully appreciate this particular point, however, we need to broach a question that we have thus far skirted around, but that will recur more and more centrally throughout the rest of the book: the question, namely, of the operating relationship between antitrust and IP laws. Given that on our account one of these laws underpins monopoly and the other, in theory at least, opposes it (they “use similar vocabularies in order to achieve very different ends,” as Spencer Waller and Noel Byrne observe), it would surely be reasonable to assume that not only have the two met in historical practice but that there would have been a certain amount of operational tension between them.138 And this, it turns out, is indeed the reality—one we can now examine for the United States, in the period from the late nineteenth to mid-twentieth century. We can observe to begin with that antitrust and IP law were conjoined in the United States from the very start, which is to say, from the moment when antitrust was formalized in the shape of the Sherman Act. By this time IP law was already in place in large measure, of course, but as soon as it was joined on the statute books by competition law it proved impossible for the former to remain indifferent to the latter. Steven Wilf captures the immediate entangling of the two sets of laws in the following observation: “Progressive Era jurists saw intellectual property through the optic of antitrust.”139 Having been considered a set of economic-legal principles in its own right, in other words, IP now became

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irrevocably colored by the new antitrust provisions. The coloring was, furthermore, mutual; if antitrust reshaped IP law, then IP helped shape, or arguably even constitute, what became antitrust law. “Whether by design or as a result of the litigation strategy of the early antitrust defendants,” emphasize Waller and Byrne, “the Supreme Court defined key antitrust doctrine in a series of cases involving restrictions imposed on the use and licensing of intellectual property rights.”140 It was in the fires of IP litigation that antitrust policy became soldered in place. It is vital to foreground the particular reason for this inextricable, co-constitutive interweaving. It lies specifically in how the U.S. courts envisioned IP—as a political-economic phenomenon—in this era. For as Edward Chamberlin would also come to do, these courts viewed IP explicitly as a source of monopoly—and for the most part they would continue to do so, as we shall see in subsequent chapters, until as late as the mid-1970s.141 Using the example of patents, Sheila Anthony spells out exactly what this meant once the monopolistic IP phenomenon entered the brave new world of the Sherman Act and antitrust in the early 1890s: There was, she writes, a presumption “that a patent not only conferred exclusive rights to one product or process, but also assured monopoly power in a relevant market, regardless of available substitutes.”142 The implications of this key presumption are not terribly difficult to surmise. It led to legalistic conflict. The Sherman Act, after all, aimed to war against the very thing—monopolization—that IP conferred. And if the two were seen to be in inherent conflict, the consequence was that the courts would be required to make a pivotal decision: Which set of laws took precedence? Given prevailing conceptual understandings, it was impossible for the courts to satisfy both laws in cases where each was implicated. Crucially, in the United States through to the mid-twentieth century, IP law typically was seen to take precedence—hence bolstering the wider rebalancing of the economy’s monopoly-competition dialectic in favor of the former. This precedence tended to materialize in the fact that, not only was the scope of IP rights defined relatively generously, but also such rights were usually treated by the courts as governmentendorsed exemptions from antitrust: as monopolies, to be sure, but legal monopolies.143 And it was a precedence underlined most emphatically in the Supreme Court’s 1902 ruling in the case of E. Bennett & Sons v. National Harrow Company, which stated the “general rule” of “absolute freedom in the use or sale of rights under the patent laws”—the

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“very object” of which, it reiterated, “is monopoly. . . . The fact that the conditions in the contracts keep up the monopoly or fix prices does not render them illegal.”144 Being grounded in IP (as, we have seen, in mergers) made monopolies, to a significant extent, antitrust-immune. It would be one thing if this mattered only to the degree that courts sanctioned monopoly in the cases of companies that had registered their IP and developed their market power prior to the birth of the antitrust laws. But the historical evidence suggests that companies rapidly proceeded to “game” the legal system in relation to its IP/antitrust tensions just as they did in relation to its cartel/merger tensions. The Sherman Act’s strong protections against cartels, we saw, prompted companies to merge instead because here the law was decisively weaker. Similarly, the fact that IP was widely seen as granting immunity from the antitrust laws now prompted companies to seek to exploit the IP laws not just to protect new products but to secure, legally, monopolies they already enjoyed. Or to put it another way, once the Sherman Act came along and threatened existing monopolies, the holders of those monopolies often turned to the IP laws precisely to minimize the scale of this threat. The exploitation of patents “to further the restraint of trade and the creation of industrial monopolies,” observed Floyd Vaughan in 1930, “has been most pronounced since the passage of the Sherman Act in 1890.”145 Among modern commentators, one of the most strident proponents of the argument that IP law neutered the Sherman Act in its early decades, shielding existing monopolies as well as nourishing new ones, is Perelman. IP law, he goes so far as to say, “rescued” giant U.S. corporations from antitrust because “corporations soon realized that they were able to use patents, which were perfectly legal, as a convenient loophole to evade the intent of [the Sherman Act]. Through patent pools, they could divide up the market and exclude new competitors. In this way, intellectual property rights were effective in firming up monopolistic power.”146 By dint of the precedence they ordinarily enjoyed over antitrust provisions, IP rights would remain largely effective in firming up such power until mid-century. But it was not always a straightforward, uncontested matter, particularly from a sociopolitical perspective. The precedence in question was constantly under sociopolitical pressure in the Progressive Era because IP rights of all kinds continued to be seen as inherently monopolistic in nature and thus the tension with antitrust—itself a highprofile political issue, as we have seen—continued to abrade. In truth

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it was only during the New Deal that such concerns briefly alleviated, allowing the monopoly-configuring work of IP temporarily to proceed, so to speak, untainted. “Progressive Era hostility to the idea of intellectual property as a form of trust” contrasted sharply, Wilf demonstrates, with “the New Deal embrace of intellectual property as an engine of economic development.” As “overall anxieties about the connection between monopoly and intangible mental products receded,” Wilf goes on to say, there was a discernible “untangling of intellectual property from the legal rhetoric of monopoly.”147 As we will see in Chapter 6, this discursive untangling would be repeated from the mid-1970s. As Wilf also shows, however, the different forms of IP were implicated in different ways in these discourses, and with significant implications for their legal treatments. In the New Deal era, for instance, it was only copyright and trademark that successfully “shed the concern with anti-competitive behavior.” “Copyright was identified with successful new mass media industries—radio and motion pictures—which might prod the economy as a whole”; trademarks also had “a privileged place in the New Deal economy.”148 The legal corollary of this sociopolitical privileging is that the exemptions from antitrust historically enjoyed by copyright and trademarks and their corporate owners remained largely entrenched. U.S. antitrust lawyers did not begin meaningfully to take on copyright or trademarks until the postwar era. In terms of trademarks, and referring to Chamberlin’s argument (Chapter 3) that these were no less monopolistic than copyright or patents, Sigmund Timberg wrote in 1949 that court judges who had intellectually accepted Chamberlin’s critique had nonetheless been disinclined to translate this intellectual acceptance into judicial practice.149 Patents and patent law were the exception, following a different trajectory. Whereas copyright and trademarks came to be viewed more sympathetically during the New Deal by the champions of competition, Wilf notes, the “distrust of patents remained,” and patent law thus continued to be identified with “the evils of monopoly.”150 And as Fisher emphasizes, this distrust had already led to a certain redressing in legal practice of the balance between IP and antitrust—the pivotal question of which one took precedence specifically in patent-related disputes—before the 1930s. “Angered by anticompetitive uses of patents by large companies,” he writes, “both the Patent Office and the courts became substantially less willing to grant or uphold questionable patents.”151 Fisher dates this shift away from unquestioned precedence for IP to the period

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between the World War I and World War II, but Sell and May suggest it occurred somewhat earlier still. For them, the case of Henry v. A. B. Dick Company was emblematic.152 First, in 1912, the Supreme Court ruled in favor of the latter and its patent-based restraining of trade in the ink used with mimeograph machines; in other words, it granted A. B. Dick antitrust exemption. In 1917, however, the Supreme Court reversed this earlier ruling, leading Sell and May to identify the intervening five years as a critical period in the tilting of judicial interpretations away from IP toward antitrust precedence—at least where patents were concerned.153 This rebalancing took place in practice through a narrowing not so much of the antitrust exemptions afforded by patent-based IP as of the scope of the IP rights attached to patent-related practices. IP continued for the most part to represent a legal monopoly, in other words; it was just that courts were less inclined to view all patents as IP.154 Notwithstanding this isolated thinning of immunity from antitrust intervention, however, the overall story in the United States of the era that concerns us in this chapter is still very much one of patents, copyright, and trademarks legally overriding competitive concerns. For trademarks and copyright they did so throughout. For patents, the period from the 1920s onward certainly saw antitrust law establishing a foothold of sorts; but this occurred against a backdrop of undisputed patent supremacy, and the courts largely continued to dismiss antitrust objections where the patent was adjudged, as it very often was, to constitute IP. Indeed, Noble, following Vaughan, reckoned that it was not until as late as the early 1940s that antitrust really began to gain the upper hand vis-à-vis patent-based monopolies.155 Allied to the attendant weakness of antitrust in dealing with corporate mergers, then, and the general picture we are left with is that of IP law widely enabling monopoly powers to be assembled and reinforced in a U.S. economy emerging, in the decades following the 1890s, from a slump caused by deep imbalance in the competition-monopoly dialectic. Rebalancing the U.S. Political Economy As this dialectic was gradually restored to balance, the economic effects were plain to see. Fortified by the creation, corporatization, and legal mobilization of IP, U.S. firms began once more to invest, and prices and profits recovered. The centrality of IP and IP law to this rebalancing and reinvigoration of the U.S. economy in the first few decades of the

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twentieth century has seldom been given adequate weight.156 But it is clear in the historical record, as is the complex but critical intertwining of IP-based market powers with powers conferred by cartelization and consolidation. A powerful way of demonstrating these twin dynamics is by examining their mutual implication in the establishment, growth, and enduring strength of those individual corporations that came to dominate U.S. capitalism of the first half-century. For our purposes here, a useful proxy for this clutch of leading firms is the Dow Jones Industrial Average (DJIA), which was initially (from 1896) made up of twelve company securities before expanding to twenty in 1916 and then again to thirty—where it remains today—in 1928. Table 4.1 identifies the thirty stocks that comprised the index at the end of World War II, split into two groups: first, the seven of these companies that had been part of the index since 1916; and second, the twenty-three that had entered the index in the intervening years. These thirty companies represent, collectively, and to varying degrees in each case, the manifestation both of already entrenched economic power in early twentieth-century U.S. social life and of the bursting forth of fresh sources of investment, innovation, value creation, and (ultimately, more) monopoly power in existing and—especially—new economic sectors. Even the most cursory analysis would be sufficient to demonstrate the IP underpinnings of the vast majority of these companies. For one thing, IP and IP law frequently played a vital role in enabling the companies in question to achieve the power and growth necessary to advance to the commanding heights of the DJIA in the first place. Sometimes this entailed developing such IP in-house; sometimes it entailed merging with or acquiring companies that owned the pertinent IP; sometimes companies used both strategies. Furthermore, if IP was often implicated in the achievement of scale and dominance, it was almost always implicated in maintaining such dominance—that is to say, staying in the Dow 30 (and AT&T, Du Pont, General Electric, and Procter & Gamble are still there today). Protecting market power, after all, required keeping at bay not only potential competitors but also the antitrust authorities; and IP, as we have seen, widely served to immunize market power from antitrust intervention. There were, needless to say, exceptions to this primary pattern. As one of the arch critics of the U.S. patent system in the interwar years, Vaughan was not one to pass up an opportunity to lay blame for monopoly power at IP’s door, but even he was forced to admit, on occasion, that IP simply was not a material factor. Harvesting machinery was,

Designs on Monopoly Table 4.1.

The thirty component stocks of the Dow Jones Industrial Average at the end of World War II.

Part of index in 1916 (when expanded from twelve to twenty stocks) American Can American Smelting American Telephone & Telegraph 1, 2 General Electric Company Texas Company 3 U.S. Steel Westinghouse 1 Entered index between 1917 and 1945 (year of entry shown in parentheses) American Tobacco (1924) 1 Du Pont (1924) 1 Sears Roebuck and Company (1924) Standard Oil of California (1924) 1 Woolworth (1924) General Motors (1925) International Harvester (1925) Allied Chemical (1925) Bethlehem Steel (1928) 4 Chrysler (1928) 4 International Nickel (1928) 4 Postum Inc. (1928) 4, 5 Standard Oil (N.J.) (1928) 4 Union Carbide (1928) 4 Johns Manville (1930) Eastman Kodak Company (1930) Goodyear (1930) Procter & Gamble Company (1932) Loew’s (1932) Corn Products Refining (1933) United Aircraft (1933) 1 National Distillers (1934) National Steel (1935) 1. Exited index temporarily for one or more years between initial entry and 1945. 2. Name subsequently changed to AT&T. 3. Name subsequently changed to Texaco. 4. Entered index when expanded from twenty to thirty stocks in 1928. 5. Name subsequently changed to General Foods.

for him, a case in point. To be sure, International Harvester—a 1902 amalgamation of five leading manufacturers, and a DJIA entrant in the very year (1925) that Vaughan published his influential Economics of Our Patent System—owned numerous patents. But these were, claimed

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Vaughan, very minor, and conferred little by way of commercial advantage; most of the major patents had expired by 1902.157 This led him to the conclusion that, notwithstanding International’s accession to the Dow, patents “have not constituted an important factor in the recent history of the harvester industry.”158 Yet these exceptions were few and far between. The market power writ large in the DJIA names shown in Table 4.1 was power predicated, in significant measure, on IP and its legal leverage. And we should not ignore either certain IP-intensive companies that joined the index during the period in question but dropped out before its end, only to reappear at a later date and then remain there to the present day: Coca Cola (1932–1935) and International Business Machines (1932–1939) perhaps most notable among them. Very often deployed in tandem with corporate consolidation, and with antitrust largely toothless to forestall either, IP was progressively embedded at the very heart of what observers of corporate America increasingly—if not, this book suggests, entirely accurately—came to call “monopoly capital.” For the most part this IP consisted of patents. Arguably the most persuasive analysis of the formative role played by patents and patent law in configuring the U.S. corporate world in this era remains Noble’s aforementioned account, in which many of the companies shown in Table 4.1 figure prominently.159 Through “consolidation, patent monopoly, and merger,” Noble shows, various important science-based U.S. industries had already by the end of the nineteenth century come to be “dominated by a handful of giant firms.”160 Foremost among these were the chemical, electrical, and radio industries. In the case of the first of these, Noble points in particular (from Table 4.1) to Allied Chemical, Du Pont, and Union Carbide but also, significantly, to the U.S. government, which seized German-owned chemical patents during World War I and, between 1917 and 1926, issued 735 of these to U.S. companies, Du Pont alone receiving some 300.161 Meanwhile, General Electric (GE) and American Telephone & Telegraph (AT&T) are fingered as the “masters” of patent monopolies in the latter two spheres, respectively, although Westinghouse (electrical) is not neglected.162 AT&T, we learn, strove relentlessly to “stifle and harass competitors through patent-infringement suits,” increasing its number of patents from just two in 1875 to 9,255 sixty years later. GE dominated electrical lighting in a similar manner, and moreover was the recipient of a vital, friendly Supreme Court decision in 1926 that suggests Sell and May’s timing of antitrust’s relative

Designs on Monopoly

ascendancy may, indeed, be askew.163 In any event, comparable patentcontrol measures were, Noble asserts, pivotal to the establishment of market dominance in several other key sectors of the day, including steel (viz., in Table 4.1, the U.S., Bethlehem, and National Steel companies) and automotive (General Motors, Chrysler, Goodyear). To these we can at the very least add, other scholarship demonstrates, the tin can (American Can), aeronautical (United Aircraft), and building products (Johns Manville) sectors.164 Yet the phenomenon of IP-based monopoly construction in this period was certainly not all about patents. Loew’s (incorporating MetroGoldwyn-Mayer Pictures) excepted, copyright did not yet feature materially in the armory of the DJIA heavyweights; but trademarks did. This, after all, was the age in which consumer, brand-based capitalism was truly born, and between its genesis in 1896 and the end of World War II the Dow morphed from a cluster of commodity and heavy-industry stocks—including the likes of American Cotton Oil, American Sugar, National Lead, Tennessee Coal & Iron, U.S. Rubber—into one in which consumer-facing and marketing-heavy enterprises rubbed shoulders with the big industrials, but in which, steel and oil aside, commoditybased interests had largely been eclipsed. Among the thirty companies comprising the DJIA when war came to an end, we find already six for whom trademarking and advertising and the brand differentiation they sustained were simply essential to the exercise of market power: General Foods (food and beverage brands), Loew’s, National Distillers (whiskies), Procter & Gamble (perhaps the quintessential consumer goods company), and two primarily retail operations (Sears Roebuck and Woolworth). Indeed, in an article first published in 1943, Kalecki argued that a discernible rise in the degree of monopoly in the United States between 1923 and 1929 could be “partly accounted for by what may be called a ‘commercial revolution’—a rapid introduction of sales promotion through advertising, selling agents, etc.”165 It is important also to recognize that IP-buttressed monopoly power never was—and still is not—necessarily a simple question of patents or trademarks. Many companies relied on aggressive IP strategies simultaneously mobilizing both. This, as Noble observes, included AT&T and GE.166 And of course it also included the big new automotive manufacturers, for whom vehicle (or tire) model branding rapidly became just as, if not more, important than the patents protecting the component technologies. Another of the DJIA companies employing a powerful mix

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of patents and trademarks was Eastman Kodak. Perhaps best known for its Kodak camera brand, Eastman’s photography products relied heavily on patented in-house chemical products, and the company—alongside Union Carbide—was another of those that, like Du Pont, “profited immensely” from the U.S. government’s post–World War I dispensation of appropriated German chemical patents.167 But Eastman Kodak is significant for a further reason that, in relation to our analysis here, is probably more important still. In many of the examples related so far, industry consolidation and IP management worked hand in hand to secure and maintain monopoly power, and the antitrust authorities—at least through to the end of World War II— largely remained at arm’s length. One might feasibly argue, therefore, that monopoly powers and the profits they buttressed were not necessarily dependent upon IP; mergers, in and of themselves, may have been sufficient, just as they were in the case of International Harvester. But Eastman Kodak throws a significant spanner in the works of this hypothetical (indeed, counterfactual) argument. Having built much of its initial scale through acquisitions (albeit often acquiring patents in the process), and having thus secured a monopoly over trade in cameras, film, plates, and photographic paper, Eastman had been forced to break up by a 1916 District Court decision that was unsuccessfully appealed.168 And yet, as the DJIA records demonstrate, this antitrust intervention did not prevent the company reemerging and rebuilding monopoly power, finally acceding to the Dow in 1930. In this second building phase, patents and trademarks were clearly the preeminent tools. Consolidation, then, was not always necessary for monopoly; IP and its legal scaffolding could, and did, do the job. Two other companies, each often serving as a byword precisely for merger- or trust-based market power, underline this point most powerfully of all. We have encountered them briefly already: Standard Oil and American Tobacco, two of the great merger-based behemoths of early twentieth-century U.S. capital, but each of which was forcibly broken up in 1911 after falling afoul of Supreme Court antitrust investigations. The former was split into thirty-four pieces, the latter into five. Yet it will doubtless not have escaped the reader’s attention that both nonetheless appear in Table 4.1, American Tobacco reentering the index in 1924 (it had featured briefly in the late 1890s), and Standard Oil materializing in the twofold shape of Standard Oil of California (which would later become Chevron) and Standard Oil of New Jersey (which became Exxon). Antitrust had had

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its say, therefore, but substantial market power continued to be enjoyed. How so? As with Eastman Kodak, scholarly analysis has shown that IP constituted a significant component of the answer. In the case of Standard Oil, William Kemnitzer’s Rebirth of Monopoly, published in 1938, explained how the offspring of the original Standard Oil—along similar lines to the original entity itself, as it happens—energetically used patents to extend and defend monopolistic control.169 Vaughan had earlier made similar observations, suggesting specifically that the patent pool allegedly operated by the Standard Oils, the Texas Company (see Table 4.1) and dozens of smaller oil concerns in the 1920s was “the most inclusive and important one of which any record exists.”170 As for American Tobacco, trademarks rather than patents were pivotal. Founded through merger in the late nineteenth century, creating the infamous Tobacco Trust, American Tobacco had arrogated to itself 80 percent to 90 percent of the cigarette trade by the time it was indicted by the Department of Justice in 1907, and in 1911 it suffered the same fate as Standard Oil. But, says Allan Brandt, “open market competition never really returned to the tobacco trade.” And the reason it did not is clear. Trademarking, and “a major intensification of advertising and promotion,” enabled massive market power to be realized, “as each of the large companies came to focus on a single brand.” For the new, pared-down American Tobacco that was reborn in 1911, the most successful such brand would become, in time, Lucky Strike. “Dissolving the monopoly merely put an oligopoly in its place,” Brandt therefore concludes of the 1911 court action, and “observers noted no apparent decline in the prices of tobacco products.”171 All in all, the distinctive constellation of U.S. capital that cohered in the first few decades of the twentieth century, dragging the country out of the economic mire of the early- to mid-1890s in the process, was characterized by rapidly and widely accreting monopoly powers assembled in significant measure through IP and IP laws. In this, the work of IP was complemented by the often conjoined dynamics of cartelization and consolidation; and newly constituted antitrust laws were largely incapable of arresting this centralization of economic power where IP or mergers were its chief vehicle. While we know that the economic consequences of this structural shift consisted of recovery of prices, profits, and investment, the data attesting to such consequences are extremely thin for most of the period

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under consideration; reliable, national-income-accounting-based data become available only from the beginning of the 1930s. Still, analysts of profitability trends have shown that for the bulk of the pertinent period the rate of profit—as a measure of return on investment—was rising. Here the work of Gérard Duménil and Dominique Lévy is indispensable.172 Their historical analysis suggests that having fallen progressively throughout the late nineteenth century, just as Marx (their intellectual inspiration) suggested it was likely to do under the capitalist mode of production, the rate of profit in the United States continued to decline even after the United States began to emerge from the first Great Depression. But then, around 1910, the decline halted, and the rate of profit began to rise. It subsequently rose consistently all the way through to the mid-1940s, with the obvious exception of three years of sharp decline—relatively rapidly recovered—at the beginning of the 1930s. That the rate of profit did recover and rise as the U.S. economy edged back toward a reproducible balance between monopolistic and competitive forces makes sense both theoretically and empirically. Theoretically, prices needed substantially to firm up, bolstered by growing monopoly powers, for profitability to become more widely realizable. Empirically, historical studies indicate that the new corporate giants emerging out of the early twentieth-century’s IP- and merger-based monopolizing currents were indeed able materially to influence price and profit outcomes. Blicksilver, for example, reported that “profits were usually, although sometimes briefly, even greater” after mergers occurred.173 Similarly, Lamoreaux claims that “consolidations could and did alter the competitive environment in a dramatic way.”174 And she further nuances this claim in a fashion that is, for our purposes, crucial. For if, pace Blicksilver, enhanced monopoly powers sometimes only boosted profit in the short term, what distinguished these ephemeral successes from more sustainable monopoly-based profit enhancement was, Lamoreaux maintains, the ability to erect meaningful and durable barriers to entry. And what better tools to do so than those of IP and IP law? Even more revealing than the return on investment metric, corporate profits also rose markedly as a share of national income. As monopoly powers were widely rebuilt, so in turn, and as a function partly thereof, was the power of corporate America to capture a growing share of the nation’s economic spoils. In the first decade of the century corporate profits represented a paltry 6.8 percent of national income; by the period

Designs on Monopoly

from 1940 to 1949 this share had nearly doubled, reaching 12.9 percent, although it had declined precipitously to just 4.9 percent in the preceding decade as the Great Depression bit.175 There were certainly suspicions in some quarters that the secular rise in the share of income taken by corporations came at the expense of labor. Capital-labor was the social relation uppermost in the social mind, and a stronger capital implied for many weaker labor, with higher prices and profits equating, ipso facto, to lower wages. Indeed: “The gravamen of labor’s charge against the trusts was that even if they did expand production and lower prices, they did not sufficiently share their benefits with their employees.”176 This charge was also backed up by pockets of scholarly research. Most notably Kalecki, using data from the U.S. Census of Manufactures for the period between 1879 and 1937, argued that as the rate of profit had risen the share of wages in U.S. value-added had indeed “suffered a considerable though not quite continuous fall.” He asserted, moreover, that this fall had “resulted mainly from the increase in the ‘adjusted’ ratio of proceeds to prime costs, which in our interpretation reflects a rise in the degree of monopoly.”177 Building on the foundational work of Charles Cobb and Paul Douglas, however, numerous other analysts showed that labor’s share of income in the United States was actually remarkably flat over the course of the first half of the twentieth century as a whole.178 In fact, this became something of a stylized “fact” of mainstream economic orthodoxy, Keynes (in 1939)—referring to data for both the United States and the United Kingdom—calling the “stability of the national dividend accruing to labour . . . one of the most surprising, yet best-established facts in the whole range of economic statistics.”179 Rather than labor, it was, in the United States of the early twentieth century, landed property that appeared to lose income share as corporate profits accumulated it. Yet a brief reference to the significant, if underappreciated, work of Josef Steindl is important here. Steindl carried out similar calculations to Kalecki for different industry groups, and although his headline finding for the 1920s merely mirrored Kalecki’s (“Most of the industries, it is true, share in the general decline of the share of wages”), his more interesting finding was that “industries which are highly concentrated . . . show in most cases a stronger decline in the share of labour” whereas the decline was typically weaker in “competitive industries.”180 In any event, as it became clear, with a relative dampening of competition and a stabilization of prices, that profits were attainable,

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private-sector investment also picked up. In his epic reconstruction of U.S. national income data for the period prior to formal income accounting, Simon Kuznets estimated that in current prices, such investment (in the form of gross capital formation) rose by just 34 percent on the previous ten years for the decade between 1894 and 1903, but by 72 percent from 1904 to 1913, and then by fully 136 percent between 1914 and 1923.181 Levels of investment continued to grow strongly through the remainder of the 1920s, only to fall sharply for three straight years from 1930, then resume their upward trajectory.182 And so, in sum, we can conclude that in this long period of widespread reconstitution of monopoly powers, U.S. capital—and much more important, U.S. capitalism—did well. The crisis of the 1890s, which we have figured as a crisis characterized by a relative excess of competitive versus monopolistic forces, had been weathered; and something resembling normality had been restored. Viewed in terms of short-term snapshots, of course, this period—scarred by the Great Depression of the 1930s, not to mention two world wars—was hardly one of political-economic stability. Viewed over the longer term, however, capitalism and its political economy of production and reproduction had been stabilized.

Conclusion In the late nineteenth century, at more or less equivalents moments, industrial capitalism in both the United Kingdom and United States was confronted by deep economic crisis that threatened its safe, smooth reproduction. With traditional sources of monopoly power having been substantially eroded, the balance between monopoly and competition that is ingrained in capitalism’s metaphorical DNA, and which is essential to its ongoing vitality, had been disturbed. Prices had steadily fallen and profits were increasingly hard to come by as firms jostled for custom in a highly competitive marketplace. Responses took many forms, of course, but arguably the pivotal and most pervasive—and the one we have emphasized in this chapter—is stated bluntly by Freyer: “British and American businessmen sought to stabilize prices by restricting competition.”183 For “restricting competition” read, equally accurately (for it is the other side of the same coin), building monopoly power. In this endeavor Freyer’s businessmen were largely aided rather than opposed by the law. Not only did the law, in the shape of prevailing competition/antitrust policy, offer little resistance to monopolization; but its

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IP variants provided strong, active support. There were significant differences between the two countries’ dynamics, to be sure. The United Kingdom featured more cartelization, the United States more consolidation; the United Kingdom did not actually have statutory competition laws, the United States did, albeit ones that seemingly precipitated more than policed the monopolistic effects inherent in mergers and in IP enactment and protection. Ultimately, however, the similarities between the two countries are more striking, and certainly more significant. In order to redress the imbalance in the core capitalist dialectic of monopoly and competition, both countries needed monopoly powers to be (re)assembled. In both countries, such powers did widely crystallize, and with comparable macroeconomic consequences, not least a return to profitability and rising investment. And in both countries, most significantly of all for this book, IP law was in the ascendancy. The political-economic leveling work effected by the law was, on balance, supportive of monopoly. IP law, constrained by antitrust only modestly in the United States and not at all in the United Kingdom, contributed substantially to rebalancing capitalism on its monopoly-competition knife edge. Yet the danger was ever present that this rebalancing act would go too far. When was more monopoly power enough monopoly power? At the level of individual capitals, of course, the answer was, and is, never. At the level of capital as a whole, by contrast, there was—and is—a theoretical tipping point of sorts at which a relative excess of competition becomes a relative excess of monopoly; the system tips from one side of the knife edge to the other once the condition of “enough” monopoly has been passed. The task nominally facing society’s antitrust and IP legal practitioners collectively is, in a sense, to use their various levers to keep capital as close to “perfect” balance as possible—a difficult enough task, of course, even if it were recognized as such. In surveying the reassembly of monopoly powers en masse in the United Kingdom and United States in the first few decades of the twentieth century, at any rate, the question we need to ask ourselves is if, when, and to what degree imbalance on one side developed into imbalance on the other. The next chapter takes up this question. But already by the late 1930s, in the United States if not the United Kingdom, alarm bells were ringing. President Franklin Roosevelt spoke to both sides of our monopoly-competition dialectic when in 1938 he warned, presciently, of “the disappearance of price competition in many industrial fields” on the one hand, and on the other hand, a “concentration of private power without equal in history.”184

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5 T H E R E V I VA L O F C O M P E T I T I O N

The two to three decades that followed World War II are among the most studied, and certainly most “labeled,” in Anglo-American politicaleconomic history and historical geography. With start dates variously pegged to anywhere from 1945 to 1951, and ending some time in the 1970s—toward either their beginning or their end, depending on the epithet in question—this was the age of John Ruggie’s famous “embedded liberalism”; of Keynesian economic policy; of the Bretton Woods monetary and financial system; and of, perhaps above all else (and for many commentators because of the preceding features), the so-called golden age of capitalism where strong growth went hand in hand with low unemployment, low inflation, and relatively low levels of intranational inequality. In short there was, the relevant scholarship suggests, a striking consistency to the postwar economic order, which indeed helps to explain why the political economy of the period is so often captured in terms of one type of “order” or another. All of this raises some interesting and important questions in relation to the dynamics of monopoly-competition and of economic stabilization and regularization. Simply stated, is some sort of “order” discernible here too? More explicitly, for the United States and United Kingdom, what overall patterns of monopoly-competition oscillation and reweighting developed in this period; to what extent was the law, in its various forms, implicated in these developments; and, arguably most important, what do our answers to these first two questions contribute to our wider understanding of postwar Anglo-American political economy and, moreover, its putative order? Where, in sum, do the law and its leveling work fit—quantitatively and qualitatively—in the wider panoply of forces that shaped the era’s political-economic evolution and the ultimate coherence thereof?

The Revival of Competition

This chapter answers these questions. Its principal thrust is that in both the United Kingdom and the United States those laws principally bearing on our central political-economic dialectic of monopoly-competition looked, both in doctrinal inscription and especially in practical interpretation, very different from the laws we encountered in the previous chapter. Competition law changed (which in the U.K. case meant it was born); and although intellectual property (IP) law per se changed less, the nature of judicial interpretation of its relationship with competition law changed radically (particularly in the United States), which, given the frequency of their entangling in legal practice, meant that in reality the application of IP law changed just as much as that of antitrust did. The upshot of these shifts was that what had previously been a legal complex cumulatively bolstering monopoly powers in both territories transformed into a complex—again, in both territories, although not without significant differences—largely supporting competition. The law was now leveling from the dialectic’s other side; and in doing so, it shaped capital’s ability to generate the profits that are its raison d’être, and ultimately to continue to reproduce itself, in highly consequential ways. The chapter begins by making the case that this shift in the law and its political-economic work was anything but accidental. It happened because it had to, or at least because a continuation of the law’s work along its existing lines would have entailed major problems for postwar Anglo-American capitalism. After all, as subsequent scholarship has amply demonstrated, political-economic conditions in the late 1930s, and then again at the conclusion of World War II, did not exactly predispose the U.S. and U.K. economies to the boom that subsequently occurred and the stability that long accompanied it; it would have been a brave, even foolhardy, contemporary political economist to predict such developments. There were numerous reasons for this, but we shall focus on one: the relative excess of monopoly powers that decades of accommodating laws had enabled corporations to assemble, and the associated threats to capital’s smooth and profitable reproducibility. Something, in short, had to be done to enliven monopolized (if not monopoly) capital and wrest it free of conditions inhospitable to its ongoing vitality. And it was—in the form most significantly of the introduction (in the United Kingdom) and strengthening (in the United States) of local competition laws and their application. The chapter’s second section traces out the most pertinent antitrust developments in both territories in this period, during which, first, in Tony Freyer’s words,

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“despite differences in the mode of enforcement, the theory, practice, and outcome of each nation’s antitrust policy gradually if unevenly converged”; and, second, antitrust tangibly gained the upper hand vis-à-vis monopoly-friendly IP laws.1 The objective of the third section is to substantiate this latter claim. It focuses mainly on the United States because the IP-related obstacles to meaningful legal encouragement of competition were, in that territory, more problematic—by virtue of being more entrenched—than in the United Kingdom. The United States, we can recall, already by the 1950s enjoyed a long history of judicial agonizing over the relative claims of the antitrust and IP laws. Not only that but, notwithstanding a modest shift in favor of antitrust in the later stages of the first half of the twentieth century, IP law had long been ascendant: It conferred, for the most part, antitrust immunity. As such, when American lawmakers and judges set about reinforcing their antitrust statutes and enforcing them with greater vigor after the war, they were required to swim against the tide of history—to battle, that is, an existing tradition of legal practice, with all of the all-too-human inertia that this entailed, in which IP rights typically took precedence. We shall see how they did so. In the United Kingdom, by contrast, the confrontation between IP and competition laws was a new one, with no embedded tradition for the courts to grapple with and justify their actions against. This meant that even if U.K. competition law, as written, did not necessarily provide obvious legitimation for competition concerns to trump IP ones, the law in action was freer to pursue just such a reading. The final section interprets these developments through the prism of political economy. What were their consequences? Both countries saw a restoration of more competitive market conditions, and both countries, as is well known, enjoyed a period in which capital generated profits and a relatively stable—indeed, a “golden” age—regime of accumulation prevailed. However, in arguing for the materiality of the law and its transformations to the successful regularization of capital accumulation in this period, two key questions naturally arise, and the chapter proffers answers to them in such a way as to corroborate—but also carefully circumscribe the limits of—that materiality. The first concerns the extent of the law’s role in reformatting the dialectic of monopoly and competition. The second, equally important, concerns the degree of influence of this reformatting in underwriting capitalism’s ongoing health.

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Turning Marx’s Dialectic on Its Head Roosevelt had been right: The United States in the first part of the twentieth century had, as he argued in 1938, experienced a “concentration of private power without equal in history,” into the hands specifically of a cluster of major, typically merger-generated corporations. Writing about the U.S. economy in the immediate wake of World War II, Robert Brenner would later accurately capture the central outcome of this political-economic concentration in the following basic terms: “oligopolistic control exerted by handfuls of US companies over major industries within the US market.”2 But this outcome had already been largely diagnosed many decades earlier, not least by two of the often most perceptive chroniclers of mid-century capitalism, U.S.-style: John K. Galbraith in his American Capitalism (1952), and Adolf Berle in his The 20th Century Capitalist Revolution (1954).3 With potential competition from abroad denuded, as David Gordon and coauthors note, by “wartime devastation of the Japanese and the leading European economies,” postwar U.S. markets were for the most part dominated by consolidated, vast domestic capitals.4 The postwar U.K. economy, meanwhile, was similarly characterized by the extensive exercise of monopoly powers. But as the previous chapter illustrated, such powers took markedly different form from the U.S. context. With price fixing among “competitors” relatively unproblematic in a country where it had not only been long tolerated but often actively encouraged by government, few companies had gone through the frequently time-consuming, costly, and destabilizing process of merging, at least where price levels were their main concern. As such, when in 1956 the U.K. government passed its important Restrictive Trade Practices Act, it did so “against a background of well-entrenched and widespread restrictive agreements.” Furthermore, as Dennis Swann and collaborators also pointed out, “the growth of tariffs in the 1920s and especially in the 1930s [had] made the operation of price rings very much easier.”5 Hence Stephen Broadberry and Nicholas Crafts’s finding that in 1958 an estimated 36 percent of value-added in U.K. manufacturing originated in cartelized sectors, whereas approximately the same share was produced by industries “where there clearly were attempts at pricefixing but where this may have been rather less comprehensive.” Only an estimated 27 percent of value-added derived from sectors deemed

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to be “completely free of price-fixing behaviour.”6 Add to these facts a major raft of industry nationalizations in 1946 and 1947 as the United Kingdom struggled to cope with the challenges of the war experience and an eroding empire, and the resulting picture is one of monopoly powers being widely exercised.7 Had these U.S. and U.K. developments of the first half of the twentieth century tilted the axis of our pivotal dialectic in a new direction? Had, in other words, the relative excess of competitive forces that obtained in the 1880s and 1890s become, by the immediate postwar period, a relative excess of monopolistic forces? And if so, had the concomitant problems for capital accumulation and reproduction conceptualized by the likes of Hilferding—atrophy, rent-seeking, lack of investment and innovation, lack of effective demand—become an emergent, ominous reality? Historical scholarship on this period suggests that the answer to all of these questions is in the affirmative. For one thing, it has been persuasively argued that the accumulation of various types of monopoly powers had overwhelmed competitive currents to the extent that the investment and innovation that healthy competition precipitates—or for Marx, compels—was simply not occurring. Broadberry and Crafts are among those who have made this case for the collusive, cartelized 1950s U.K. economy, concluding from their econometric analysis of the era that the “net effect of market power on innovation is negative.”8 Brenner has made much the same case for the United States (albeit without the statistical sophistication), concluding that “one can legitimately refer to the existence of ‘oligopolistic competition’ as a fetter on investment in this period.” Here, Brenner was consciously treading in the footsteps of Michal Kalecki and, even more so, Josef Steindl. In his Maturity and Stagnation in American Capitalism (published the same year as Galbraith’s very different treatise), Steindl had shown that oligopoly in the mid-century United States was indeed associated with underinvestment. He had furthermore posited his own original thesis as to why: a fall in the degree of utilization, and thus the emergence of excess capacity. “If the growth of monopoly power leads to an increase in the gross profit margins in industry as a whole,” which was what he saw as having happened in the United States, “this will lower the degree of utilisation, and in this way discourage investment.”9 For another thing, it has also been shown that capital’s relative monopolization had, by the late 1940s, come to be accompanied by another of the key phenomena that Hilferding (and Kalecki) saw it inevitably

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spawning: relatively weak labor. Staying with the United States, Brenner is one of many to observe that by the end of the 1940s the labor movement had lost much of the momentum and power it had temporarily gained in the 1930s.10 Hence why the famous capital-labor accord that now evolved necessarily involved, in Gordon et al.’s words, “union submission and cooperation”—or in effect, “corporate control of labor”— in exchange for “the promise to workers of real compensation rising along with labor productivity.”11 On this point an important quantitative feature of the period is also vital to note. Keynes’s famous “law” of the “stability of the national dividend accruing to labour” (Chapter 4) may indeed have applied during the first few decades of the twentieth century—although as we have seen, Kalecki’s analysis, indicating decline in labor’s share to mid-century, substantially differed—but it certainly would not apply during the century’s second half. And labor’s share in the United States, it transpires, was during the period 1950–1980 never lower than when that half-century, amid widespread capitalist monopoly powers, began.12 In the United Kingdom too, meantime, labor was precariously positioned in the years after the war’s conclusion. To be sure, this period saw extensive nationalization. But some 80 percent of the economy remained profit-making. Full-employment policy theoretically contributed to union bargaining strength and thus to wage levels, but the reality was one of union restraint keeping wage levels in check.13 Recently published data indicate that in the 1940s and early 1950s labor’s share of U.K. national income sank to lows—between 60 percent and 65 percent—to which it would not fall again until the mid-1990s.14 In sum, precisely because of a marked imbalance in the pivotal monopoly-competition relation, things looked inauspicious, insofar as AngloAmerican capital’s stability and growth prospects were concerned, when the dust settled on World War II. In the language of political economy, these were the making of crisis conditions; and deep-seated changes to extant political-economic dynamics were required if actual crisis were to be averted. Of course, some scholars would argue that there was a certain inevitability to the subsequent “golden age” boom, which lay specifically in what had happened in the 1930s and 1940s. This is the argument of Marxian theorists such as Andrew Kliman. For Kliman, “the massive destruction of capital value that took place during the Great Depression and World War II” is the key to understanding “the boom that followed.” Not only did it “set the stage” for the boom by virtue of the

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fact that massive erosion of asset values theoretically enabled profitability—the return on investment in (now cheaper) capital—to be restored. More than that, the destruction of capital is, in Kliman’s account, “a main cause of the booms that follow.”15 Yet there is a distinct dearth of tangible political-economic dynamics here; instead, we have a reification of capital value destruction. It is one thing to say that such destruction makes something else (economic recovery, say) possible, but it is another thing altogether to say that it causes it. Even if we allow that the Great Depression and war put in place conditions where a recovery of profit rates—which, we should recall, had actually been rising consistently since the beginning of the century—was feasible, we surely need a whole other set of arguments for the actual mechanics whereby the boom was engendered and, more pertinent, the bottleneck conditions associated with monopoly-competition imbalance were alleviated. And here, we need to be especially careful not to fall into the trap of classic either/or narratives of crisis formation and avoidance. For many political economists, crisis—potential or real—is so often one thing or another. It is a demand-side, “realization” crisis where the capitalist class is “too strong,” effective demand from squeezed consumer-laborers is lacking, and surplus value cannot be realized; or it is a supply-side, “production” crisis where the capitalist class is “too weak,” laborers cannot be sufficiently ruthlessly exploited, and thus profits cannot be satisfactorily produced to justify investment.16 Either way, the circulation of capital dries up. Understanding what was going on in the United Kingdom and United States in the immediate postwar era, however, requires us to think in terms of both types of crisis narrative. The first of the two sets of phenomena we identified earlier—oligopoly conditions militating against investment and innovation—is very much a supply-side phenomenon. But the second set of issues, concerning labor’s inability to secure a higher share of income in the face of capital buttressed by monopoly powers and thus by inflated prices and profits, belongs on the demand side of the political economy equation. Capital was, in effect, “too strong.” As Alvin Hansen, among others, observed of the United States, “The country came out of the war rich in monetary assets and monetary savings” but with precious little by way of domestic demand from a weakened consumer-laborer population.17 Viewed through this demand-side optic, the United States, and also the United Kingdom, thus confronted a

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classic effective demand or “underconsumption” problem. Steindl concurred. He went to great lengths to make the case that his close reading of U.S. oligopoly, falling utilization, and stagnation fitted comfortably with the Marxian underconsumption crisis theory; and hence he pitched his book as one illuminating this very “tendency to underconsumption set up under oligopoly.”18 Given all of this, therefore, why did crisis not occur? Many clearly suspected it would, and not only among political economy’s naysayers such as Steindl; according to Galbraith, “the tone of business statements during these [postwar] years was often that of a communiqué promising a last-ditch stand against disaster.”19 To answer this question it is essential to consider—contra the Kliman-type theory—not only legacy conditions but what actually, actively then happened. What, in other words, did different political-economic agents—capital, the state, laborer-consumers, the judiciary—do to enable the so-called golden age to become reality? Plenty of arguments have been advanced in this regard, and we shall return to the most favored below. Our focus, however, will be on a set of factors typically overlooked when this critical era of capitalist history is under consideration: the law, and in particular its role as leveler of inherently unstable rhythms of accumulation.

The Halcyon Days of Competition Law In the United States and United Kingdom the voices of doom in the late 1930s and through the 1940s, particularly insofar as those voices identified the relative excess of monopoly powers as the root cause of capitalism’s systemic vulnerabilities, were not confined to the ranks of business people or radical political economists. They also belonged to some of those with their hands directly on the tiller of policy and, crucially, to members of an epistemic community that would, over the course of ensuing decades and all the way up to and including today, come to exert an increasingly powerful influence on national economic policymaking: mainstream economists. That such individuals now warned about the likely consequences of continuing monopoly-competition imbalance was to have profound, lasting consequences in both territories—because they were listened to. Roosevelt, with whose late 1930s admonition of concentrated economic powers we closed the previous chapter, was central to the critique that developed in the United States. Roosevelt’s inner circle included

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those such as Department of Justice (DOJ) antitrust chief Robert Jackson, who, relates David Hart, argued that America’s monopoly-rich corporations “used their legal and market power to inhibit technological innovation (among other things), thereby choking off economic growth and causing unemployment.” Equally important, says Hart, such views increasingly found support among academic economists, many of whom, significantly, focused in particular on the innovation-stifling effects of strong IP rights. “Perhaps the most influential work,” Hart goes on to say, was that of the Harvard-trained, Berkeley-based economist Joe Bain, who—somewhat ironically, given the views (Chapter 3) of his doctoral supervisor, Joseph Schumpeter—“argued broadly that high barriers to entry might deter innovation in some industries.”20 A critique with similar implications but a slightly different complexion emerged in the wartime United Kingdom. In a seminal early report on the United Kingdom’s fledgling competition policy, first published in 1960, Paul Guénault and Joseph Jackson identified a number of important economists who had argued vigorously and influentially against monopoly power in the United Kingdom of the 1940s: A. G. B. Fisher, Hector Leaks and Alfred Maizels, John Jewkes, and Victor Morgan.21 To this list, Freyer adds C. K. Hobson and Arthur Lewis.22 (This was not, in other words, the nascent neoliberal economists such as Arnold Plant and Lionel Robbins—who, as we saw in the previous chapter, had also been arguing against monopoly powers, but to whom few in power were yet paying attention.) A lack of technological innovation was certainly deemed in the United Kingdom to be one of the negative consequences of excessive monopolization, but as Freyer notes, it was not regarded as the key one.23 Instead, the central concern with monopoly powers articulated during the war in the United Kingdom was the conviction that they were responsible for unemployment. Thus, as Thomas Sharpe has argued, the academic assault on monopoly, at least in this particular strain, “was largely owing to the clear association, in the minds of the economists involved, of monopoly power and unemployment. If the monopolies and cartels could be controlled, output and real income would be higher than otherwise and unemployment lower. This was the leitmotiv of the war-time discussions.”24 It was a view encapsulated in what was perhaps the key document of all, a Board of Trade-originated memorandum entitled “The Control of Monopoly” (1943), coauthored by the economists G. C. Allen and Hugh Gaitskell—the latter of whom became

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a member of Parliament after the war, rose to the rank of leader of the Labour Party, and was briefly Chancellor of the Exchequer.25 And crucially, the growing antimonopoly argument of the wartime years was one that, having flowed from the academic into the political domain, largely crossed political party lines: “During World War II,” according to Freyer, “Labour joined many Conservatives in the belief that post-war full employment and economic efficiency required the development of some sort of antitrust policy.”26 In other words (and this is the critical point), these ideas and arguments mattered—in the United States as well as in the United Kingdom. Economists, as well as others, were arguing that contemporary capitalism’s self-evident bias toward monopolistic versus competitive forces posed all manner of problems; and politicians, as we shall now see, listened to them. These opinions stimulated action. We begin with the United States. From Arnold to Warren: Fortifying U.S. Antitrust Historians of U.S. antitrust typically point to one of two different periods—and sometimes both—as the moment when the law shifted from being a powerful tool against price-fixing but powerless vis-à-vis what Freyer terms “managerially centralized big firms,” to being a potent, if imperfect, weapon against monopoly power in toto, however exercised and accumulated.27 The first such period—nominated by James Hurst, among others, as the pivotal one—was 1938–1941. It was in 1938 that Roosevelt made Thurman Arnold his competition law chief, enabling the latter to build “the first substantial Antitrust Division in the Department of Justice.”28 As Hart has observed, Arnold “not only found the views of the deconcentrationist economists congenial, he also hired some of them (such as Corwin Edwards) to work for him.” Hart further explains why Arnold’s elevation was so vital: “Arnold’s stated objective was to convert antitrust from a ‘folklore’ that pacified popular passions, but accomplished little economically, into a tool for ‘breaking bottlenecks’, including those that inhibited technological innovation.”29 Arnold presided over successful prosecutions in, inter alia, the steel, oil, electrical goods, and cement industries. And yet, as Freyer emphasizes, most such successful prosecutions continued to involve cartel-based price-fixing; the Supreme Court remained decidedly “ambivalent” toward the aforementioned “big firms.”30

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Moreover, as even Hurst admits, “World War II shelved the expanded effort” instigated by Arnold.31 Hence why some historians point instead to the immediate postwar—and post-Arnold—era as the critical one. “There was” in this latter period, notes Freyer, “mounting pressure for governmental action against corporate concentration resulting from mergers.”32 Antitrust’s historic weaknesses against such concentration were no longer to be tolerated. And so: “By the year of Truman’s presidential campaign [in 1948, attorney general Tom] Clark and the Antitrust Division had filed suit against nearly half of the nation’s 100 largest firms.”33 Equally significantly, at least in symbolic terms, 1947– 48 saw the Justice Department’s first ever (ultimately failed) attempt to use an antitrust suit to prevent a merger, in the Columbia Steel Company case.34 The decade following World War II thus saw U.S. antitrust begin to broaden and strengthen its purchase. But in this process, says Hurst, stressing the imprint of prewar history, “the Arnold legacy remained and was consolidated.”35 In short, whether one sees the pre- or postwar years as the turning point, antitrust began now to be much more actively and widely enforced. A significant tightening of the antitrust statutes helped greatly in this regard, particularly insofar as the courts were able to go after prospective mergers. Charles Steele, in 1961, summed up the pre-1950s history of antitrust’s merger-related efficacy in stating that as hurdles to corporations “intent upon expanding via the acquisition route,” the Sherman and Clayton Acts “were failures. A judiciary which refused to give effect either to the language or intent of the acts nullified completely their usefulness as anti-merger weapons.”36 Yet this was slightly harsh on the judiciary because in actuality corporations had been exploiting a major loophole in the Clayton Act; the judiciary, short of the statutory closing of that loophole, could do little to prevent such exploitation. The loophole in question was the so-called asset loophole: Where prevented by the Clayton Act from purchasing competitors’ securities, companies merely purchased their assets instead, a strategy that had essentially the same effect on levels of market competition but that the law could not stop. Until 1950, that is, when the Celler-Kefauver Act (also known as the Antimerger Act) was enacted. Its key provision was to close the Clayton Act loophole by prohibiting the acquisition of assets as well as stock; among its other important provisions, meanwhile, was to clarify that the Clayton Act applied not only to “horizontal” mergers between direct competitors but to “vertical” ones between suppliers and their customers too.37

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The upshot of all of this was that by as early as the late 1950s the DOJ was winning, in Freyer’s words, “the sort of case Clark had lost in Columbia Steel.”38 The halcyon days of vigorous and effective U.S. competition law enforcement had begun; and they were to last until the mid-1970s. Attending a conference of the Association of American Law Schools in 1995, by which time such days had long passed, Gary Minda remarked that “a number of the speakers ended their discussion by making fond reference to what they called the ‘great antitrust cases’ decided by the Warren Court during the 1960s and 1970s, especially those cases dealing with the monopoly power of the dominant firm. The speakers referred to this time as an era in which antitrust practice was in its ‘heyday.’”39 Indeed it was. The “Warren Court” was the Supreme Court under chief justice Earl Warren between 1953 and 1969; and as one of the main critics of antitrust under Warren would later note, this period saw antitrust at the very peak of its powers.40 “The plaintiff lost only one major antitrust case in the heyday of the Warren Court, White Motor [in 1963],” wrote said critic, Richard Posner, in 1978, “and four years later the Court in Schwinn adopted the principle for which the plaintiff in White Motor had been contending.”41 Where antitrust law was mobilized in this period to break up alleged price-fixing cartels, note, the approach used by the courts remained much the same as in the prewar era. The Supreme Court continued to insist, shows Eleanor Fox, that “the law prohibited contract restraints that ‘clogged’ the channels of competition and deprived firms of an equal chance to compete on the [sic] merits in free and open markets. It protected the freedom of the independent trader to sell where and to whom the seller pleased.”42 However, where mergers, antitrust’s principal new bugbear, were concerned, the law headed off in new substantive and analytical directions. The importance of this shift can barely be overstated because it had profound short- and long-term implications, and ones ultimately dripping in irony—for although the law’s exercise changed in a way that strengthened U.S. antitrust in the short and medium term, the path was simultaneously laid for its eventual sterilization. The essence of this shift was that antitrust and its exercise became increasingly dominated by academic economics. It may sound odd to assert that a law concerned with the economy had ever been anything but predicated on economics, yet until the 1940s economic scholarship and economic models had actually been largely peripheral to the law both

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as written and as judicially interpreted. Instead, antitrust had been, in Frederick Rowe’s telling, “an instrument of public intervention to check feared abuses of power” that incorporated a range of political-economic imperatives (protecting small businesses being a key one) but that, crucially, was not based primarily on economic “science.”43 Indeed, contemporary economists had for the most part scorned the Sherman Act when it was enacted in 1890. When antitrust reemerged with a vengeance from its hiatus during World War II, however, it did so wrapped in a new mantle of nominally objective economic science, leading Will Davies to write of “a usurping of legal by economic epistemology.”44 Rowe, meanwhile, styles this new merging of law and economics a Faustian pact.45 He does so because although, in the short term, this newly economized legal complex focused on the economics of industrial structure and boosted antitrust as an interventionist force, it was now inherently vulnerable to changes in economics orthodoxy. And when this orthodoxy substantially changed under the influence of the Chicago School from the 1970s, so too, as we shall see in the next chapter, did antitrust. As Peter Carstensen has written, the postwar shift toward a more scientifically informed legal regime had in fact been presaged somewhat earlier; rarely, indeed, are such shifts sudden and abrupt. Thus, although economic-model-based antitrust was not fully in evidence until the 1950s or even the 1960s, the 1930s had seen “the beginning of a shift in monopoly analysis away from the bad conduct approach emphasized in United States v. United States Steel Corp. and United States v. International Harvester Co. to the structural and economic impact analysis of United States v. Aluminum Can Co. of America and United States v. Griffith.”46 What did this new “structural and economic impact analysis” look like? It was actually relatively straightforward, at least in theory. The central issue of antitrust was now to be levels of industry concentration. This emphasis was palpably evidenced in the late 1940s in the legislative history of the Celler-Kefauver Act, which as Fox remarks, “speaks clearly and overwhelmingly of the social evils of ‘concentration.’” And it was evidenced equally in the case-law interpretation of said act. Fox continues: “In the 1960s and early 1970s, the Supreme Court applied the merger law to prevent increasing concentration of business assets into the hands of fewer competitors.  .  .  . Competition was equated by the Court with deconcentration. . . . Applying the merger law to prevent concentration, the Court protected competition as the Court defined it and as the legislature had viewed it.”47

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In practice this emphasis on concentration was realized through what Rowe calls the “oligopoly model,” which posited that “few producers dominating a concentrated market instinctively behaved like one monopolist,” and which deployed a concept of market power measurable by numerical market shares.48 To distil a broad swath of legal principles into one sentence, we can say that there was perceived to be a competitive concern if market power, evidenced in market share, was excessively concentrated in the hands of one or a small number of producers. The DOJ’s 1968 Merger Guidelines, in calling for strict market share criteria to be applied, were extremely influential in this respect. Two dimensions of the law’s application in this period of the oligopoly model’s hegemony warrant particular mention. First, because market shares were crucial, so too was the underlying exercise of defining what the market was: Where, in both product/service and geographical terms, did the “relevant” market begin and end? One obviously could not estimate market shares before first asking: shares of what? And thus, as Rowe explains, “delineating the relevant market became the crux of each case. Opposing lawyers fought to make the market look smaller or bigger, in order to bloat or to shrink the defendant’s percentage share within.”49 Second, and more material to our purposes, concentration levels did not need to be particularly high for antitrust’s standardbearers to cry foul. “The basic ideology of the Warren Court merger decisions,” says Herbert Hovenkamp, “held that merger policy should ensure the maintenance of markets with large numbers of small players. The Supreme Court condemned mergers at market concentration levels that would be considered hilarious by today’s standards.”50 Hilarious or not, matters had clearly changed radically from the prewar era. From the enactment of the Sherman Act in 1890 through to World War II, U.S. antitrust had been long on the rhetoric of antimonopoly but short on the practice, feeble as it was to act against consolidation-based corporate monopoly in particular. It had been feeble vis-à-vis IP-based monopoly too, of course; and the question of whether it remained so is one to which we return below. Insofar as merger-based concentrations of power were concerned, however, a fundamental shift in antitrust policy and its exercise had occurred, with bite finally being added to the longstanding bark. This shift was set in motion by Arnold, pursued with alacrity by Clark, and then achieved its full flowering under Warren. Only in the mid- to late 1970s, midway through the subsequent Supreme Court tenure of chief justice Warren Burger, would a shift of equal importance, in the obverse direction, occur.

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Putting Competition Policy in Place: The U.K. Restrictive Practices Court If the insistence by prominent U.S. economists that abundant monopoly powers stymied technological innovation was instrumental in invigorating U.S. antitrust from the late 1930s, U.K. economists’ tying of unemployment to those same powers was similarly influential in prompting a postwar U.K. administration preoccupied with full employment to formulate the country’s first ever competition policy as such.51 The centerpiece of this policy was the Monopolies and Restrictive Practices Act, passed in 1948, and the Monopolies and Restrictive Practices Commission it created. Antitrust had arrived in the United Kingdom, and not without U.S. encouragement.52 Right away, however, we have to caveat heavily the claim that the United Kingdom now had competition laws. In theory, on the statute books, it did; in practice, the 1948 law was meaningful in little more than name. It was, says, David Gerber, markedly “timid”; considerably more circumscribed than the Gaitskell-Allen memorandum had recommended, it was dismissed as a “puny infant” by one particularly scathing observer.53 To a degree, the government acknowledged this timidity, defending cautiousness on the grounds that not enough was yet known about monopoly power in its U.K. variants to warrant a stronger initial legal framing.54 As such, although the act empowered the new commission to investigate either whole industries or individual firms (but only after cases had been referred to it by the government), few such investigations were ever carried out—just twenty-seven in the years prior to the system being overhauled in 1956—and a grand total of two government orders were issued under statute.55 Furthermore, “the Act imputed no vice to monopoly or restrictive practices as such. . . . ‘To monopolize’ was no offence under the law. The Commission’s investigations were simply directed towards discovering the economic effects of certain practices and suggesting what should be done if those effects were found to be socially undesirable.”56 This leads Gerber, in line with other historians, to conclude that during this formative period the system “performed little more than an educational function.”57 Yet Gerber is not entirely negative. For one thing, he argues, this education evidently transformed social attitudes to competition and demonstrated the rampant nature of restrictive practices that were potentially harmful to the public interest. And in doing so, the 1948 act “began

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a long and tortuous process that eventually yielded a formidable and complex competition law system.”58 A secondary caveat also applies if we choose to speak of this formative period specifically in terms of competition law. Granted, competition policy had been written into the legal system; but the Monopolies and Restrictive Practices Commission created by the 1948 legislation was a purely administrative as opposed to legal body, and one which reported to the president of the Board of Trade. In this period, therefore, the United Kingdom followed an “administrative approach” to the practice of competition policy, not a legal, court-based one.59 This definitively changed, however, in 1956, with the passage of the Restrictive Trade Practices Act—an act that, in the words of Thomas Sharpe, “adopted a highly legalistic approach toward restrictive trade practices.”60 U.K. competition law, as a practical and purposive de jure reality, had finally been born. As noted in the introduction to this chapter, Freyer has argued that the theory, practice, and outcomes of U.K. competition law “gradually if unevenly converged” with the U.S. experience over the next two to three decades. He bases this assertion primarily on the fact that officials in both countries remained more vigilant and interventionist in regard to cartels than where mergers or corporate concentration were the issue in hand.61 And, at a (very) headline level, he is right. But we have already seen that U.S. antitrust became considerably more vigorous in the merger and industry-concentration field after the war than it had been beforehand, a fact that runs somewhat counter to Freyer’s thesis. And although U.K. competition policy, as we shall now see, did indeed for several decades focus more on cartelization than on monopolies and mergers, it was nonetheless characterized by a number of striking differences from U.S. antitrust. There were, for instance, considerable differences in political-economic philosophy, which had been hinted at in the United Kingdom’s neutral, nonnormative approach to monopoly in the 1948 legislation, and whose manifestation in relation to the 1956 U.K. act was smartly captured by David Kilgour: “The Sherman Act stands in praise of a full-blown competitive economy. The English Act on the other hand reflects the fact that in a state committed to a large measure of public or private control competition is only one of many other economic objectives.”62 This was indeed true. For Kilgour, moreover, this philosophical variance was reflected in significant doctrinal variance: Where the Sherman Act “strikes

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at all ‘contracts and combinations in restraint of trade,’” and was thus “general in scope,” the U.K. act “is limited: it strikes not at firms in general,” for instance, “but only at firms trading in ‘goods.’”63 (A limitation that was later removed when the act and its provisions were extended to services businesses as well.) In any event, differences in philosophy and doctrine were accompanied by numerous differences in legal practice that, for our purposes, are the more important. To begin with, the key effect of the 1956 act, beyond providing the law with much-needed teeth, was decisively to split the existing competition policy system in two. For the sake of clarity we will deal with these in turn. The first component of the system was now limited to restrictive practices; the second, to monopolies, with mergers not added to the mix (and to this second “leg” specifically) until as late as 1965. For at least three reasons, the restrictive practices—essentially equating to cartel-based price-fixing—dimension of post-1956 U.K. competition policy deserves much the fuller scrutiny and understanding here. First, restrictive trade practices, as we have seen, constituted the particular form in which monopoly powers were most often realized and exercised within the mid-century U.K. economy; we need therefore to know what, if anything, U.K. competition law sought to do about them. Second, and as a direct corollary of this first feature, restrictive trade practices indeed became, after 1956, far and away the most active and impactful area of U.K. competition law enforcement: the law, in this sense, acted where the need, at least in the short term, was greatest. And third, although U.K. monopoly (and subsequently merger) policy was not greatly dissimilar from approaches pursued elsewhere in the world (including in the United States, which explains in part Freyer’s convergence thesis), its approach to restrictive trade practices assuredly was different. Most especially of all, the 1956 act created a distinctive new legal institution—the Restrictive Practices Court (RPC)—that developed into what Gerber, and others, regards as “perhaps the most unique feature of UK competition law.”64 How, then, did the Restrictive Trade Practices Act, and the RPC in particular, begin to stamp down on restrictive practices?65 We can consider its work in two stages. The first was one of registration. According to the provisions of the act, parties to all and any new horizontal business agreements within the United Kingdom, where these parties accepted substantive restrictions of some kind, had to register

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such agreements with the Court. Restrictions could, and did, cover prices or other conditions of sale, the geographical regions where business could (or could not) be conducted, the types of goods to be made or sold, and so on. The Registrar of Restrictive Trading Agreements then displayed these agreements on a public register. As numerous legal and economic scholars have since pointed out, this approach was particularly notable for the prioritization of legal form over economic effect: What mattered was the form of the agreement rather than the effects it engendered in the marketplace. The second stage to consider is what was then done with regard to these restrictive agreements. Perhaps most significant, and in a major departure from the 1948 act, restrictive practices were now, with certain exceptions (including most export agreements), presumed to be harmful in the sense of being contrary to the public interest. They were therefore to be terminated accordingly, unless the parties to the agreement could satisfactorily justify their retention before the RPC. The court contained judges and lay members, and each case was heard by a panel of at least three members, but sometimes many more. Crucially, restrictive agreements could only be justified by reference to a series of prespecified “gateways,” the most general and most frequently invoked of which was that “the removal of the restriction would deny to the public (as purchasers, consumers or users) specific and substantial benefit.”66 Even then (i.e., if the agreement passed through the gateway), the court could still judge the restrictions to be, on balance, unreasonable. The above synopsis of the Court’s practices concerns horizontal restrictive agreements, which is to say, those between companies deemed direct (potential) competitors; a word is necessary also on vertical agreements. The Resale Prices Act of 1964 brought these too within the RPC’s jurisdiction. Such agreements, whereby suppliers sought to stipulate or otherwise control the prices at which their products were (re)sold by wholesalers and/or retailers, were relatively common; the Net Book Agreement (NBA), which was in place from 1900 up until as recently as the 1990s, is merely the best known of these. The 1964 act effectively condemned such vertical price agreements in much the same way that the 1956 act had condemned restrictive horizontal agreements. Again, however, the possibility was left open for the individual companies— or more frequently, industry sectors—involved to persuade the court to exempt them from the blanket prohibition. The book publishing sector was one industry granted such exemption in the period we are concerned

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with here. (Not until 1997, by which time the NBA had already largely collapsed in practice, did the RPC rule it illegal.) If the 1950s through 1970s saw U.S. antitrust finally come materially to grips with consolidations of economic power within large corporations, therefore, the same period saw U.K. competition law come to grips with price-fixing in its various forms. We shall reflect more critically and closely on the nature and degree of this success (as well as that of U.S. antitrust) later in the chapter, but the overall efficacy of the RPC is relatively clear. Gerber summarizes its first, pivotal decade as follows: “More than 4,000 agreements had been registered by 1965, including many of national significance. The court seldom concluded that such agreements were justified, and, as a result, the vast majority of them were either terminated or modified to eliminate provisions that fell within the Act.” In this reading Gerber follows the early assessment of N. H. Leyland, who in 1965 described the initial court judgments as “fierce” (but also “probably essential, as the 1956 Act marked a new approach to the competitive system”), and concluded that the “shock therapy has been administered.”67 Court activity then ebbed somewhat, but the central pattern of few agreements—horizontal or vertical—passing muster prevailed throughout. Monopolies and mergers, however, were another matter altogether. As already stated, the 1956 act did not encompass mergers at all; only existing monopolies were addressed. And here the exercise of competition policy remained administrative—the courts were not involved. The key administrative body was a newly slimmed down Monopolies Commission, which was charged with carrying out investigations strictly upon referrals from the Board of Trade. Did monopoly exist (the answer was in the affirmative if a third, later reduced to a quarter, or more of the market was controlled by just one or two entities); and if so, was the exercise of this monopoly against the public interest? These were the questions the commission tackled. But with the U.K. government continuing to be supportive of internationally competitive large U.K. corporations (support channeled, after 1966, through the Industrial Reorganisation Corporation), the commission handled relatively few references in its first decade. Furthermore, although it could make recommendations for remedies in the event that it unearthed harmful monopoly, it had no power to enact them. Instead, most of its recommendations led to negotiations between the companies involved and the Board of Trade, and to voluntary compliance. Evoking the type of “gentlemanly capitalism”

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later pictured by Peter Cain and Tony Hopkins, the Registrar of Restrictive Trading Agreements, Sir Rupert Sich, remarked in 1971 that when “objectionable practices” came to light in monopoly investigations the guilty parties “generally undertook to mend their ways.”68 With mergers added to its remit in 1965, the commission became the Monopolies and Mergers Commission (MMC). Once again, as with nonmerger monopoly matters, the Board of Trade occupied a pivotal position: It was the board’s decision as to whether mergers should be referred to the commission or not. Mergers were considered “referable” if they would create a monopoly—as defined above—or where over £5 million in assets were being acquired. But the board was under no obligation to refer referable mergers, and in the majority of cases, swayed by the argument that the merger was not against the all-important “public interest,” it did not. In the relatively few cases where mergers were referred to the commission, there was one of three possible outcomes. The parties to the proposed merger simply abandoned it (this often happened); the merger was found not to be against the public interest; or the merger was deemed contrary to the public interest, and either it was blocked or remedies were imposed. In sum, therefore, and without entering into a more detailed consideration of the effects of these policy changes and implementations (which we shall do later in the chapter), we can conclude simply as follows: The United Kingdom, in the period from the 1950s through to the midto late 1970s, actively sought to eradicate monopoly powers realized through restrictive trade practices, but it was seemingly much less concerned to intervene when there was a possibility that existing or prospective clusters of industry concentration begat such powers. The next substantially significant change in U.K. competition policy occurred at the juncture of the periods considered in this chapter and the following one when, in 1980, the new Conservative administration passed its Competition Act. The act’s content and implications are discussed in Chapter 6. In the early 1970s, however, there had been two other noteworthy developments. In 1973 the Fair Trading Act shifted certain competition policy responsibilities to the Director General of Fair Trading, who from this point on would make recommendations to the Secretary of State as to whether markets (in the case of suspected monopoly) or mergers should be referred to the commission for investigation; but the impact of this restructuring was limited. Meanwhile, it was in the same year, of course, that the United Kingdom acceded to the

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European Economic Community (EEC), meaning that British business became subject to an additional set of competition rules—those spelled out in Articles 85 and 86 of the Treaty of Rome—where alleged anticompetitive practices or structures specifically affected trade between member states. This development would have more lasting significance; but its implications did not begin to be materially felt until towards the end of the decade (when the growing significance of European competition law was indeed one of the triggers for the new U.K. Competition Act), hence it too is covered in the following chapter.

Trading Places: IP Law Shackled Up until the middle of the twentieth century, we saw in the previous chapter, the law, broadly conceived, had roundly bolstered monopoly power accretion in the United Kingdom and the United States. Strong monopolysupportive and widely mobilized IP laws in each territory held sway over competition policy that was nonexistent in the former and largely powerless to provide counterbalance in the latter. However, we have now seen that from around mid-century, Anglo-American competition law was substantially strengthened on paper and in practice. What, then, occurred in the realm of IP and its legal protection, particularly insofar as such protection jarred—or was seen to jar—with competition imperatives? Of the two territories, the United States presents much the clearer pattern of evolution. Antitrust had been in evident tension with IP law ever since the former’s genesis in the late nineteenth century. The relation between the two legal complexes was already a high-profile one. As the government moved to intensify antitrust enforcement after the war, the question of IP’s relative status was inevitably very much in the spotlight. It has remained there in the decades since, and there exists therefore a rich literature to guide us in illuminating the pertinent historical dimensions of this relationship. The U.K. story is much murkier, having been much less written about. We will therefore begin here, and endeavor to draw out what conclusions we may. Perhaps the key recognition to start with is that, there having been no U.K. competition policy prior to 1948, the relationship between IP and competition laws that now developed did so from scratch. It had no history either to accommodate or to escape from. Equally, and perhaps unsurprisingly, it took a relatively long time for the relationship in question, in terms of its practical manifestations, to

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settle into any sort of clear pattern (if indeed it ever did). The relevant new statutes, after all, came thick and fast: not only the overlapping competition bills of 1948, 1956, 1965, and 1973, but the significant Patents Act (1949) sandwiched between them. Furthermore, and more pointedly, the written law in this area would prove to be something of a jumble—hazy, at best. Consider first of all the implications of the 1949 Patents Act. The key background to this legislation was the influential 1948 report of the Swan Committee on patents. In preparing its report this committee had been made well aware of arguments from within industry that the monopoly powers furnished by U.K. patents needed to be made more expansive and robust. But as G. C. Allen later observed, neither the committee nor Parliament was persuaded by this view. In the event, therefore, the 1949 act leaned in the other direction: instead of emboldening the patent monopolist, it “further qualified the monopoly granted to patentees.” It did so primarily in respect to patent licensing, or rather patent nonlicensing (hoarding). “Where the [Monopolies] Commission found that the use of patent rights contributed to practices deemed by them socially undesirable,” wrote Allen, “the Comptroller of the Patent Office could take this conclusion into account in deciding whether to give licences of right.”69 Yet if this seemed to set a precedent in one direction, the terms of the 1956 Restrictive Trade Practices Act appeared to nudge the relationship the other way again. Recall, from above, that in not being considered inherently harmful to the public interest, some interfirm restrictive agreements were exempt from public registration. These notably included most agreements dealing with trademarks and patents. In theory, therefore, things like patent licensing agreements, where a patentee and licensee agreed upon key matters such as the price at which the latter would sell the licensed good, would not land the two parties in court. Ultimately, therefore, amid a thicket of often dense legislation, the different legal and administrative bodies charged with effecting U.K. competition policy were left to work out, in practice, how IP and competition protections should relate to one another: which should take precedence, when, and where. Unlike the U.S. case, however, where the relational tendencies of the period are, as we shall see, crystal clear, it is very difficult to judge the overall balance between competition and IP protections in cases involving both in the United Kingdom in this period. Yet in the final reckoning

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this difficulty is not of too great concern, for the more important conclusion that we can state with confidence is that the relationship in question was simply not the major issue that it was in the United States. IP-related concerns certainly surfaced periodically in both monopoly and restrictive practices cases over the next two decades, although seldom in isolation in the latter (rather, as one among a wider set of restrictive arrangements). But the word “periodically” is the key one here. The RPC dealt only occasionally with such matters. “The Monopolies Commission,” meanwhile, “rarely encountered serious allegations of patent abuse.”70 The explanation for this may in part be that the tenor of the 1949 act was largely neglected, and that patents, trademarks and the like were simply assumed by the authorities to provide sweeping exemption from competition inquiries per se. This may be true for the RPC, where such exemption was indeed legislated—albeit not, claimed Michael Burnside, without limitations—but the argument bears less weight in relation to the Monopolies Commission, which not only rarely deliberated on alleged patent abuse but rarely encountered (see above) allegations thereof.71 The more likely explanation therefore lies in the particular history of IP creation and exploitation in the United Kingdom in the postwar era. Where the interwar years had seen feverish IP activity at the heart of the country’s innovation-intensive industrial development and growth, the postwar period is widely recognized as a period of relative stagnation in innovation by British firms. Simply stated, domestic IP activity tailed off; and in this milieu, a relative lack of IP-based conflict with the new competition agenda is comprehensible. Patenting rates epitomized the wider trend. As William Walker notes, the United Kingdom’s share of global technological output, measured by patents, declined throughout the 1960s and 1970s.72 Perhaps the most striking statistic in this regard is that which shows the United Kingdom’s changing share of nonAmerican patents granted in the United States. Exemplifying the argument of the previous chapter, this share had risen from 22.7 percent in 1938 to a high of 36 percent in 1950. But it then declined precipitously throughout the period we are concerned with in the present chapter, falling back to 23.4 percent by 1958 and to just 10.8 percent in 1979.73 This decline undoubtedly helps to account for the seemingly largely free rein afforded to U.K. competition policy in the 1960s and 1970s. But just as important, it also supports Broadberry and Crafts’s argument—rehearsed above—about market power and innovation in postwar Britain. Innovation and IP may originally have helped to secure

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monopoly powers during the decades prior to World War II; but once the war was over, the monopoly thus crystallized evidently served to stymy the innovation that would have spawned new patents. It did not help matters, either, that there was little by way of government encouragement for IP promotion and protection in this period. From the early 1980s, as we will see in Chapter 6, IP would come to occupy a pivotal position in European states’ innovation and national “competitiveness” discourses and policies. But Valbona Muzaka shows that in the postwar decades, by contrast, IP was conspicuously absent from this terrain, with innovation policies instead “driven by knowledge production and technological development promoted primarily through public investment in sciences and intercompany research and development cooperation.”74 Hence the decidedly nonexpansive Patents Act of 1949. And hence also the fact that where, in the United Kingdom, local technology-intensive growth did occur in these decades, it was the result mainly of the state’s expansion of defense expenditures and of inward investment from, especially, Japan and the United States. Indigenous IP-intensive innovation stagnated. “Only in chemicals and pharmaceuticals and in a few engineering niches (aeroengines being a significant example),” argues Walker, “could it be claimed that Britain maintained its position.”75 What, if anything, then, are we able to conclude about the relative weighting of IP and competition concerns in the (few) cases where the authorities were required to judge the balance between them? Charles Rowley’s observation that the Monopolies (then Monopolies and Mergers) Commission adopted “a flexible approach” to patent agreements certainly fits with the historical record, but says nothing about where precedence was typically laid.76 But a helpful early signpost was provided by Burnside, who wrote in 1962 that, in relation explicitly to competition law, “at the present time, a British patentee probably enjoys a more favored legal position than his American counterpart”—an American counterpart who, as we shall presently see, had over the previous decade seen her historic protections from antitrust largely eroded.77 Burnside’s suspicion—and it was only that—was given credence by the observations of Eberhard Gunther nearly a decade later. Gunther noted that one issue that had cropped up a number of times in the MMC’s reports was patent licensing. He identified eight such occasions, split equally between monopoly and merger investigations. In six of these, the commission concluded that the patent agreements did not unduly endanger competition. In only two, therefore, did it issue recommendations,

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with the merger being blocked in one case and the monopolist giving assurances to terminate specified agreements in the other.78 Over time, however, as the 1960s segued into the 1970s, the historical record suggests a shift in momentum, with competition policy concerns increasingly winning out over IP protections in the limited number of instances when they crossed paths. Two cases are mentioned frequently in the literature as being symptomatic of this shift. The first, on which the commission reported in 1973, was that of the pharmaceuticals company Roche and its supply of the tranquilizers chlordiazepoxide and diazepam. This case was particularly notable for the fact that in ruling against Roche, which dominated the U.K. market for these drugs, and in recommending price controls to dampen existing price levels that—the National Health Service being the main customer—it deemed contrary to the public interest, the commission specifically invoked the ways in which the 1949 Patents Act (in Allen’s above-cited words) “qualified the monopoly granted to patentees.” In regard to pharmaceuticals products it did so, the commission said, in two main ways: by allowing for compulsory licensing on “reasonable” terms, and by giving the state the power to exploit patented products without paying compensation. It is highly noteworthy in this regard that the proportion of the total sales value of the 100 leading pharmaceutical products in the United Kingdom that was attributable to patented products fell from 73 percent in 1973 to just 43 percent in 1978.79 Three years later, the commission handed down a similarly negative judgment on patent-based monopoly in its report into the U.K. market dominance of the photocopying equipment manufacturer Rank Xerox. The company’s patent strategy had, the commission concluded, “impeded and delayed the emergence and establishment of competing suppliers” and was geared explicitly towards “preserving a monopoly condition . . . against the public interest.”80 While such cases are arguably indicative of a shift towards greater weight being accorded to competition policy versus IP imperatives, however, we probably should not push the argument too far; just as it would be unwise to read too much into Burnside’s estimation at the beginning of the previous decade that British patentees “probably” enjoyed a stronger relative position—relative to antitrust strictures, that is—than U.S. patentees. What we should emphasize, rather, is the reason precisely for why such judgments can be only cautiously advanced: namely, the fact that the confrontation between competition and IP law was not a major one, and hence the data on which to establish patterns

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are too thin. Thus, when, in the following section, we seek to evaluate the political-economic effects of competition-related laws in the United Kingdom in this period, IP law will not feature centrally. Just as competition law, in its absence, offered no counterbalance to IP law in the United Kingdom in the first half of the twentieth century, IP law in turn seems to have offered relatively little counterbalance to competition law in the decades that followed. That was also the eventual outcome in the United States, albeit subsequent to a very different political-legal history. As we saw in Chapter 4, IP law had had the clear upper hand in relation to antitrust in the first half of the century: The courts saw IP of all varieties as endowing its owners with monopoly power, but this was, in antitrust terms, legal monopoly. Only in the later years, and only in respect of patents, had antitrust begun tentatively to claw back some of the ground. The period from the beginning of the 1950s through to the end of the 1970s presents, however, a very different story where the IP-antitrust nexus is concerned. With antitrust having historically been thwarted by IP laws, the latter had to be actively muzzled if the former—as it ultimately did—was to begin to do its work effectively. The real turning-point came, legal historians have shown, in the 1940s. Alongside a determined move by the Justice Department during World War II to use the Sherman Act to attack international cartels and the licensing practices they relied upon, there was a hardening of attitudes toward domestic IP-based monopoly. “Only then,” observe Spencer Waller and Noel Byrne, “did the hostility to intellectual property rights become a consistent feature of United States antitrust policy.”81 Sigmund Timberg, as close to the judicial coalface as anyone in his work in that period at the DOJ’s Antitrust Division, pinpointed the exact moments when this attitudinal hardening conclusively permeated court judgment. For patents and copyright it was 1947, in which year, courtesy of the Supreme Court, they “were decisively deprived . . . of their potency for commercial regulation contrary to the antitrust laws.” For trademarks it was 1949, when Timberg’s division for the first time “launched a series of cases in which the use of trade-marks was regarded as a primary and direct source of antitrust violation.”82 The exact legal mechanisms whereby power shifted in favor of antitrust were varied, but this occurred mainly through a narrowing of the immunity from antitrust that IP had traditionally conferred. In the 1948 patent-pooling case of United States v. Line Material Co., the Supreme

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Court’s explanation for ruling against the pool illustrated just how important this exercise in boundary drawing—where exactly did legal monopoly begin and end?—was: “The possession of a valid patent or patents does not give the patentee any exemption from the provisions of the Sherman Act beyond the limits of the patent monopoly.”83 The monopoly power conferred by patents, trademarks, and the like may still have been legal, and hence exempt from antitrust, but the scope of that monopoly was now to be radically constrained. The pattern was broadly comparable for trademarks and patents. Our best guide to the former is the work of Daniel McClure. Far from the “privileged place” they had been accorded as recently as the 1930s under the New Deal economy (Chapter 4), trademarks had come by the 1950s to be regarded as vehicles for maintaining large corporations’ monopoly powers—in other words, as intrinsically anticompetitive. They were attacked accordingly in antitrust suits. This attack, argues McClure, “reached directly into the heart of trademark law.”84 And it reached its apotheosis in the late 1970s, he shows, with the Federal Trade Commission’s action against Borden Inc., which it accused of monopolistic behavior in the concentrated lemon juice market predicated on its ReaLemon trademark, for which the commission thus initially sought compulsory, royalty-free licensing.85 This, says McClure, was nothing less than a “frontal assault on trademarks.” His assessment of the implications of this assault is worth quoting in full: “The antitrust laws are designed to promote and protect competition, and the use of the antitrust laws to directly challenge the validity of trademarks sent shivers through the community of trademark owners. In 1979, it appeared that the future of trademark protection was in jeopardy or at least that trademark protection might be denied in any instance where trademarks were found to assist in the maintenance of monopoly power by any trademark holder. With that ominous prospect, the 1970s drew to a close.”86 The same stark scenario materialized for patents and patent owners. But if, pace Timberg, it was not until 1947 that a line had definitively been drawn in the sand in terms of court judgments on relative patent/ antitrust precedence, there was, as we saw in Chapter 4, historical precedent. The courts had been patiently chipping away at patent supremacy for many years, even if they did not conclusively bury it until after the war. It is, for instance, hugely significant that when Arnold began filing his antitrust suits a decade earlier, his targets included “some of the

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nation’s best-known high-technology companies, including Standard Oil of New Jersey, DuPont, General Electric, and Alcoa”; and that he “focused particularly on the patent holdings of some of these firms.”87 Arnold’s focus subsequently became widely institutionalized from the 1950s through the 1970s. As with trademarks, it was in the 1970s that antitrust’s newfound dominance over patent law reached its peak; it was manifested most notably in the infamous “nine no-nos” of patent licensing, first articulated by a DOJ official in a 1975 luncheon speech, which would almost certainly see such licenses struck down on antitrust grounds.88 And also as with trademarks, there was, with patents, a particular example that has come to be seen as emblematic by many historians: If for trademark it was Borden/ReaLemon, for patents it was Eastman Kodak and Polaroid. For when, in 1976, the former company attempted to produce an instant camera to compete with the marketleading product sold by the latter, its development committee sent around an internal memorandum that spoke as voluminously as any court decision could about the prevailing weaknesses of patent protections in an environment of undisputed antitrust hegemony: “Development,” it insisted, “should not be constrained by what an individual feels is potential patent infringement.”89

Law, Competition, and the Golden Age of Capitalism In the United States, then, the legal tables had been decisively turned in the space of the previous three to four decades. A context in which IP rights typically trumped competition concerns—in which, indeed, the former were often mobilized with the explicit purpose of circumventing the latter—had mutated into one where antitrust was ascendant: partly by virtue of its strengthened enforcement per se, and partly by virtue of a diminution of the immunity that IP provided from antitrust. In the United Kingdom, meanwhile, the turning of the tables had occurred even more rapidly—in the space of the two decades since laws to curtail monopoly powers were first introduced in 1956. This active building in the United Kingdom of legal means to disassemble such powers was facilitated moreover by the simultaneous decline in corporate mobilization of the countervailing legal means—namely, IP law—to assemble them. The law, in short, in both territories, was now providing support not to forces of monopoly but to the competitive forces with which monopoly under capitalism is always, necessarily, dialectically intertwined.

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In doing so the law once again served as a critical political-economic leveler. In the immediate postwar era capitalism in both the United Kingdom and United States had arrived at a precarious juncture where stable reproduction of the system and its profit-making engine was threatened by a relative surplus of monopoly powers that stifled innovation and investment, and which squeezed labor and the effective demand it theoretically nourished. But in reversing its effective mode of operation, the law once again came to the rescue. It now served to begin to replenish the ailing forces of competition. And in doing so, it began to restore the balance between monopoly and competition that had been substantially disrupted. Labor’s power vis-à-vis capital began to recover; monopoly prices and profits were undercut; and capital accumulation proceeded apace. Both economies, in this so-called capitalist golden age, grew faster than ever before, even if the United Kingdom—in which the recovery of competition and innovation was clearly the slower of the two—experienced relative decline compared to its continental European neighbors. In arguing, however, for the critical materiality of the law to the regularization of capital in the postwar U.K. and U.S. economies, two questions loom large and demand close consideration. First, did the law alone lead to the reemergence of meaningful competition—and indeed, did levels of competition actually increase? And second, did the restoration of better balance between competition and monopoly, particularly insofar as it was driven by the law, alone help capital emerge successfully from the inauspicious conditions it faced in the late 1940s? Addressing and answering these questions can help us identify and understand just how important the law was, and is. We shall take each in turn. Competition Law and Competition Economic historians are broadly agreed that levels of competitive intensity did rise in the United States between the end of World War II and the 1970s. A “comfortable cushion of moderated competition,” in the words of Gordon and coauthors, gradually turned into “a bed of thorns” as U.S. firms increasingly experienced “intensifying competition.”90 For Gordon et al. this intensification dates to the mid-1960s, but other analysts suggest it began considerably earlier, even if the pace of intensification was indeed strongest in the second half of the 1960s and in the 1970s. William Shepherd’s work is especially important here. His

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analysis shows slowly rising levels of competition from 1939 to 1958, concentrated principally in the manufacturing, construction, and transportation sectors, followed by more rapid, economy-wide appreciation from 1958 through to 1980. Writing at the very beginning of the 1980s, Shepherd was sufficiently struck by the data to posit that the U.S. economy had by this point become “far more competitive than at any time during the modern industrial period.”91 If the United States represents a relatively open-and-shut case, what of the United Kingdom? Here, ironically, the chronology that Gordon et al. suggested for the United States arguably fits better: The historical evidence indicates that balance between the forces of monopoly and competition was only very modestly restored during the 1950s and first half of the 1960s, if in fact it was restored at all; thereafter, however, levels of competitive intensity did increase. This heightening competition was particularly notable in selected economic sectors, banking, grocery retail, and synthetic fibers among them.92 But it was, all the same, a more generalized phenomenon, even if it was not quite as marked elsewhere as in the aforementioned industries.93 We know, meanwhile, that the law was being exercised with a much stronger disposition towards competition in this same period than it had been prior to the 1950s, in both the United Kingdom (where there had been no competition law) and the United States; based on this correlation, it would therefore be a short step to conclude that changes in the law’s effective polarity were responsible for the changing levels of competition. But it would be a false step. Correlation never implies causality; and there are clearly other factors to take into consideration that could have materially influenced the development of the relationship between monopoly and competition in each territory. In reality one other factor was, in both places, especially significant, operating alongside radically reoriented laws and, indeed, helping to explain the fact that levels of competition recovered in the United States well before they did so in the United Kingdom. This factor was trade policy. As we saw in Chapter 4 the United States had been resolutely protectionist in the late nineteenth and early twentieth centuries. And even though it moved to freer trade policies in the early 1910s, protectionism resurfaced with a vengeance in the late 1920s and early 1930s, briefly taking tariffs to above 50 percent. The mid-1930s, however, saw a decisive, long-term change in policy, with the Reciprocal Trade Agreements Act of 1934 marking the progressive opening of the U.S.

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market—gingerly at first and then, after World War II, more forcefully. The impact was striking: Average U.S. tariff levels fell by approximately 70 percent between 1934 and 1972; and by the end of this period tariffs averaged only approximately 10 percent.94 As trade barriers fell, competition to domestic manufacturers from foreign imports grew. Something similar ultimately happened in the United Kingdom too, but it is critically significant to our comparative chronology that it did so much later. For a variety of reasons, the United Kingdom retreated from protectionism only very, very slowly after World War II. “Average tariff rates for UK manufacturing remained at 1930s levels until the early 1960s,” notes Nicholas Crafts, “and were considerably higher than those in West Germany in the late 1950s.”95 The subsequent decline in tariff rates, in other words, that occurred from the mid-1960s, coincided precisely with the beginning of the observed increase in levels of industry competition. And the process of removal of trade barriers was then given a further, powerful, one-off fillip in 1973 when the United Kingdom became part of the EEC. The move away from protectionism, therefore, evidently contributed to rising levels of competition in both the United Kingdom and the United States. Crafts explicitly acknowledges this fact for the former territory; Gordon et al. and Shepherd both do likewise for the latter. The law, then, did not serve to restore monopoly-competition balance to capitalism all by itself (just as it had not done in the early decades of the twentieth century, when monopoly rather than competition had been the component in relative deficit). Yet it was, we shall now argue, a primary and profoundly important motive force. Before substantiating this claim, however, we would do well to acknowledge the inherent difficulty of doing so. It is an oft-repeated truism of research into the political economy of competition law that assessing its economic effects, including its effects purely on competitive configurations per se, is very hard. The influential Chicago School economist George Stigler remarked bluntly of the challenge of effecting a quantitative assessment of antitrust: “The task is formidable.”96 Peter Carstensen points to some of the reasons why. Investigating the impacts of competition law and its enforcement calls for “complex and contingent analysis,” he maintains, particularly because “the legal environment is but one of many forces that influence economic change” and thus antitrust is “but one limit society places on economic activity.”97 Intellectual property law, needless to say, is another, making the assessment of the effects—on

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competition or any other economic process—of market-facing law in toto more challenging still. We need also to acknowledge that there are nominally good reasons to be skeptical of the notion that competition law in the United States and United Kingdom, even relatively unencumbered as it now was by the potentially countervailing effects of IP law, materially reshaped monopolycompetition dynamics—and thus political-economic development more widely—in the period we are concerned with here. Various imperfections and fissures in antitrust and its enforcement are of course not the least of these reasons; and one can certainly find commentators (albeit in a minority) willing to argue that even in the case of the United States, and in its postwar enforcement heyday, antitrust had negligible positive impact on competition levels.98 What might some of those reasons for skepticism—or at least caution—be? In regard to the United States, perhaps the principal one is that for all the ratcheting up of antitrust scrutiny and intervention under Clark and Warren, merger activity continued apace. The 1960s, in particular, saw yet another major merger wave. In fact, levels of concentration at the scale of corporate America as a whole increased throughout this period, however counterintuitive that may sound in the light of Shepherd’s assertions as to ever-rising levels of competition. (We will resolve the apparent paradox shortly.) The grounds for skepticism are, if anything, stronger still in the case of the United Kingdom. Recall that once its relatively youthful competition policy broke into two streams from 1956, with restrictive trade practices heading into court whereas monopoly and (then) also mergers were dealt with administratively, the latter field saw very little by way of either investigation or remedial intervention: Dennis Swann and collaborators, in an important study from 1974 that we shall have cause to draw upon extensively below, were sufficiently underwhelmed to claim that the “British treatment of mergers has so far really involved little more than tentatively nibbling around the edges of the problem.”99 They also claimed that if the RPC’s altogether more vigorous enforcement of restrictive trade practices legislation represented another matter entirely, even here there was cause for caution in making claims for antitrust efficacy given evidence of circumvention of the 1956 act.100 Yet there are also persuasive counterarguments to each of these cautionary points; some of the latter are in fact little more than red herrings. For instance, it is true that the United States witnessed extensive

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merger activity in the 1960s and that this increased macro-scale concentration. But we need to be careful not to conflate mergers with accumulations of monopoly power, and thus with the restriction of competition. Monopoly power is a function, not of size, but of control over the market environment and thus price; if—to take the extreme case—two companies operate in totally separate markets with mutually exclusive suppliers, competitors, and customers, it would be difficult to construe a merger between them as anticompetitive in the strict sense of the term. In earlier U.S. merger waves few combinations had been of this so-called conglomerate type; they had been either vertical or horizontal. But in the 1960s, conglomerate mergers, creating diversified corporate groups, were the predominant U.S. merger form.101 That antitrust law typically did not prevent such mergers does not mean that it countenanced effective monopolization and thus that it stymied competition.102 Equally, although it may seem curious on the face of it that the United Kingdom adopted a hostile approach to restrictive agreements while seemingly neglecting mergers and concentration-based monopoly, we need to assess this distinctive approach strictly in the context of the particular postwar industrial environment with which policy makers were dealing. Where, in the United States, companies seeking monopoly power had long favored tight corporate consolidation (partly because antitrust deprived them of alternatives), in the United Kingdom loose pricefixing cartels remained the strategy of choice well into the 1950s. The 1956 act focused on this configuration of monopoly power because this was where the subversion of competition was seen to be concentrated. To be sure, the data suggest that this state of affairs did not remain stable for long, as the merger wave of the 1960s—yes, the United Kingdom had one too—saw U.K. companies pursuing en masse, for the first time, what had hitherto been regarded as a very American affair. Just as certainly, the state’s crackdown on collusive price-fixing was responsible at least in part for spurring this burst of consolidation, much as it had done in the United States a generation earlier.103 Moreover, we have already noted that of the many mergers that now took place in the United Kingdom, many were “referable” under the terms specified by the 1965 law, but only very few were actually referred: just 83 (or less than 3 percent) of more than 3,000 referable events between 1965 and 1985.104 This disjuncture also hints strongly at a failure of the law—or more accurately, of its putative enforcers—to prevent the assembly of monopoly powers.

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Yet once again we must be careful not to jump to unwarranted conclusions. Many of these 3,000 mergers were referable not because they would lead to a combined entity with an excessive (25 percent or 33 percent) market share but because they breached the other condition for referability: more than £5 million in assets being acquired. This ceiling, however, even by the standards of the late 1960s, was remarkably low. It was not raised for many years, and when it was (to £15 million, in 1980), U.K. companies had already for more than a decade been buying each other for sums well into the hundreds of millions of pounds.105 Perhaps more important, this wholly arbitrary ceiling bore no necessary relation to market dominance. It was no less feasible for a company with £5 million in assets to be a bit player in a market worth many multiples of that amount than it was for a company with £0.5 million in assets to be a de facto monopoly in a highly niche market. The fact that a referable merger was not referred simply cannot be taken to mean that competition was being curtailed. Nor, it is worth noting, should we underestimate the wider impact of the work of the MMC where mergers were referred and investigated, limited though such instances were. Freyer is one of the few commentators fully to appreciate this point, observing that “action on the cases which were referred consistently attacked concentration resulting from horizontal mergers in the name of competition.” This was important, he emphasizes, less for its impact in the particular cases in question— although that action may have been material also—than for its ripple effect in industry more broadly. “Coinciding as it did with a firm anticartel policy,” Freyer continues, “the prosecution of horizontal mergers encouraged investors to shift towards conglomerates.”106 Indeed it did, Alan Hughes and Manmohan Kumar confirming that “in the 1970s conglomerate mergers have generally become of far greater relative importance [in the United Kingdom] than they were in the 1960s.”107 And here, of course, precisely the same caveat identified above in regard to the United States applies: that we should not always infer monopoly from merger. In sum, none of the potential objections to the argument that competition law boosted levels of competition in the United States and United Kingdom in this period is disabling; all have significant logical holes. Much more important, however, than this “negative” critique—that is, the rebuttal of potential objections—is the positive historical argument we can make about competition law and competition in the two

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territories in question through to the late 1970s. For there exists compelling evidence that the law did contribute substantially to redressing the imbalance of monopoly and competition with which each country emerged from World War II. It is expedient to take the U.S. case first because there is a strong consensus on this issue among those who have studied it closely. The majority of such studies are based on the analysis of antitrust law in situ: namely, of explicit action taken by the authorities to redress or prevent anticompetitive dynamics, and of the economic impacts of such action within the industries affected. Yet it is important to be aware of another very important dimension to the argument, which is more in the realms of counterfactual. This concerns the concept of deterrence, where the essential thesis is that if the antitrust laws had not existed in the form they did—and had the authorities not taken the actions they did—companies would have pursued more anticompetitive practices than they actually did. Much has been written on this subject, with much of this commentary based on close observation of American industry by either participants or regulators.108 Hurst spoke for the majority when he concluded in 1982 that it was “likely that the threat of antitrust prosecution had materially curbed monopolistic ambitions.”109 For some, indeed, the deterrence function was sufficiently material, broadly based, and positive to outweigh “bad” individual outcomes. Claims Carstensen: “Whatever the merits of particular decisions or doctrines, strict merger rules created a legal atmosphere that deterred undesirable mergers.”110 In any event, long before the Warren years gave way to the Burger years, analysts had begun seeking to assess the economic effects of America’s new, reinvigorated postwar antitrust policy. One of the first studies was published by Simon Whitney, in 1964. There was at that time, he noted, “major agreement” among economists as to the achievements of antitrust to date. They were primarily twofold. First, it had contributed “substantially, to prevent the cartelization of the economy”; this was not really news, of course, because antitrust had done so since its very inception, and not unproblematically. But second, it had also contributed in the postwar era “to reduce existing concentration”—but “only in certain industries,” which of course were those industries where Clark and Warren had successfully taken the fight to extant and wouldbe monopolists (Whitney specified in this regard “petroleum refining, tobacco, explosives, motion pictures”).111

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Subsequent studies then reaffirmed and extended this assessment. As antitrust’s enforcers tried and won pivotal monopoly and merger cases in an increasing range of industry sectors during the final decade of antitrust’s heyday—the decade between Whitney’s assessment in the mid1960s and the shift away from interventionist antitrust in the mid- to late 1970s—the conclusion that it prevailed against concentration as well as cartelization became a more generic one. “From aluminum to automobiles to banking to beer to oil,” Carstensen wrote in an influential retrospective, “antitrust law tended to force industries to accept structures and conduct that, over time, yielded more competition.” In the process, he continued (and in words very much evoking our monopolycompetition dialectic), antitrust “served as a counter-weight to other forces pushing economic organization toward more concentrated structures and tighter restraints.” In short, antitrust had been largely effective in “preserving more competitive structures.”112 Perhaps the most forceful statement of this thesis has been provided by Shepherd. Not only, argues Shepherd, did levels of competition in U.S. industry rise progressively from the beginning of the 1940s through to the end of the 1970s (which is to say, throughout the era covered by this chapter). And not only did antitrust enforcement contribute positively to this transformation. It was the main driver thereof. Granted, other factors also led to increases in degrees of competitiveness; Shepherd says two, deregulation and declining trade barriers, played important parts. But in his quantitative analysis of relative contributions, antitrust policies “emerge as the strongest single cause of rising competition.”113 Whether Shepherd’s assignation of primacy to antitrust is ultimately defensible is a moot point; substantiating such a definitive argument is always fraught with analytical perils. But it is also, for our purposes, unnecessary. The key point, which Shepherd’s analysis shares with others, is that antitrust played a material role—primary or otherwise—in bolstering competition. Before assessing whether it did likewise in the United Kingdom, it can be useful, not least in relation to the following chapter, briefly to consider this conclusion in the context of the particular critique of U.S. antitrust that was emerging in influential academic and judicial circles in the 1970s, and which eventually led to the Chicago School revolution and U.S. antitrust’s effective neutering. Simply stated, did this critique not refute antitrust’s effectiveness, hence undermining the conclusion

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we have just reached? The answers to these questions are yes and no, respectively. Yes, critics such as Richard Posner and Robert Bork maintained that antitrust was ineffective. But it was deemed ineffective specifically in achieving what they saw as the “proper” goal of antitrust, which was economic efficiency. In other words, they criticized antitrust à la Warren not because it did not promote competition, but essentially because competition was regarded as the “wrong” objective. More broadly, theirs was at heart a highly normative critique of the economic theory animating antitrust rather than of the results it produced—even if they frequently elided the two.114 Meanwhile, the evidence suggests that the law was no less material to promoting competition in the United Kingdom than in the United States, even if, as already noted, the grounds for questioning this thesis are theoretically stronger in the former case—and even if the effects did not begin meaningfully to show through until rather later. The terrain of U.K. merger and concentration-based monopoly can be dealt with quite quickly. Here, as we have seen, the writing and implementation of competition laws appears on most readings to have had only relatively marginal practical effects during the period under investigation; but equally, this was also the sphere in which, particularly in the 1950s and early 1960s, little intervention to boost competition was actually required, monopoly power usually taking the form of restrictive agreements. However, we also highlighted Freyer’s important, somewhat divergent argument: that strong action on (an admittedly small number of) horizontal mergers prompted a wider shift toward conglomerate-style mergers where the restraining of competition is typically less of a concern. Along parallel lines, Michael Utton argues that the United Kingdom’s seemingly meager merger policy in this era had a more general deterrence effect similar to the one that has been more widely discussed for the United States. Allowing that few mergers were actively prevented, Utton insists that “an unknown number of mergers have not occurred precisely because the policy is in place.”115 And although very few commentators have made a case for the direct, positive effects of monopoly or merger investigations, some certainly have. Michael Marshall is one such, emphasizing in a 1980 paper that the remedial actions taken by the commission after its investigations had unearthed anticompetitive dynamics “often led” to reduced prices, to the abandonment of discriminatory

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pricing, or to significant changes in structure and sales policies facilitating greater consumer freedoms.116 Nevertheless, for all the positive spin of such assessments, it is clear that the efficacy of competition law in bolstering U.K. competition in this period lay overwhelmingly in the work of the RPC, and that this was where such bolstering was most needed. Sich, the registrar, reported in 1971 that in the Court’s first fourteen years some 2,500 horizontal agreements had been registered, of which 87 percent had been abandoned without a court defense, 10 percent terminated after being unsuccessfully defended in court, and only 3 percent found consistent with the public interest.117 Marshall later updated these figures through to 1978, by which time 3,678 agreements had been registered, with the proportion terminated predefense having fallen slightly to 84 percent.118 The figures for vertical resale-price agreements—which had been estimated as covering between fully 20 percent and 25 percent of total U.K. consumer expenditure in 1960—were no less striking: 700 applications for registration pre-1978, but only 4 cases actually making it as far as court, and only two of these successful (one being the NBA).119 In sum, great swathes of price-fixing agreements, horizontal and vertical, were swept away in the two decades following the 1956 act. It is therefore no wonder that commentators have been unanimous in hailing the Court’s procompetitive achievements. “In most industries today,” claimed Sich, “there is free competition and where there is not it is more likely to be due to the existence of a monopoly or oligopoly than of restrictive agreements.”120 This was a highly partial view, of course, but the latter speculation was almost certainly true (even if the first was hyperbole). And later, more neutral observers largely supported this positive reading. “Following the termination of agreements,” noted Marshall, “studies have indicated that in over half the cases there was evidence of increased competition mainly in the form of lower prices or higher discounts.”121 Similarly, and most recently, Utton concludes from the relevant history that the United Kingdom saw “substantial improvements in market performance” courtesy of the RPC, with gains from price competition supplemented by further, more intangible, but often enduring gains “in terms of business attitudes and the environment in which many decisions are taken.”122 Far and away the most important and comprehensive study of the RPC, and one whose significance merits close attention, was carried out

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by Swann and colleagues in the early years of the 1970s.123 Curious to understand the nature and extent of the impact of the 1956 act, the team carried out what remains, to this author’s mind, the most impressive study in the Anglo-American literature of competition law in action and of its economic consequences. The study consisted of analysis of some forty different industry sectors and of the economic impact therein of the RPC’s work over approximately fifteen years. Eighteen industries— “deliberately chosen in order to give a wide coverage of industrial situations”—were studied in depth. The other twenty-two industries were treated in more restricted but nonetheless rich case studies. The authors found that overall, across the full spectrum of industries, various types of restrictive agreements had existed at the outset of the Court’s life but that price agreements prevailed “in a majority” of the industries and “were in practice by far the most important form of restriction.”124 What, then, did the 1956 act achieve across these forty industry sectors between the mid-1950s and the beginning of the 1970s? It indubitably stimulated competition, as other commentators ultimately agreed. Where agreements were abandoned before court or were terminated by the court—as in the lion’s share of cases they were—a “competitive or partially competitive situation” was established, the authors claim, in the majority of cases, as first established producers began to compete among themselves and then new entrants, previously thwarted by cartelization, emerged. The evidence for such increased competition was manifested, the study argued, on two main, and obviously connected, fronts. The first was “in the sphere of prices and discounts,” with sustained price declines of 20 percent to 30 percent proving quite common. The second was in “the paring down of unduly generous profit margins.” Indeed, one of the main criticisms of the 1956 act from within corporate Britain, the authors somewhat wryly noted, was that it “severely affected the profitability of industry.”125 This seminal study is also important for the light it sheds on an issue that constitutes perhaps the one meaningful ground for being wary of the study’s overall conclusions. This is the issue of circumvention. Numerous commentators have noted that circumvention of the act’s strictures and the Court’s authority was a problem. Most of them identify one problem in particular: firms continuing to operate unregistered— but registrable—agreements.126 As late as 1985, Sharpe noted that such agreements had recently been detected in industries ranging from passenger ferry services to central-heating boilers to aluminum ingots.127

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That companies risked maintaining such agreements is not unduly surprising; the price and profit upsides were substantial and the penalties if discovered relatively limited.128 The Swann et al. study provides an insightful and textured discussion of the circumvention issue. Despite the “closing of loophole after loophole” in the years since the passing of the act, the latter continued, the authors observe, to be “subverted on a very considerable scale.” The aforementioned “clandestine discussions on prices” were one such vehicle of subversion. But there were others too. One was simple price leadership, where an acknowledged leader would set prices and discounts and others would follow suit, as occurred in wire ropes, pipes, and electric meters. Yet evidently the most common tactic was the establishment of so-called “information agreements” to replace formal price-fixing. These involved “the reporting by individual firms to a bureau, and the subsequent dissemination by the bureau to the industry, of price lists and discounts, together with changes therein.” The object of such agreements, the study authors write, “was obvious. They enabled industries to maintain a common front in respect of list prices and terms.” They were, as such, “forums” or “cloaks” for collusion. They remained influential through to the late 1960s but rarely survived into the 1970s. And when they ended, Swann et al. emphasize, competition duly emerged— “half a decade or more later than had been the case where industries had adopted a competitive posture immediately after abandonment of formal price-fixing,” but emerge it nevertheless did. This had happened in, inter alia, the galvanized tanks industry, in tire mileage, in transformers, in glass containers, and in steel drums, the last of which saw a price war in 1967–1968.129 In sum, this rigorous and broadly-based study is the strongest evidence available for our central conclusion of this section: that, in respect of the monopoly-competition dialectic, the outcome of the law’s exercise in the United Kingdom in this period was largely equivalent to in the United States, even if the mechanics were markedly different. Unencumbered for the most part by potentially monopoly-supportive IP law, competition law was vigorously—if often selectively—enforced in both countries. And in both places, this enforcement contributed substantially to boosting levels of competition. As such, by the mid-1970s, Anglo-American industry and its interlocking dynamics of competition and monopoly looked very different to how it had done in the late 1940s.

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The Intensification of Competition and the Reproduction of Capitalism All of which brings us to the final question for this chapter. To what extent was this increase in competition—particularly inasmuch as it was driven by the law (we have seen that other factors were in play)—and the redressing of underlying monopoly-competition imbalance that it precipitated responsible for helping U.K. and U.S. capital successfully to “escape” from problematic postwar conditions? Was it the law’s leveling, or other forces, or some combination thereof that served to stabilize and regularize once more the dynamics of capitalist profitmaking and accumulation? These, of course, are complicated and weighty questions. Perhaps, therefore, the most expedient way of addressing them is to begin with a simple but nonetheless important observation: Even if the rise in competition levels was a significant foundation for capitalism’s ongoing health, it was clearly not the only one. Mainstream arguments for the golden-age phenomenon have centered primarily on postwar fiscal policies in the countries of the Global North, prominent among them the United States and the United Kingdom.130 Briefly stated, this argument runs as follows. Consumers, their spending power constrained by powerful, concentrated capital and its superiority vis-à-vis labor, were unable to drag the capitalist economies out of their effective-demand doldrums. Then, in stepped the state, with government spending acting as the locus of demand management. The Keynesian solution “worked,” at least until the 1970s, partly because the Bretton Woods monetary system stabilized national economies by limiting the threat of capital flight. And in “working,” this solution solved—even if only temporarily—problems of underconsumption. Alongside this thesis, more radical arguments have also been proposed. Some of these actually fit neatly within an orthodox Keynesian economic lens. Perhaps the best example here is the notion of “military Keynesianism,” a phrase coined by the economist Joan Robinson (of “imperfect competition” fame).131 If state expenditure in general propped up the Anglo-American economies (and the U.S. economy in particular) in the 1950s and 1960s, then military expenditures—on Cold War armaments and regional wars—were the Keynesian solution par excellence.

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The military Keynesianism argument was, interestingly enough, one of the propositions put forward by Paul Baran and Paul Sweezy—even if they did not call it that—in their Monopoly Capital (1966), a book that we have had occasion to discuss at a number of junctures.132 And indeed, a broader consideration of Baran and Sweezy’s account of postwar capitalist development can helpfully illuminate and sharpen the arguments to be developed here forthwith. To understand their account, however, it is vital first of all to appreciate the particular political-economic conundrum that, as they saw it, they were trying to solve. That conundrum turned on their concept and envisioning of monopoly capital. As we have noted more than once, Baran and Sweezy, like many others, saw capitalism in the United States as having come to be increasingly dominated by monopoly power—concentrated in large, dominant corporations—by mid-century. Hence, “monopoly capital”; and so far, so consonant with the narrative of this book. But their account departs decisively from this book in arguing firstly that U.S. capitalism then remained wholly monopolistic in nature into the 1950s and 1960s (Marx’s “counteracting tendencies” not kicking in), and thus, second, that capitalism could flourish in this imbalanced form. Restoration of some sort of balance between monopoly and competition was evidently not required, nor did it happen. But they knew, and indeed had argued at length, that being monopoly heavy, and prone as such to stagnation, was not unproblematic to capitalism’s reproduction. So how was it therefore that capital could be stabilized and continue to grow—to enjoy a golden age, no less—despite remaining monopoly capital? This was their conundrum. While military Keynesianism was one of their answers, it was not their only one. Others were inspired more by Marx than by Keynes, even if the Keynesian lens is not necessarily an incongruous one through which to view them. And perhaps the pivotal such argument revolved around fundamental changes in the economic geography of life in the postwar United States. In the late 1940s but especially in the 1950s and 1960s, the United States underwent two dramatic economic-geographical transformations that were, of course, deeply bound up with one another: automobilization and suburbanization. Not only, Baran and Sweezy observed, did these transformations provide a huge stimulus in and of themselves to an industrial constellation previously facing problems of deficient demand (think highways, houses, automobiles, petroleum, and

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so on). But all manner of incremental demand was further created by the bundle of consumer accoutrements that came to be associated with the quintessential suburban lifestyle. These latter arguments, significantly, would be picked up, nuanced, and advanced a decade later by economic geographers heavily influenced by the work of the French Marxist Henri Lefebvre. For David Harvey and Dick Walker, in particular, what was going on here was in fact nothing less than an epochal shift from “supply-side” to “demand-side” urbanization. Rather than cities and the built environment that constitutes them supplying the conditions for surplus-value production, as they had done during the industrial revolution, they now met the demand for surpluses to be soaked up. The massive postwar rebuilding of America’s urban fabric served, on this reading, to absorb capital that was “overaccumulated” in the sense that effective demand for its reinvestment was otherwise lacking. Speaking directly to the build-up of crisis conditions in the immediate aftermath of war, Walker felicitously termed this the “suburban solution.”133 For Harvey, meanwhile, it was another of capital’s many and varied spatial fixes to stagnation and crisis.134 As argued in Chapter 2, the ideas of law-as-leveling and of spatial (or indeed temporal) fixes are not—and should not be construed as—mutually exclusive. Doubtless the spatial fix constituted by the large-scale rescripting of U.S. urban-economic geography was part of the answer to the emergent postwar crisis conditions we described above—in the United States, if not so evidently in the United Kingdom. But it was clearly not the entire answer, either in isolation or in combination with (military and other) Keynesianism. There are two grounds for insisting so. The first concerns the competition-monopoly relation per se. Substantial imbalance between monopoly and competition can only ever be a temporary phenomenon. Capitalism needs monopoly but it also needs competition, and if either in large part goes missing, then capitalism cannot enduringly reproduce itself as the profit-generating, growth-oriented system that it is. This is the theoretical problem with Baran and Sweezy’s argument. For if capitalism remains too monopolistic, it cannot meaningfully recover; Hilferding saw this and so too did Marx. As the analysis in the previous section demonstrated, moreover, Baran and Sweezy’s account was not just theoretically flawed but also, on almost all readings, empirically incorrect. Levels of competition did recover, in the United Kingdom as well as the United States.135 And although Keynesianism

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and the not unrelated spatial fix assuredly helped capital to continue to circulate, they did nothing meaningful to boost competition at the expense of monopoly. In fact, the quintessential U.S. suburban-solution industry—automotive—was, as we will shortly see, one of the few to remain highly monopolistic. Second, the Keynesianism and automobilization-suburbanization arguments do not fully account for other key empirical developments of the historical period in question—developments that, by contrast, we can help substantially to explain by reference to the argument that the law served to redress monopoly-competition imbalances. In concluding this chapter, and cementing the case for the significance of the law’s leveling work, we shall focus on two such developments. One of these takes us back to a relation we touched upon briefly at the beginning of the chapter: that between capital and labor. The immediate postwar era was famously characterized by a capital-labor accord that was, however, a highly uneasy one; and one that was subsequently seen to be markedly unequal in the sense that capital was in the driving seat. But it did not stay that way for long. In both the United Kingdom and the United States labor soon began agitating for a bigger share of the economic pie. In regard to the former territory, for example, Crafts argues that “wage bargaining in Britain involved ‘rent-sharing’ with workers extracting an increasing fraction of the rents as early postwar wage restraint was replaced by labour militancy and workers exploited their bargaining power.”136 This increased bargaining power, and the enhanced capture of value that it facilitated, was manifested in a trend that would have startled Keynes, convinced as he was of the long-term stability of relative labor-capital income shares: a progressive, substantial rise, in both the United States and the United Kingdom from the early 1950s to the mid-1970s, in the share of income accruing to labor, accompanied by a fall in the share taken by corporate profits.137 But where did that power come from? What gave labor the platform to agitate for this growing share? Some would argue that Keynesianism does in fact provide the answer to this pivotal postwar development, that a proactive empowerment of labor was part of the Keynesian solution to underconsumption. There may, indeed, be an element of truth in this: The U.S. and U.K. governments did not actively oppose the relative power of labor in this period. But nor did they actively, substantively encourage it. Keynesian redistribution was always based more on progressive taxation than on giving power to labor. And as we have seen,

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effective demand was to be supplied and managed more by state than by consumer spending. The alternative, Kalecki-type argument thus carries more weight. Theoretically, this argument, as previously rehearsed, is that it is the “degree of monopoly” that ultimately decides the relative powers of, and thus distribution of income between, capital and labor. The greater the imbalance of monopoly-competition in favor of the former, the greater the share of income that capital can capture. Following Kalecki, then, we would hypothesize that labor’s growing power—and growing share of income—during the postwar decades was predicated on a reweighting of the monopoly-competition dialectic toward the latter—which, of course, is the exact historical development we have traced out here. Furthermore, there exists empirical evidence to reinforce this theoretical argument. As the crucial Swann et al. U.K. competition law study found, one of industry’s main criticisms of the 1956 act was indeed precisely that it “altered the macro-economic distribution of income in favour of labour.” The authors, moreover, concurred with industry’s critique. The act, they concluded, “tilted the balance of power strongly in favour of labour. . . . The power of labour to raise wages was almost entirely unimpaired: the power of industry to recoup these increases by raising prices to maintain profit margins was seriously impaired.”138 Competition law, and the competition it stimulated, gave labor its crucial edge. If Keynesianism perhaps serves in part to help explain this particular development, meanwhile, neither it nor the spatial-fix argument contributes at all to explaining the other significant development of these postwar decades: the reemergence, after the stagnation evident immediately after the war, of vigorous corporate innovation, first in the United States and rather later, in the late 1960s and the 1970s, in the United Kingdom. Once again we have a theoretical basis—this time in the work of scholars such as Hilferding and Steindl—for ascribing this development to a flowering of competition; but once again empirical substantiation is probably even more persuasive. And here it comes in both positive and negative varieties. Positively, studies have shown, for instance for the United Kingdom in the 1970s, that greater competition did increase levels of innovation.139 Arguably, however, the negative evidence is more striking. For what is clear is that where the degree of competition did not increase in the postwar decades because competition law did not—or was not allowed to—do its work, innovation remained stifled. Carstensen

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demonstrates this was manifestly the case in the U.S. steel industry, where antitrust failed to dislodge entrenched monopoly powers, and where rent-seeking and atrophy set in, leading ultimately to “long and slow decline starting in the 1950s and accelerating in the 1970s and 1980s. . . . Absent competition, the industry arguably did not develop the technological and marketing capacity to withstand efficient competition from new sources of supply and new methods of production.”140 David Mowery and Nathan Rosenberg arrive at a similar conclusion for the oligopolistic U.S. automotive sector, another where antitrust failed. The story of the postwar decline of this sector, for Mowery and Rosenberg, is a story of “the importance of competitive pressure in maintaining innovative performance. . . . The evidence from 1945 through 1975 suggests that domestic oligopolies may succumb to the pursuit of the quiet life, rather than maintaining their investments in creative destruction.”141 Through the 1950s and 1960s, capitalism in the United Kingdom and the United States flourished. It did so against the immediate historical backdrop of postwar circumstances that were anything but propitious, particularly given a marked relative excess of monopoly powers. This critical period of Anglo-American capital’s regularization and stabilization witnessed, inter alia, the growing power of labor and a recovery of innovation, even if the latter occurred relatively tardily in the United Kingdom. A recovery of the forces of competition was also clearly a characteristic feature of the period. But we have seen this last was much more than that too. No mere epiphenomenon, competition’s clawing back of ground vis-à-vis the forces of monopoly was, in fact, essential to and generative of capital’s reproductive health more generally.

Conclusion If economic historians have widely documented the key facets of this postwar golden age for Anglo-American capitalism, legal historians have been no less assiduous in documenting how U.K. and U.S. laws relating to markets, and to rules of market-based competition in particular, underwent their own dramatic transformations during the same period. Competition law finally arrived on the scene in the United Kingdom, in the shape most materially of the Restrictive Practices Court; and in the United States, lawmakers and practitioners set about plugging the holes in antitrust that had enabled corporations widely to circumvent the

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spirit, if not letter, of the law in the first half of the century. Meanwhile, a substantial weakening of IP law occurred in the United States at the same time, indeed as a necessary corollary to antitrust’s bolstering; and although it is difficult to judge whether U.K. IP laws were, in practical terms, strengthened or weakened, what is clear is that they became much less material. The central purpose of this chapter has been not so much to trace these various developments in economic and legal history but to demonstrate that they are intimately, substantively connected. Legal changes did not simply occur alongside political-economic transformation in the manner of some kind of distant, disconnected adjunct. They were fundamental to the political-economic developments of the period. The reorienting of the thrust of U.S. and U.K. laws in favor of antitrust and away from IP protections—and thus in favor of competition and against monopoly powers—helped redress deep existing imbalance in the dialectic of monopoly and competition and, in the process, enable capital to continue to circulate and accumulate. This work of legal leveling did not facilitate the restoration of competitive forces all by itself, nor did the reemergence of meaningful competition alone allow capitalism to sidestep imminent crisis; but it was a crucial component of golden-age dynamics and their conditions of possibility. The legal pendulum, so to speak, had therefore now swung in both directions. In the late nineteenth century, capitalism in the United Kingdom and United States had been beset by a relative excess of competition and a concomitant dearth of monopoly powers. The law, in the shape of IP laws largely unfettered by competition laws, enabled through ensuing decades the widespread assembly of monopoly powers and a recovery of price, profitability, and investment. But the process of rebalancing between monopoly and competition evidently went too far. A surfeit of competition became a surfeit of monopoly, and in the period immediately following World War II this situation, to many eyes, threatened capital’s ongoing health. Yet again, however, the law would step in to help regularize the capitalist system. But to do so, of course, it needed to reverse its effective polarity of political-economic efficacy, and this is precisely what happened: IP law took a backseat and antitrust came to the fore, the latter stimulating competition and, in the process, pulling monopoly capital from out of the mire of stagnation. The pendulum had swung back.

The Revival of Competition

Where, then, would it swing next? Most pointed, would the requisite political-economic balance between monopoly and competition now be institutionalized, protected, and sustained? And if so, would this require antitrust to remain dominant; or alternatively would IP laws have to reemerge from their period of relative subordination and quietude? Or would the patterns of the past essentially be repeated—capital failing, again, to navigate sustainably the critical knife-edge path representing balance of monopoly and competition? If the 1960s suggested stability had perhaps been achieved, then the first half of the 1970s intimated, of course, that this had been another false dawn.

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6 R E M A K I N G M O N O P O LY F O R T H E T W E N T Y- F I R S T C E N T U R Y

In macro-scale accounts of the international political economy in the second half of the twentieth century, the period examined in the previous chapter—from the end of World War II through to the 1970s— is typically contrasted sharply with the ensuing period, which we turn to now. Embedded liberalism was supplanted by neoliberalism, Keynesianism by monetarism, regulated finance by financial deregulation and concomitant financialization, and so on. Indeed the only important political-economic continuity ordinarily ascribed to the two periods is an economic-geographical one: the growing international economic integration that characterized the postwar decades, rather than halting or reversing, instead extended and deepened across circuits of productive, commodity, and in particular, money capital from the 1970s onward. Such deepening in fact became a defining feature of global political-economic evolution as capital’s golden age segued into the age of globalization, the latter epithet speaking precisely to the economic-geographical dynamics involved. In several important respects market-oriented laws were part and parcel of the globalization phenomenon of the twentieth century’s final decades and the twenty-first century’s early ones. International, or extranational, developments play a much more central role in this period than in preceding ones, when competition and IP laws in different territories had not only developed in greater isolation from one another but had also been applied, for the most part, independently.1 In the field of antitrust, for instance, these decades now witnessed several attempts to develop properly global competition laws, including most recently through the conduit of the World Trade Organization (WTO).2 And even though all such attempts have to date proven unsuccessful, antitrust globally has

Remaking Monopoly for the Twenty-First Century

nonetheless experienced globalization of sorts, albeit taking the form of convergence as opposed to consolidation.3 Meanwhile, in the field of intellectual property (IP) law, consolidation has been more conspicuous, with far and away the most important development being the signing in 1994 of the WTO Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS), which stipulates minimum reciprocal standards for various forms of IP protection among WTO members. These international developments, as we shall see, have been absolutely crucial to the late twentieth century and early twenty-first century transformation of IP and competition laws in the U.S. and U.K. contexts and, in turn, also to those laws’ implication in political-economic transformation—the transformation of Anglo-American capitalism—more broadly. Yet the chapter begins, seemingly paradoxically, with a strict focus on legal developments in one national sphere: that of the United States. The paradox, however, is only an apparent one. The reason for this is simply that those U.S. developments would increasingly come to be mirrored elsewhere, including in the United Kingdom; it therefore makes historical and analytical sense to start with the U.S. picture. The chapter emphasizes, nevertheless, that even if U.S. developments in market-oriented laws—and indeed, in the law/political economy relationship—have been widely reflected in developments in other parts of the world, the mechanism of transmission has varied substantially. In IP it has often been relatively direct, with TRIPS the quintessential example. As Susan Sell, more than anyone else, has shown, TRIPS was very much a U.S.-led phenomenon, and its treatment of IP—the scope of such rights and the commercial protections with which such rights were to be invested—was effectively the prevailing U.S. treatment.4 In competition law the transmission effect has been more indirect. The United States has not, unlike with IP, scripted global competition rules; it has actually often been one of the most active opponents of such rules being formalized. Yet, to the extent that competition law in different parts of the world has converged on a single model of antitrust, that model is the U.S. one. This is certainly true, in the past decade in particular, of the United Kingdom, although in this case a crucial mediating filter—in the shape of the European Union (EU) and its own competition rules—has also played a prominent role. The chapter’s first, U.S.-focused section demonstrates that over the period of approximately a decade, starting in the mid-1970s, the law did a remarkable volte-face in its treatment of monopoly, competition, and the

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dialectic binding them together. Having been cumulatively supportive of competition and antimonopoly throughout the postwar era, it now reverted to something approximating the contrary configuration of forces it had assumed in the early decades of the twentieth century (Chapter 4), namely, supportive of the assembly of monopoly powers while only minimally fostering competition. This transformation occurred through a wholesale chilling of antitrust enforcement alongside a bolstering of IP protections, a twofold reconfiguration that was most vividly evidenced in cases where the IP and antitrust laws were both in play. The second section of the chapter is given over principally to attempting to explain the developments sketched in the first. Why, that is to say, did a U.S. legal system that previously privileged competition in both theory and practice switch, somewhat rapidly, to supporting—certainly in practice but also, in significant measure, in theory—the accumulation of monopoly powers? It shows that, perhaps unsurprisingly, there were numerous reasons, including intellectual and purely political ones. But it emphasizes the political-economic: The law reverted to privileging the forces of monopoly over the forces of competition because, ultimately, it needed to. For once more, capitalism’s stability and reproducibility had come to be threatened by deep imbalance in its core monopolycompetition relation, only this time with the excess existing in the latter rather than the former; and once more, the law was called upon to come to capital’s aid. The chapter then turns to the United Kingdom. Not only was the United Kingdom confronted by comparable imbalances in the 1970s, but also it would in due course see a comparable reconfiguration of legal forces, with the law required to fulfill a comparable political-economic releveling role. Yet this reconfiguration would take rather longer substantially to materialize in the United Kingdom than in the United States. It occurred through a number of different stages, and it was in many ways a markedly more complex process involving a wider array of pertinent developments, not the least of which was the United Kingdom’s increasing embedding in the aforementioned processes of geopolitical rescaling of legal codes and authorities. The fourth and final section of the chapter focuses on the politicaleconomic outcomes of these directionally consistent reconfigurations of competition and IP law on either side of the Atlantic. What effect did they have? Just as it had done at the beginning of the twentieth century and then once more at midcentury, the law helped stabilize a capitalist

Remaking Monopoly for the Twenty-First Century

system whose smooth reproduction as a vehicle of class-based profit generation and accumulation was at risk; and it did so by correcting the imbalance of monopolistic and competitive forces that underpinned such risk. The monopoly powers whose (re)assembly the law now facilitated were by no means identical, however, to the monopoly powers underwritten by Anglo-American law in the early decades of the twentieth century. They were (and are), most notably of all, much more international in constitution and operation than ever before. The chapter ends by emphasizing this particular point because, as the book’s coda goes on to argue, it likely has profound implications for the future of the law— and of the political economy of monopoly, competition, and capitalism the law has historically served successfully to regulate.

The Law’s Volte-Face, Mark 2: The United States since the Mid-1970s The story of U.S. antitrust’s dramatic transformation from the mid1970s onward has been widely told by practitioners and scholars—legalists, historians, economists—alike. We will deal with three main aspects of that transformation. Toward the end of the chapter, we shall consider consequences; in the next section, we shall examine causes; and here, to begin with, we look at its essential complexion. What, in short, happened to U.S. competition policy? The abbreviated, but fundamentally accurate, answer to this question is that it became much, much less interventionist than it had previously been. Having been highly suspicious from the 1950s through early 1970s of monopoly and monopolization of all shapes and sizes (be it price-fixing, market concentration, mergers, or whatever else), and liable to intervene accordingly, U.S. antitrust practitioners progressively backed off from the mid-1970s. And despite periodic hints since the turn of the millennium, in particular, of a return to more interventionist ways, they have essentially stayed stilled—imperceptible in the regulatory background. The historical fact of this substantial neutering of antitrust was attested to first of all by legal scholars in the mid-1980s. In 1984, for instance, Frederick Rowe observed that “antitrust is sinking into decline. Its grandiose crusades against the concentration of economic power are over, and a regime of retreat and revision is taking shape.”5 His diagnosis was correct. Robert Pitofsky, who would later chair the U.S. Federal Trade

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Commission (FTC), announced in 1987: “Today we pursue a ‘minimalist’ antitrust enforcement policy.” This was, he argued, particularly true in regard to “vertical restrictions, price discrimination, vertical and conglomerate mergers, and non-price connected boycotts”—all “practices and transactions,” he reminded readers, “that have been the conventional stuff of anti-trust,” yet all of which by the mid-1980s were “either per se legal or challenged only in exceptional circumstances.” But lest skeptics think the drift toward noninterventionism stopped there, he emphasized that it clearly ranged more widely still: “Even in the cartel, horizontal merger, and predation cases, enforcement agencies have introduced various exceptions and qualifications into prior law and today tend to resolve most doubts in favor of non-intervention.”6 And, when later commentators came to reflect back on the longer-term implications of the transformation that occurred between the mid-1970s and mid-1980s, there was a clear consensus that the changes described by Pitofsky and others had endured. Sam Peltzman, an economist, captured the overall tone when he wrote, in 2001, that the “decline” in U.S. antitrust from the mid-1970s—coming hard on the heels of “a post World War II revival that probably peaked around 1970”—had “rent asunder much of the legacy of the preceding activist period.” Moreover, and echoing Pitofsky’s last point, Peltzman stressed the fact that noninterventionism had come to reign even in relation to horizontal consolidation involving direct competitors: “To see how profound the change has been a reader with a historical sense should contemplate most any recent merger of any size—say, Disney and ABC, or Exxon and Mobil, or MCI and WorldCom, or International Paper and two significant competitors. All these and many more like them went essentially unchallenged by the Antitrust Division. The odds of any such merger, let alone all of them, going unchallenged even 20 years ago would have been close to zero.”7 To appreciate quite how significant the move away from interventionism was, and to pinpoint more precisely the critical timing of this shift, we can usefully examine data for an industry where the pattern—on these particular issues—was broadly representative of U.S. industry more broadly: the banking sector.8 According to Bernard Shull, the Federal Reserve Board, which coadministers competition policy in the U.S. banking sector with the Department of Justice (DOJ), denied sixty-three banking mergers on competitive grounds between 1972 and 1982—in other words, an average of approximately six denials per annum. From 1983 to 1994 it denied only eight (i.e., fewer than one per annum), and

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what is more, “with far greater numbers of proposals.”9 The data for 1998—1,923 banking merger applications and all approved, with only 13 subject to restructuring remedies—are therefore typical of the “new” antitrust era.10 That era had definitively taken root in judicial practice by the beginning of the 1980s, under the administration of Ronald Reagan; and it saw the rate of antitrust intervention essentially collapse, in a trend reinforced by “dramatic reductions in appropriations and staffing” at the FTC and DOJ’s antitrust divisions.11 “After almost a century of combating the evils of monopoly,” writes Louis Galambos, “the federal government suddenly and with no fanfare stopped enforcing that part of the law [that prohibited monopoly].”12 At exactly the same time, however, a part of the law that had been in the shadows of antitrust for the previous three decades—IP law—began to enjoy a dramatic renaissance. The timing, of course, is not coincidental. What occurs in the one area of the law (competition law) is always and everywhere intimately and necessarily bound up with what happens in the other (IP law) because both, as we have noted, are ultimately just vehicles for regulating, albeit in different ways, the same politicaleconomic dynamic: the dialectical interplay of the forces of monopoly and competition. As such, antitrust can scarcely undergo substantial transformation (as it did in the United States in this period) without IP law being directly impacted, even if the latter is not expressly overhauled per se. During the period in question, however, not only did U.S. IP law experience significant ripple effects from antitrust’s defanging, but it too was actively manipulated to perform significantly reformed political-economic work, both in and of itself and when explicitly in legal dialogue with antitrust law. Needless to say, none of this multifaceted legal development in both IP law and antitrust took place without significant parallel developments in the nature of the U.S. economy, and it would be wrong to suggest that the relationship between the law and the economy was, or is, unidirectional—that the law shaped political economy (as we are arguing in this book) without being shaped by it in turn. It did not. Indeed, the reciprocal nature of this relationship is to the fore throughout the remainder of this chapter. But it is particularly vital to stress this point here because it could be ventured that the evident rise in the importance of IP in the United States since the early 1980s was simply a reflection of economic change—and not also of legal change. IP became more significant, such a hypothetical argument might run, merely because those sectors of the

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economy that are IP heavy—media and entertainment, information and communication technologies, pharmaceuticals, and others—became more important; and thus our age is the “age of intellectual property,” as various authors have labeled it, because of economic change above and beyond the law.13 This, however, is palpably not the case. The law changed too. And although this legal change partly resulted, as we shall see, from wider developments in the economy, it did so only in part; and it conspicuously underwrote those developments in turn. The central component of this post-1970s history of change in U.S. IP laws, alongside and in close relation to the aforementioned attenuation of antitrust, is a trend of both widening and strengthening of the rights attached to IP. This trend has been sufficiently pronounced for Robert Merges to describe it as nothing less than a “great tectonic shift.” “Intellectual property legislation,” he reflected at the turn of the millennium, “has, in recent years, become much more important than it was earlier this century.” Emphasizing the deep-rooted nature of this shift, moreover, Merges contends that it occurred not only in the formal legal treatment of IP rights but in the very way in which such rights are conceived in foundational legal-philosophical terms. He refers here to what he terms the “deepest substratum” of legal principles. Within that substratum, he suggests, there has always existed a “principle of the competitive baseline” (a principle no less essential to antitrust, of course), where “IP rights were envisioned as a rare exception.” And surveying the events of the 1980s and 1990s, both in antitrust but especially in IP law, Merges concludes that this principle “has started to give way.”14 The notion of IP rights as an exception is an important one, to which we will return shortly in relation to patent law, but first the issues of widening and strengthening need foregrounding. Beginning with the latter, Merges emphasizes that the prominence of IP has risen by virtue, not only of the growing economic materiality of the types of (intangible) assets in question, but also of “the increasing strength of the property rights that attach to them,” whether that strength is crystallized in the period of protection, the degree of exclusivity, the range of sanctions available to rights holders, or whatever else. With regards to widening, meanwhile, his observation that “all manner of intangibles meet with protection—even when, in the past, the competitive baseline would have militated against it” is mirrored by others: Steven Wilf, for example, writing of “the remarkable expansion of [IP’s] scope” and

Remaking Monopoly for the Twenty-First Century

of “an unprecedented expansion in the subject matter covered.” This contemporary consensus that, in Wilf’s words, “intellectual property rights have become increasingly far-reaching”—in terms of breadth and depth—underlies, Wilf posits, the growing opposition to them among critics of various stripes (a critique we shall consider more closely in the coda).15 What Susan Sell and Christopher May describe as “the inexorable expansion of property rights in intellectual goods” since the early 1980s has culminated, says Wilf, in “insistent political pressure . . . from those who see the growing capaciousness of private property rights over the products of the mind as a new enclosure movement.”16 Such pressure is perhaps especially visible, to the entertainment-hungry public at any rate, in relation to copyright; and one particularly significant statute of legislative change in the U.S. copyright context testifies to just how radical the modern-day legal strengthening of IP has often been.17 The Sonny Bono Copyright Term Extension Act, signed into law in 1998, effectively extended the term of all copyrights (existing and future) by twenty years in one fell swoop. There was plenty of grassroots endeavor to stop the bill becoming law, but as Christina Gifford notes, support for the opposing outcome was rather more potent politically. “The Act,” she writes, “was supported by large corporations and motion picture associations in the entertainment industry, including Disney and Time-Warner, and by individual song writers and artists, as well as the heirs of deceased authors such as the Gershwin Family Foundation.”18 Meanwhile, U.S. trademark law had been undergoing similarly important transformation since the perilous juncture at which we last encountered it (in the previous chapter)—when in the late 1970s, after decades of persistent assault under the antitrust laws on the grounds of their being deemed inherently anticompetitive, trademarks’ legal protection per se had seemed threatened. For from the vantage point of today, it is clear that, as Daniel McClure has observed, “the aggressive enforcement actions taken by the FTC in the 1970s represented the highwater mark of the attack on trademarks.” Ever since, in a volte-face comparable to the one which occurred in antitrust, trademark protection has strengthened and broadened, while competition law—and the conventional underlying concern to prevent monopoly—has been subordinated to it. Two statutory enactments were, according to McClure and other scholars, especially important. First, in 1988, the Trademark Law Revision Act inaugurated “significant substantive expansion of trademark rights.” And second, the Federal Trademark Dilution Act

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of 1995 further expanded such rights by extending protection beyond the realms of de jure “infringement.” Infringement requires proof of a likelihood of consumer confusion between products. The dilution law lowered the burden of proof on the plaintiff by stipulating that such confusion is in fact not necessary for the value of the trademark to be diluted. States McClure: “Dilution laws protect against either the ‘blurring’ of a trademark’s product identification or the ‘tarnishment’ of the affirmative association a trademark comes to convey.” In the laws of 1988 and 1995 combined, McClure concluded, the perennial “tension between competition and protection” had been “decisively resolved in favor of trademark protection.”19 Yet arguably the most profound and significant changes of all have taken place in regard to U.S. patent law and its mobilization. The 1970s—the decade of the infamous nine no-nos—represented the highpoint in antitrust’s battle with patents as well as with trademarks. Since the beginning of the 1980s, the legal protections afforded patents have become progressively stronger and antitrust’s purchase has weakened in kind. Citing Lawrence Kastriner, Sell and May observe that henceforth, “the Supreme Court placed the public policy of supporting patent rights on an equal footing with free competition, and ‘effectively ended the era of antitrust dominance over patent law in the eyes of the judiciary.’” The changing economic and legal relationship between the instant camera manufacturers Polaroid and Kodak, referenced in the previous chapter, was symptomatic of this wider shift. Whereas in the 1970s, the latter seemingly felt at liberty to infringe the former’s patents at will, the 1980s delivered a stinging rebuke. In 1986 Kodak was found guilty of willful patent infringement, effectively restoring Polaroid’s monopoly in the process, and making this, for Sell and May, “the most striking instance of an increasingly pro-patent sentiment in US courts.”20 And as the rights attached to patents were seen to harden, so U.S. patenting rates exponentially rose—quadrupling to more than 275,000 per annum between the early 1980s and today.21 The most significant individual development in institutional terms was the creation in 1982 of the Court of Appeals for the Federal Circuit (CAFC). This court was created explicitly to unify and harmonize patent law, and was granted exclusive jurisdiction over appeals in patentrelated cases.22 More pointedly it had from the outset, says Merges, “a clear substantive agenda: to strengthen patents,” and its early decisions “did just that.”23 Over ensuing decades, indeed, it has consistently

Remaking Monopoly for the Twenty-First Century

“proven to be a more patent-friendly court than its scattered regional predecessors,” resulting, according to Sell, “in a significant increase in the economic power of patents,” including through the CAFC’s substantial raising of “the level of damage and royalty compensation awarded to successful patent-owner litigants.”24 This work of patent reinforcement has been especially notable and significant, Merges observes, in relation to two industry sectors that have assumed major importance during the period in question: biotechnology and software.25 If the CAFC has been the main institutional standard-bearer for patents in this new era of patent ascendancy, we have seen a development of equal importance in the realm of U.S. legal doctrine. To appreciate this development we must first remind ourselves of a central presumption of antitrust law since its origins in the late nineteenth century, namely, the presumption that a patent not only confers exclusive rights to a particular product or process but also furnishes monopoly power in a relevant market, irrespective of the availability of substitute products. This had remained the presumption in the postwar era, when antitrust temporarily gained the upper hand; it was simply that the legal exception to Merges’s competitive baseline that patent rights represented had been much more narrowly envisioned. But the period we are concerned with here has seen this crucial presumption abolished, with the Supreme Court ruling in 2006 that it should be abandoned.26 The significance of this development should be plain to see. Antitrust, as we have emphasized at numerous points, has conventionally been centrally concerned to prevent the accumulation and exercise of market power; indeed, even from the 1980s when, as we shall shortly see, various other shibboleths of traditional antitrust (such as competition and concentration) came under critical scrutiny, the concept of market power and its dangers remained largely intact. This is why the presumption that patents conferred such power historically presented such problems for courts concerned both to respect IP rights and to enforce antitrust: It effectively compelled those courts, as we saw in Chapters 4 and 5, to choose between the two sets of legal principles. For if patents implied market power, it was impossible to give them full protection without degrading competition policy. But if this conferral of market power was no longer presumed, a whole new vista of legal-economic possibility suddenly emerged into view: IP rights could be defended without breaching antitrust rules because this defense did not necessarily amount to a legitimation of monopoly. Hence, in turn, the apparent new consensus in the

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U.S. legal community that far from being inescapably opposed to one another both in practice and in theory, antitrust and IP laws can operate harmoniously. “The FTC and DOJ,” observed Sheila Anthony, a commissioner of the former, in 2000, “no longer consider the two bodies of law to conflict.” Rather, and moreover, the two laws were seen now to have “complementary purposes”—purposes we shall consider in detail in the next section.27 Yet Anthony’s observation raises a critical question of timing. How was it that the antitrust and IP laws could have come to be regarded as complementary by 2000 when, as noted above, the presumption that patents entailed market power was not formally abandoned by the Supreme Court until 2006? The answer lies in the word “formal.” In short, although this presumption was not officially relinquished until relatively recently, it had, as Ariel Katz points out, begun to be “eroded by some courts long before”—from as early, Katz suggests, as 1965, when in Walker Process Equipment, Inc. v. Food Machinery & Chemical Corp. the Supreme Court “refused to infer market power necessary for a monopolization claim from the mere existence of a patent.”28 The shift in thinking which culminated in the 2006 decision was, in other words, a gradual one, concentrated in—and occurring across the breadth of— the period covered in this chapter. And it was not confined to the courts, either. The Judiciary Committee of the House of Representatives twice, in 1989 and 1995, considered bills that would prohibit courts in antitrust cases from making the presumption in question; and on each occasion the DOJ, notes Abid Qureshi, “endorsed the substance of the proposed legislation.”29 In fact, the first semiformal abandonment of the market power presumption came in the latter year, in the shape of new Antitrust Guidelines for the Licensing of Intellectual Property and their reinforcement of a permissive approach to patent licensing agreements, which were now regarded as generally procompetitive.30 In any event, what is clear is that the 2006 Supreme Court determination essentially represented a tardy recognition of an actually existing judicial and philosophical reality, the conviction that market power did not necessarily arise from patents having already become “conventional wisdom among antitrust lawyers, academics, and policymakers.”31 In the realm of patents, therefore, just as in the realm of copyright and trademark, the period since the late 1970s has seen a dramatic turnaround in legal understanding and treatment. If we were to summarize, we might say that IP’s potential to support the assembly of monopoly

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power in political-economic terms has been substantially rebuilt—partly, furthermore, through the abandonment of the assumption that it fosters monopoly/market power in strictly antitrust terms. And when considered alongside the equally radical simultaneous turnaround in antitrust law, we are confronted by a scenario of remarkable historical déjà vu: in stark contrast to the postwar decades, U.S. law cumulatively once again had come to be configured to bolster the monopoly side of the monopoly-competition dialectic, just as it had been in the first half of the twentieth century. Strengthened IP laws could do this directly; denuded antitrust policy, by virtue of not intervening, could effect the same outcome more indirectly. Later, in the final section of the chapter, we will see that this was indeed precisely what happened; now, however, we turn to the question of why this wholesale reconfiguration of the law took place.

The Chicago School Revolution in Political-Economic Context Given their intimate entangling in historical practice, it should not be altogether unexpected that the reasons for the U.S. IP and antitrust laws’ respective reorientations from the early 1980s were also interconnected. Those reasons were, in the first place, intellectual ones. That is to say, one explanation for why both antitrust and IP law reversed tack between the mid-1970s and mid-1980s is that thinking about those laws and their economic effects substantially changed. In part this was a question of influential thinkers coming to new conclusions about old questions; and partly it was a question of a change in the identity of those whose thinking now shaped emergent economic-legal orthodoxies. Such shifts were particularly evident in relation to antitrust, which is where we shall therefore start. The marked decline of interventionist U.S. antitrust in the late 1970s and early 1980s reflected a powerful, growing critique of such interventionism from scholars of the rising Chicago School of economics.32 At the very broadest level, the essence of this critique was that government intervention in the economy of any variety (whether based on legal means or not) was usually misguided, the direct corollary of this view being that markets were superior mechanisms for the allocation of economic resources. “Riding the 1970s tide of disenchantment with government intervention,” Rowe explains, “scholars of the Chicago School of Economics propounded a revised antitrust synthesis based on the price

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theory of self-correcting markets.”33 Applying their wider revamping of economics specifically to the law-and-economics conjuncture, in other words, the likes of Robert Bork and Richard Posner set the issue up as a simple state versus market binary; and as an infinitely superior processor of information, the market won. The implications for antitrust of an interventionist ilk were not hard to see: “antitrust policy decisions,” as David Hart says of the Chicago worldview, “could rarely improve upon market outcomes, but could easily make them worse.”34 What specifically was it, however, that markets optimized and that the state (in the shape of activist antitrust policy) could not? This was the second significant development ushered in by the Chicago School. For not only was the preferred agent of optimization now different, but so too was the privileged object of manipulation. Crucially, that object was no longer competition. The Chicago criticism was not that antitrust in the Warren years failed to promote competition; it was that it failed to maximize consumer (economic) welfare, which was the proper goal of antitrust, and which was itself dependent upon maximizing economic efficiency. Countless scholars, writing from a critical perspective, have highlighted the Chicago preoccupation with efficiency and with the belief that antitrust—partly by protecting inefficient businesses—had historically frustrated the achievement thereof.35 But the clearest articulation of this preoccupation is provided by Bork himself. “The whole task of antitrust,” he opined in The Antitrust Paradox (1978), “can be summed up as the effort to improve allocative efficiency without impairing productive efficiency so greatly as to produce either no gain or a net loss in consumer welfare.” Or more succinctly: “The only legitimate goal of American antitrust law is the maximization of consumer welfare.”36 Herein, therefore, lay markets’ avowed superiority vis-à-vis the state, for as Rowe translates, “the market ensures efficiency and cures inefficiency if meddling governments keep out.”37 Needless to say, one important byproduct of this reconceptualization of antitrust—as essentially something not needed because efficiency was the goal and markets delivered it—was the relegation of our own central conceptual categories, those of monopoly and competition, to the intellectual sidelines. The reason for this, to be clear, was not only that something else (efficiency) was now accorded pride of conceptual place; it was also, just as important, that neither monopoly nor competition was seen to have any necessary relation to efficiency. To be sure, competition

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sometimes led to optimal welfare outcomes. But not always. Or seen from the other way round, and as Posner liked to put it, monopoly was only presumptively inefficient; it could be more efficient than competition where, for instance, the economies of centralizing production outweighed the costs of monopoly pricing.38 Those traditionalists who clung to a symbiosis of antitrust and competition, therefore, were to be deeply frustrated by the new philosophy of U.S. antitrust. And of course the Chicago revolution was never just one of philosophy. In the course of a decade of transformative change, beginning in the mid-1970s, it totally redefined antitrust practice as well as thinking. Eleanor Fox identified 1977 as a critical moment as it was in that year that the Supreme Court, in a landmark decision, determined that market impact should control antitrust decisions and that market impact was to be assessed in terms of efficiency.39 The swing toward Chicago thinking was then forcefully solidified in the following years, not least through President Reagan’s commissioning of leading Chicago theorists as serving judges. The two most prominent examples of scholars to have made this particular transition were none other than Bork and Posner, both of whom were nominated in 1981, and both to Courts of Appeals (for the District of Columbia Circuit and Seventh Circuit, respectively). New leaders at both the FTC (James Miller) and the DOJ’s antitrust division (William Baxter) from 1981 were also both Chicago Schoolers.40 The Chicago School succeeded in transforming IP law through a parallel and closely connected set of arguments, and we shall consider these in a moment. Before doing so, however, it is important to update the Chicago School antitrust story somewhat closer to the present day. It is not uncommon to read about so-called post-Chicago developments in antitrust, dating from around the middle of the 1990s.41 Indeed, the winner of the 2014 economics Nobel Prize, Jean Tirole, is commonly identified as a leading post-Chicagoan. Post-Chicago developments have certainly entailed meaningful changes in antitrust thinking and practice, but such changes ultimately amount to small beer compared to the changes that the Chicago revolution itself heralded. Moreover, these latter-day changes have been more in the nature of additions rather than fundamental modifications. Which is to say, U.S. antitrust has demonstrably not undone the Chicago transformation. Gunnar Niels and Adriaan Ten Kate reflect as follows: “The rise of post-Chicago has not affected the prevalence of the Chicago ground rules for antitrust .  .  . When post-Chicago theories are used it is to assess the economic effects

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of the specific business practices or mergers concerned—but still largely within the competition-efficiency framework laid out by Chicago.”42 Central to the Chicago critique of interventionist postwar antitrust was a rethinking of the materiality specifically of barriers to entry, and it is here that the link to IP and IP law is most explicit. As we saw in the previous chapter, the argument that monopoly powers—and in particular, in the work of Joe Bain, those buttressed by strong IP protections—stifled both competition and innovation by erecting formidable barriers to new entrants had been key to the postwar antitrust revival. The Chicago School summarily turned this convention on its head. Bain and others, it was now argued, had greatly overplayed such barriers to entry, even where industries were highly concentrated and/or saturated in IP protections.43 The notional barriers were simply not as substantial as had previously been argued. Bork was especially dismissive, scorning as “incomprehensible” the idea that trademarks and the advertising that enveloped them created meaningful entry obstacles.44 And if monopoly power did not ordinarily generate such problematic barriers, of course, there was no need for a policy—antitrust—to mitigate their nominal materialization. Equally, there was no need to be cautious about reinforcing rights—IP rights—that contributed to the assembly of such monopoly power. Astute readers, meanwhile, by now may have noted a certain historical curiosity—even irony—in these various antitrust and IP-related intellectual developments. Bork and Posner, with their disdain for state intervention and their concomitant privileging of markets, are widely regarded as having been in the vanguard of neoliberal thinkers in the 1970s. Yet had not an earlier generation of influential Mont Pèlerin neoliberals, such as Lionel Robbins and Arnold Plant, developed a forceful critique in the name of competition, precisely of monopoly power and of its frequently IP-based constitution? Indeed they had (Chapter 4); and latter-day neoliberals’ elision of such conceptual contradictions, whereby an erstwhile taboo can smoothly reemerge as a harmless economic byproduct, is just one of the tensions exhibited by the political-economic philosophy of neoliberalism in general and its law-and-economics manifestations in particular.45 Yet no matter, for such tensions clearly did not stand in the way of Chicago’s rethinking of IP and its relation to antitrust. This went beyond the issue of entry barriers per se, developing rather into a fullblown conceptualization of IP in general not only as not necessarily

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anticompetitive but as procompetitive. Spencer Waller and Noel Byrne make this case well, showing that in the early 1980s the Antitrust Division of the DOJ—which as Katz observes was heavily influenced by Chicago thinking in regard to IP and antitrust—became “a powerful force in changing attitudes.”46 McClure notes that the Chicagoans posited advertising and trademarks as procompetitive on several linked grounds—“because they lower consumer search costs, facilitate entry by new competitors, and generate quality-control incentives.”47 And naturally, it would not have been a Chicago conceptualization worthy of the name if it had limited the identification of upsides to the now distinctly second-tier consideration that was competition. Efficiency and welfare effects, as we have seen, were now the true arbiters of a policy’s worth; and whereas antitrust was seen to fail this cardinal test, IP rights, vitally, did not. Thus, they were inherently justifiable, even where they evidently constrained competition. “It became acknowledged,” writes Katz, “that many restrictions on competition, often part of any IP licensing agreement, could indeed be efficient and welfare increasing and therefore not raise any antitrust concerns.”48 The critical cumulative implication of this revolution in thinking about antitrust and IP laws—their rationales, dynamics, and effects—was that having traditionally been seen as oppositional because one promoted competition and one enabled its dialectical counterpart (monopoly), they now related in new ways since the rules of the game had changed. The big new game was efficiency, and efficiency was the purpose of both sets of laws; and in any event, on those increasingly rare occasions that antitrust was still dialed to tired competition concerns, that was no problem either because IP was now deemed procompetitive. Whichever way one looked at the problem through the Chicago optic, then, IP and antitrust laws were all of a sudden conceptually complementary. They were “perfectly compatible,” as McClure wryly observed in relation to the new trademark policy; or as an influential 1990 opinion by the CAFC put it in relation to patents, both laws “are aimed at encouraging innovation, industry and competition.”49 And this cumulative revolution in thinking was, in summary, crucial to the revolution in practice delineated above. Yet in surveying these closely linked intellectual reformations we should be careful always to keep in mind one especially vital consideration: the fact that the antitrust law with which IP law was now considered of a piece was a very different antitrust from its historical forebears. It was, essentially, an anti-antitrust law—one to be largely shelved because,

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with markets ensuring efficiency better than the law ever could, it was not in fact needed. At the same time, however, the wholesale rewriting of U.S. antitrust and IP policies from the middle of the 1970s was never only a function of changing intellectual currents. Ideas were important, but their effects were always intermingled with others. These other formative influences included essentially political ones, by which is meant here active intervention into the political process by groups seeking politically led change to the form and/or enforcement of the laws in question. In the 1970s and 1980s this occurred much more in relation to IP than antitrust law. In terms of the latter, two key factors mitigated any need for extensive lobbying either by industries seeking the tempering of antitrust or by those economists championing the new efficiency agenda.50 First, “the apostles of the Chicago School,” as Walter Adams and James Brock described them, “captured control of the antitrust agencies during the Reagan administration” without any great struggle; the administration parachuted them in.51 What lobbying took place therefore occurred more within the political sphere, as an administration sold on Chicago, in the form especially of Secretary of Commerce Malcolm Baldrige, lobbied a more skeptical Congress.52 This brings us to the second factor. Congress in fact remained skeptical, but ultimately it did not much matter. Antitrust’s new school of thinkers and practitioners were able to curtail its erstwhile interventionism without any substantive changes to its core historic statutes. The Sherman and Clayton Acts, after all, are still on the books. The transformative practical changes to the U.S. antitrust regime during the Chicago era, in other words, have been of interpretation rather than of doctrine. IP law was a different matter. Here, the law did change, in the field of patents (the American Inventors Protection Act of 1999 being particularly important) in addition to those of copyright and trademark, as discussed above; and it changed because it needed to, if it were to reverse the postwar pattern of weak protection and subordination to antitrust. And it is now well established that these changes were initiated by politicians who came under not inconsiderable pressure from industry. Copyright law, particularly in the years leading up to the passage of the term extension act, is a prime example.53 The 1998 act was, says Merges, “a classic instance of almost pure rent-seeking legislation . . . that strongly favored a narrow class of copyright owners” and which “was intensively lobbied, and became law with little opposition.”54 Merges cites

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an eye-opening exposé written in 1996 by a former House Intellectual Property subcommittee staff member, William Patry: “Copyright interest groups hold fundraisers for members of Congress, write campaign songs, invite members of Congress (and their staff) to private movie screenings or sold-out concerts, and draft legislation they expect Congress to pass without any changes. In the 104th Congress, they are drafting the committee reports and haggling among themselves about what needs to be in the report. In my experience, some copyright lawyers and lobbyists actually resent members of Congress and staff interfering with what they view as their legislation and their committee report.”55 Yet even when allied with the intellectual sea changes identified above, politicking, in its various guises, cannot alone account for the wholesale transformation that U.S. IP and antitrust policy underwent from the middle of the 1970s. In the remainder of this section, we shall see that the U.S. economy and its corporate population had arrived at a new conjuncture in the early 1970s that increasingly necessitated the types of changes charted in the previous section. Alongside intellectual and political forces, this is to say, we must recognize deeply relevant political-economic ones. The basic argument here, bluntly stated, is that the law—cumulatively conceived—began now to exert pressure from the monopoly side of the monopoly-competition dialectic because, for the sake of U.S. capital’s stability and reproducibility, it was required to. Things had thus turned full circle since the immediate postwar years: Proceeding from a conjuncture of relative excess monopoly, with all the attendant challenges to macroeconomic health, the United States now confronted relative excess competition—partly, although assuredly not only, due to the competition-boosting work of the law through the 1950s and 1960s. This powerful political-economic impetus to the subsequent reformation of antitrust and IP policy is evidenced in several ways, but a particularly significant one, we shall see, is the fact that it was frequently acknowledged as such in the various arguments for reformation that we have just surveyed. That the U.S. economy entered a period of deep malaise in the early 1970s, from which it did not substantially recover until the early to mid1980s, is widely recognized by economic commentators of all schools, even if they do not agree on causes. U.S. capitalism’s golden age, in other words, was over—arguably by as early as 1971 (when the Bretton Woods system collapsed), and certainly by 1973, which marked the global oil

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crisis and, in the United States, the start of a two-year bear market and a recession that may officially have ended in 1975 but which hung heavily over the economy until at least the end of 1982, as accelerating inflation accompanied persistently low economic growth and investment. In figuring this onset of U.S. economic stagnation from the early 1970s as arising from a relative excess of competition, and thus from the reemergence—albeit in a different configuration—of imbalance in our pivotal monopoly-competition dialectic, our account follows the lead of a number of previous readings. These include those of Giovanni Arrighi, of Thomas Weisskopf and coauthors—whose work the previous chapter also drew upon—and of, in particular, Robert Brenner, especially in his The Economics of Global Turbulence.56 For these writers too, the U.S. crisis of the early 1970s was about intensified competition, although in their accounts the notion of competition is relative in only a historical sense, not in the more fundamental, dialectical sense (as in, relative to the degree of monopoly). As Brenner argues, corporate profitability in the United States fell sharply between 1965 and 1973 due to stronger competition, downward pressure on prices, and overcapacity and overproduction. With profits increasingly hard to come by, investment stagnated. But Brenner is wrong to insist that the thesis of intensified competition somehow contradicts the “wage squeeze” thesis advanced by others to account for the 1970s crisis (just as those who believe the wage squeeze thesis obviates Brenner’s theory are also wrong). By the latter argument, growing pressure on U.S. corporate profits was a function not of greater competition among capitals but of labor’s increasing empowerment visà-vis capital at large, real wage rises thus “squeezing” profit rates. But the two arguments are not necessarily mutually exclusive. In fact, as we saw when discussing Adam Smith’s thesis of excessive competition in Chapter 3, competition can only be considered generally excessive—and can only depress overall profit rates—if labor is able to extract a higher average share of income. The excess competition theory advanced by Brenner does not therefore exclude the wage squeeze thesis; it depends upon it. Or as Martin Thomas puts it, insofar as “workers must gain a cut in the rate of exploitation” in order for profits to fall, “Brenner’s ‘ruinous-competition’ theory is really a wage-push theory.”57 And U.S. labor did grow its income share progressively during the postwar decades (Chapter 5). Confronted initially by concentrated industrial formations, but then by progressively fragmenting capitals as competition

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increased, by the early 1970s labor had achieved something like the peak of its postwar powers. Notably, it is not just political economists of a leftist orientation that have documented and discussed the intensification of competition in the United States in the period leading up to the 1970s stagnation. Indeed, they were not the first to do so. For in the 1970s itself, the economists of the Chicago School had frequently elaborated on this theme; and moreover, this identification of renewed intercapitalist competition became a key plank of their assault on interventionist antitrust. Why seek to generate more competition, they demanded, if the economy was already competitive? This proved a persuasive argument. Writing in 1988, George Stigler, another of the leaders of the Chicago movement, admitted that broadly acknowledged changes in U.S. political-economic dynamics—toward a more competitive configuration— had indeed been just as important as pure intellectual, welfare-based arguments to legitimating antitrust’s sterilization. The two key drivers of this sterilization, in his view, were “the shift in attention to efficiency, and the restoration of the powerful role of competition.” The “combination” of the two, he reflected, “has done much to weaken the arguments for an antitrust policy.”58 Critically, the problematic political-economic conditions associated with this intensification of competition—depleted profits, stagnation, moribund investment, and so forth—also directly inspired the changes in IP policy charted earlier. IP rights would be broadened and bolstered in order to help drag the U.S. economy out of recession; and they would theoretically do so, of course, by enabling the recovery of profit potential through the (re)assembly of dwindling monopoly powers, even if the latter was not explicitly identified, or even necessarily understood, as the pertinent mechanism. Confronted with ongoing stagnation, president Jimmy Carter commissioned a Domestic Policy Review on Industrial Innovation in May 1978, levels of commercialized innovation being seen to have deteriorated dramatically during the preceding decade. When it reported the following year, the commission’s recommendations centered, significantly, on patent law and on the necessity of its strengthening to reinvigorate profitable innovation.59 The creation of the CAFC in 1982 was one key outcome. As the court’s first judge explained: “The court was formed for one need, to recover the value of the patent system as an incentive to industry.”60 Without the incentive, in the shape of defensible profits, that stronger patent protection (aka monopoly power)

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afforded, industry simply would not invest.61 In this trumpeting of the positive economic development potential of IP, the discourse and policy of the Carter administration went further even than the brief New Deal IP advocacy discussed in Chapter 4, which had lauded copyright and trademark but stopped short of extending this support to patents, then still too closely associated with the “evils” of monopoly. On the face of things, therefore, the political economy of the 1970s United States looks much like the political economy of the 1890s United States—with the policy responses to the difficulties of those decades also appearing remarkably similar. On each occasion (relative) excess competition had led to declining levels of prices and profits; on each occasion the economy needed external help to recover and reproduce; and on each occasion the law stepped in, subsequently supporting the building of monopoly powers. Yet if the 1970s replicated the 1890s, they did so with a crucial twist. In the 1890s, the intensification of competition had been a largely domestic phenomenon; where one-time monopolists faced new competitors, the latter were largely from within the United States. The story of the 1950s through 1970s certainly was partly one of increased domestic competition (courtesy in no small part, as the previous chapter showed, to antitrust enforcement), but it was also clearly one of increased competition from overseas. This sets the period apart in important ways from the experience of the previous century. This international dimension is a—if not the—central component of the thesis of intensified competition advanced by the likes of Arrighi, Weisskopf et al., and Brenner for the early 1970s U.S. stagnation. With the U.S. government tolerating “the broad opening of the US economy to overseas penetration,” growing competition from, in particular, Japanese and German manufacturers dragged down aggregate profitability.62 Basking in the profits of the golden age, concurs Galambos, “the United States suddenly found its hegemony cut short by global competition. The first wave of competition began to cripple U.S. firms as early as the late 1960s, and following the first oil shock in 1973 very few of the nation’s major forms were left unscathed.”63 So strong was this overseas competition that for Brenner it, above all else, necessitates the dumping of Paul Baran and Paul Sweezy’s thesis of enduring “monopoly capital.” “The long and dynamic postwar expansion of the world economy from the late 1940s through the early 1970s and the profound intensification of international competition,” Brenner asserts, “put paid to the idea that capitalism per se had entered a stage

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of structural stagnation as a result of the monopoly control over the market exerted by its giant firms.”64 Once again, we find that these developments were explicitly identified and mobilized by the protagonists of the Chicago School in their 1970s attack on antitrust policy. So although Stigler stressed that he and other Chicagoans had concluded that competition was more widespread than previously had been thought before international competition really intensified, the latter phenomenon had confirmed them in their conclusion.65 And if increased competition per se justified a relaxing of antitrust (on the grounds that it simply, by definition, was not necessary), then the increasingly international disposition thereof only served to cement the case. The essence of this even more forceful argument was: How can U.S. companies hope to compete effectively with strengthening foreign competitors, at home and abroad, if the antitrust authorities insist on stripping them of valuable competitive assets and competences? Such an argument had a long U.S. heritage. “A strong strain of rhetoric,” Waller observes, “has always advocated dispensing with the full rigors of competition in international markets.”66 An early example was the 1918 Webb-Pomerene Act, which allowed U.S. companies to collude in export markets so long as they did not do so domestically; it was taken as given that foreign competitors did likewise and, moreover, with the active support of their governments. But in the 1970s the Chicago School took these existing arguments and invested them with new potency. Attuning antitrust to efficiency, they maintained, was especially important now that international competition was so fierce. Perhaps, in the past, the United States could live with welfare imperfections, and (in Pitofsky’s words) “certain goals of antitrust, such as preventing monopolized or highly concentrated markets, could be pursued without taking account of the magnitude of loss in terms of efficiency.” But not under the new scheme of things. “As the 1960s and 1970s progressed, and firms in the industrial sector found themselves challenged abroad and at home by foreign rivals, one had to reconsider whether the country could afford an antitrust policy that was profligate in its efficiency considerations.”67 This, therefore, was one of the main arguments with which the Chicago School and its adherents in government ran. When Baldrige and others in the Reagan administration lobbied Congress for the abolition or weakening of the antitrust laws, it was specifically “in order to promote better international ‘competitiveness’ for the United States.”68 When the

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same administration was called upon to stem the rising tide of mergers in the United States in the early 1980s, the same concern justified inaction. “At that time,” writes Galambos, “many of America’s largest firms were beset by fierce competition from abroad. Mergers and acquisitions were two of the many ways American companies were attempting to get up to speed in this new environment, and the Reagan Administration did everything it could to ease them through that transition.”69 And when this administration codified “very limited jurisdictional rules over export activity . . . and an expanded form of antitrust export immunity” in 1982, it was clear where the conceptual justification lay. With competition now demonstrably international, the Chicago law-and-economics community had determined that antitrust policy must change. Indeed, as late as 1997, Waller detected the same argument continuing to surface “as part of ongoing efforts to limit the antitrust laws in various ways in the name of ‘international competitiveness.’”70 If anything, however, the growth of international competition, and the domestic political-economic imbalances to which it contributed, played an even more prominent and significant role in this period vis-à-vis IP policy and law, and their progressive expansion. As we shall see in the following section, this expansionism played out internationally too, in the domain of U.S. trade policy; and indeed, international and domestic considerations were inextricably linked. But in terms of the latter, the policy effect essentially mirrored that which we saw with antitrust: If U.S. companies now faced intensified foreign competition, then not only should policy (i.e., antitrust) not hamper them, but policy (i.e., IP) should actively help them. Michael Perelman offers a helpful analysis in this regard. “As manufactured goods poured into the United States in the late 1960s, government leaders agonized about finding ways to increase exports,” he writes. “Strengthening intellectual property rights seemed to be an ideal strategy for promoting exports,” Perelman continues, because it was in IP-intensive sectors that the United States was seen to have a competitive edge.71 With government thus inclined, the leading U.S. companies in those sectors suddenly spied an opportunity—they “took advantage of this climate and energetically lobbied for stronger intellectual property rights”—and a process of progressive strengthening of such rights, domestically (not least through the eventual creation of the CAFC) and internationally, was set in motion. The particular value of Perelman’s analysis lies in its recognition of the materiality of intensified international

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competition to reinforced domestic IP protection. Underlining this materiality, he cites Fred Warshofsky’s account of how IP indeed came to be seen as a weapon “in the fight against foreign competition. . . . As a flood of imports washed away millions of domestic manufacturing jobs, attitudes towards patents and their role in the economic equation began to change.”72 With regard to the “economic equation” alluded to by Warshofsky, meanwhile, the United Kingdom faced a broadly comparable set of political-economic circumstances in the 1970s as the United States did. The malaise was just as deep, if not deeper. It entailed a comparable depredation of profits. Indeed, the “wage squeeze” theory of crisis was popularized in the U.K. context before the U.S., Andrew Glyn and Bob Sutcliffe arguing in an influential 1972 book that profits had been pressured from the mid-1960s primarily due to trade union strength and the concomitant capture of income share from capital.73 Data suggest that the labor share of income continued to rise for several years thereafter, as competition among capitals intensified (Chapter 5); hence Thomas’s aside that if Brenner’s excess competition theory of crisis was at once a wage push theory, then so also “Glyn and Sutcliffe’s wage-push theory was really a ‘ruinous-competition’ theory.”74 And, increasingly, this competition, as in the United States, had a crucial international component—as Brenner himself emphasized. It is true that vigorous competition from overseas emerged in the United Kingdom later than in the United States. It is also true, as Brenner admits, that if for Japanese and German manufacturers the U.S. market was “huge, dependable, and easily penetrable,” these characteristics applied to a lesser extent in the case of the U.K. But apply they did; and Robert Hine and Peter Wright confirm the U.K. picture, describing how in the late 1970s, “intensifying international competition disciplined price developments. Competition was sharpened by a continuing liberalization of trade,” and particularly “through multilateral reductions in trade barriers under the GATT Tokyo Round and through the emergence of low cost competition especially from East Asian low wage economies.”75 In short, in relation to its critical monopoly-competition dialectic, the U.K. situation was increasingly akin to the U.S. situation as the 1970s progressed, an historic competition-deficit having become a relative deficit in competition’s economic alter ego; and thus the United Kingdom, also like the United States, increasingly called out for a rebalancing of its skewed monopoly-competition relation.

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As we shall see now, the aggregate legal complex represented by the laws of IP and competition would progressively come in the United Kingdom, from the mid-1970s, to be cumulatively supportive of monopoly as opposed to competition—just as it did in the United States, and just as the United Kingdom’s political-economic (mis)configuration required it to. The legal pendulum, in other words, would swing again there too. This reverse swing, critically, was no less bound up with international developments than was the national political-economic conjuncture to which it represented, in no small part, a response. But this cumulative transformation in the work of the law would, however, follow a markedly different trajectory to the one taken in the United States.

Jumping Scales: U.K. Competition and IP Laws in a Globalized World Internal Developments: The 1980s and Early 1990s Having seen active and vigorous, if partial, enforcement from the late 1950s through to the early 1970s in the shape most materially of the Restrictive Practices Court (RPC), U.K. competition policy subsequently entered a period of deep inertia—beginning in the mid- to late 1970s and lasting until at least the late 1990s, if not longer. If this future pattern of development had been described to an observer of the U.K. economy and economic policy in the early 1980s, they would have reacted with surprise, if not shock. For 1980 had seen the arrival, amid some fanfare, of the new Conservative administration’s much-heralded Competition Act. As David Gerber has noted, this new legislation was drafted and passed in the threefold context of the new government’s avowed emphasis on competition; of an ongoing reevaluation of U.K. competition policy in the light of the growing significance of European Community (EC) competition rules (on which much more below); and last but not least (and also discussed below), of concerns comparable to those documented above for the United States, about the international competitiveness of domestic U.K. industry.76 A 1978 Review of Monopolies and Mergers Policy had identified a clear gap in existing competition policy—there was, says Michael Utton, “no relatively speedy procedure for investigating a particular, narrowly defined piece of market conduct by a dominant firm”—and the 1980 Act was designed to fill it.77

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Alongside the work of the RPC and the Monopolies and Mergers Commission (MMC), the act added a third leg to an already somewhat unwieldy amalgam of national competition rules. Centered on the concept of “anticompetitive practice,” the act was “intended to deter conduct that was likely to harm competition, but which was not being effectively treated under the other two regimes”; and it explicitly added considerations of “economic effects” to the public interest principles that guided existing U.K. competition law. To observers in both government and industry, the new legislation seemed to offer the likelihood of “more direct and vigorous enforcement activity,” particularly insofar as anticompetitive behavior entailed abuse of market dominance.78 Yet by almost any measure the act, or at least its implementation, was a failure. Surveying the track record of the previous two decades, Gerber observed in 1998 that the more “direct and vigorous enforcement” promised by the act had simply never transpired. This recognition led him to the conclusion that, certainly relative to the contemporary experiences of its continental European neighbors, competition law in the United Kingdom “remained a relatively marginal phenomenon.”79 Utton, two years later, reflected similarly. Ten enquiries had been completed under the act’s terms. “However, considerable doubts have been expressed about whether this addition to competition policy really succeeded in achieving the original objective.”80 Not only that, but with the aggressiveness of the RPC’s formative phase having substantially dimmed, U.K. competition policy more broadly—which is to say, not only in relation to its newest legislative weapon—had entered in the early 1980s, writes Andrew Scott, a period of “prolonged and curious inaction.”81 The existence and apparent promise of the 1980 act was definitely one reason for the curiosity alluded to by Scott. But it was not the only one. As noted, the Conservative Party, which remained in power until 1997, was long on the rhetoric of competition. The period in question was also one in which consumer groups frequently and forcefully complained about ponderous and limp investigations by the MMC; two particular cases, concerning car dealerships and the perfume industry, “enraged” these groups.82 Moreover, this period saw the development of numerous proposals for reform and modernization of U.K. competition law, increasingly along the lines of the EC’s parallel rules.83 Yet ultimately, until the passage of the next Competition Act (1998), none of these proposals would make any headway.

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The marked and enduring inaction referred to by Scott was perhaps captured best in two editorials, published in 1994 and 1995, by The Economist. The first noted that references to the MMC had “dried up” and that: “A new restrictive practices bill is still waiting for parliamentary time five years after one of the government’s own white papers promised fines and greater investigative powers against illegal cartels.”84 The second cited Sir Gordon Borrie, former head of the Office of Fair Trading (OFT) and a leading advocate of U.K. competition policy reform, who had recently told a government inquiry into such policy “that ‘for many years now, government policy towards the promotion of competition and the restraint of cartels and monopoly policy has been marked by lack of will, dither and uncertainty.’”85 All of this raises the obvious question of why there was lack of will, dither, and hence policy failure. In the most immediate sense there was a practical reason, one identified by The Economist in its assessment of the lot of the MMC: “Can a commission run by part-timers, with an annual budget of only £5m and lumbered with a tangle of unsatisfactory laws, hope to umpire a modern economy?”86 Clearly the answer was no, but this in itself raised the further question of the deeper reasons for such inadequate staffing, budgets, and legislative clarity; and here too The Economist provided crucial insight. Significantly, its 1994 commentary on the state of U.K. competition policy was published just days in advance of the government’s launch of a “long-awaited” white paper not on competition but on competitiveness—the competitiveness, that is, of the U.K. economy and of its leading companies. The Economist was minded to write about competition precisely because of what it saw as a striking disjuncture: “When [president of the Board of Trade Michael] Heseltine delivers his much-ballyhooed white paper on competitiveness on May 23rd, it is expected to contain little on competition policy. Mr Heseltine has already expressed more interest in nurturing national industrial champions than championing the interests of the nation’s consumers.”87 If this sounds familiar, then well it might, for we encountered above, in the U.S. context in the 1970s and 1980s (i.e., somewhat earlier), exactly the same set of political concerns about national competitiveness. Furthermore, just as those concerns directly informed the relaxing of antitrust in the United States, so in turn, The Economist claimed, they fueled the inertia in competition policy in the United Kingdom. Thus the same Graeme Odgers, MMC chairman since 1993, who “has taken a

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more hands-off approach than his predecessors to competition issues,” had “spoken of his concern that over-zealous enforcement of competition rules risks ‘damaging our great enterprises.’”88 This opposition to antitrust enforcement on the grounds of protecting the competitiveness of national industrial champions was straight out of the Chicago playbook. And of course, the political-economic context framing these convictions—one of heightened levels of competition, particularly from foreign companies—was equivalent. Given the imbalance in the national political economy, with the forces of competition having become relatively dominant versus those of monopoly, the United Kingdom, it was sensed, could no more afford vigorous antitrust than the United States could. In short, with competition having reemerged in the postwar decades as an economic reality, the government felt confident in now subordinating it—as a policy concern—to competitiveness. “The government’s failure to reform laws which even those employed to implement them think are flawed,” The Economist concluded, “indicates that it gives much less priority to consumer protection than to promoting industrial recovery.”89 Significantly, this prolonged inertia in U.K. competition policy in the 1980s and 1990s extended also to the relationship specifically between such policy and IP policy. In the previous chapter we came to two conclusions regarding this particular interface in the 1960s and 1970s United Kingdom that are worth reprising briefly here because the contrast with the 1980s and 1990s is a stark one. First, we saw that the two sets of laws seldom encountered one another in practice, largely it seems because U.K. IP registration and exploitation entered something of a hiatus during these decades, with indigenous industrial innovation in the doldrums. Second, we concluded, albeit somewhat hesitantly, that competition policy increasingly appeared to win out over IP policy on the few occasions when the two were both substantively implicated. The 1980s and early 1990s look markedly different on both counts. This is made especially clear in the U.K. submission to a 1997 roundtable on competition issues relating to IP rights held by the Organisation for Economic Co-operation and Development’s (OECD) Committee on Competition Law and Policy.90 For one thing, the submission emphasizes that the legal encounter between the two sets of policies became a more common one in this later period (although for reasons that shall presently become clear, the two still “met” much less often than in the United States): “The MMC,” it observed, “has given intellectual

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property issues more extensive treatment.”91 For another, in those cases where the MMC was indeed required to weigh off the two policy considerations against or alongside one another, it was IP law that typically now took precedence. The latter conclusion, and the swinging of the legal pendulum to which it attests, can be made much more forcefully than the correlate conclusion—regarding competition law’s precedence—for the preceding period and bears closer exemplification, not least in view of its significance for the wider arc of our narrative. It comprises two connected components. First, the submission states that the OFT did not “view ownership of an IPR as a source of market power in itself, provided that there is actual or potential competition in the relevant market. In other words, ownership of an IPR does not automatically create a ‘monopoly.’” We should pause a moment to reflect on this fact. In the United States, after all, the Supreme Court only managed to arrive at a comparable IP-friendly view as late as 2006, and after a century or more of explicit philosophical soul-searching and political-legal wrangling. In the United Kingdom, this position was formalized just so—with no history of formal, entrenched acceptance of the obverse position to be overcome. This fact also, of course, explains why, in the United Kingdom in this period, we still see IP and antitrust considerations entangling relatively infrequently: because with market power not presumed from the presence of IP rights, the exercise of the latter was generally examined by the authorities only where some degree of market power was shown to be present.92 Second, even where it was believed that IP rights did confer monopoly power, this was not necessarily grounds for intervention and remedial action. Why? Because the OFT and MMC did “not normally view the exploitation of an IPR, or the failure to license a competitor, as anticompetitive.” Indeed, on the contrary: Monopoly-conferring IP rights were now seen as “usually pro-competitive,” just as they had come to be seen by the Chicago School and its acolytes at the DOJ in the early 1980s.93 Together, therefore, these two newly cohered opinions—that IP rights did not automatically furnish market power, and that even where they did they were usually procompetitive—contributed to a powerful and materially reconfigured overall approach to the IP/competition interface in the United Kingdom. The competition authorities, the submission to the OECD summed up, “generally take a benign view of IPRs and view them as being in conflict with competition policy only in exceptional circumstances.” Moreover, given that “IPRs are not usually in conflict

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with competition policy,” it followed automatically that the authorities “need to have good reasons before interfering with their exploitation.” Even a Chicagoan would have been hard pressed to capture the new mood, and its implied suppression of competition concerns, quite as eloquently as the submission did: “IPRs are designed to be exploited. Parliament (and, in the case of copyright, international convention) has granted these rights to companies as a reward for their innovation and creativity, and in order to provide an incentive for future innovation and creativity by other firms. The whole point of creating IPRs is to allow firms to exploit that asset.”94 And the authorities were, in practice, true to this word. In the 1980s and especially the 1990s, substantiation of actually existing market power was rare; of the “exceptional circumstances” then constituting “good reasons” for interference, rarer still (almost by definition, one might add). Of the four 1990s MMC investigations involving IP documented in the submission, for instance, only one—of the video games industry—led to adverse public interest findings. TRIPS If the 1980s and early 1990s saw the balance in the United Kingdom between IP and competition laws swinging firmly in favor of the former (as the latter were sacrificed at the altar of national competitiveness), then this trend would be redoubled over the following two decades—which take us all the way up to the present day. Numerous interlocking factors contributed to this further development; the one feature they all share is that each was intimately bound up with the increasingly international dimensions of the rules and laws governing competition and IP in the U.K. context. Taking the latter first, undoubtedly the key moment and point of transition was the signing of the TRIPS Agreement in 1994. Described recently by Valbona Muzaka as “the most significant IP agreement of the twentieth century, indeed, of the entire history of IPRs,” the significance of TRIPS to the present discussion was and is twofold.95 First of all, TRIPS entailed a profound shift in the locus of decisionmaking power and indeed enforcement capacity with regards to IP protection. All that the Paris and Berne IP conventions had required was that states extend the same protections to foreign as to domestic IP owners; each state retained the capacity to decide what those protections should

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be, and there was precious little institutionalized political-economic recourse if equal protections were not in fact afforded. But this state of affairs changed dramatically with TRIPS, as the work of Sell, in particular, has shown. TRIPS was, perhaps above all else, about international harmonization, which is why Sell talks about the agreement as “effectively globalizing IP protection.” It “promotes universality in IP rights protection”—for example, in imposing a uniform patent protection term of twenty years—and thus “institutionalizes greater substantive convergence of national IP systems.” It covers all IP rights (incorporating, as opposed to superseding, Paris and Berne), and states must adhere to the agreement in order to be part of the WTO. Adherence, in turn, means a number of things. Most obviously it means providing “adequate and effective enforcement mechanisms both internally and at the border.” But it also means abiding strictly by any rulings handed down by the WTO’s dispute settlement mechanism in the event of conflicts; nonobservance explicitly risks retaliation, including in the form of sanctions. In short, therefore, TRIPS “reaches deep into the domestic regulatory environment of states,” bringing with it a “sharp reduction in the scope of state autonomy for determining appropriate levels of intellectual property protection at home.”96 None of this, of course, would necessarily have supported and furthered the aforementioned shift in the balance between competition and IP laws in the U.K. case specifically, if the IP protection levels specified by TRIPS had been minimalist ones. But they were not. TRIPS was massively, inherently expansionist with respect to the rights associated with IP. As Hanns Ullrich summarizes: “IPRs were extended to new subjectmatter categories (for example, copyrights in computer programs and sui generis protection of databases); the protection of some new categories was tightened (for example, patents were granted ever more readily for computer programs in addition to copyright protection); and preexisting exceptions or limitations on the scope of protection were also weakened so as to render the protection of new subject matters ever more opaque and inaccessible.”97 Inter alia, patent rights were extended to almost all subject matter (barring plants and animals other than microorganisms), and the patent law minimum adopted by TRIPS was substantially higher than the standards of the Paris Convention.98 Sell and May, therefore, speak powerfully to the two key impulses and implications of TRIPS when concluding that the agreement “is intellectual property protection at its most developed and most geographically

Remaking Monopoly for the Twenty-First Century

extended.”99 In the United Kingdom, it helped reinforce a trend to IP precedence over competition law—we shall deal imminently with TRIPS’s consequences specifically for the latter—that had begun a decade or so earlier. Only now, that trend was being shaped increasingly by extranational forces, at least insofar as IP rules were concerned. Yet we should be careful not to read into Sell’s references to reductions in state autonomy the notion that this was some kind of unwanted development being foisted on the United Kingdom by malevolent external forces. In a generic sense Sell’s work is frequently read this way, particularly because she emphasizes the key role of the United States as the driving force behind the negotiation, formulation, and signing of the agreement. But such a reading is only really accurate for the countries of the Global South (and even then it is a generalization that a close reading of Sell serves to unsettle). Japan and various leading European nations, including the United Kingdom, were also active proponents, from the mid-1980s onward, of the harmonization and strengthening of international IP protection that TRIPS ultimately came to institutionalize. This particular dimension of the background to TRIPS merits discussion for reasons that cut to the heart of our political-economic analysis here. To be sure, the United States did provide the principal stimulus to TRIPS; and equally certainly, its reasons for doing so were tightly bound up with the concerns about intensified international competition and national competiveness touched on above. As Muzaka summarizes, “with the more traditional industrial sectors stagnating and the blame for economic malaise laid elsewhere, the high-tech and copyright industries successfully promoted themselves,” from the late 1970s onward, “as viable and vibrant industries most capable of improving US growth and competitiveness.”100 Stronger domestic protection per se was the first necessity, as we saw earlier. But in the context of international competition, two extra elements were deemed necessary, and it was these that TRIPS would ultimately, most comprehensively and universally, provide. First, domestic protection had to include protections specifically against IP infringement originating externally; hence, long before TRIPS, the aggressive U.S. use of the 1930 Trade Act to prevent imports infringing U.S. IP rights.101 Second, the U.S. IP champions could only truly flourish, needless to say, in Muzaka’s words, if “their IP assets were ‘properly’ protected abroad”; and there were important precedents to TRIPS in this regard too, including the United States making the delivery of trade concessions to third-party countries conditional upon IP

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enforcement.102 Through their insistence on both elements during the decade preceding TRIPS, U.S. industry’s advocates of protection doggedly turned IP explicitly into a trade “issue,” and one nominally of “fundamental national importance.”103 Yet the United States —in the shape of its industry lobbyists and the national trade representatives whom they relatively easily persuaded— did not make such arguments, and thus provide the discursive and political momentum for TRIPS, all by itself. Sell has shown that the central group of U.S. lobbyists—the so-called Intellectual Property Committee (IPC) comprising the chief executives of leading U.S. companies from the IP-heavy pharmaceutical, entertainment, and software triumvirate—made it its business to get European and Japanese counterparts on board from the mid-1980s. In 1986, for example, the IPC met with national groups including the United Kingdom’s Confederation of British Industries, and found willing allies more than happy to make the case for international IP harmonization and expansionism to their respective governments.104 In fact so strong was the independent European desire for similar outcomes that Muzaka styles the conventional view that the European Union adopted a softer pre-TRIPS approach to IP than the United States “misguided because the EU has in fact played a crucial role in the push towards a more ‘robust’ global IP system, both alongside the US and in its own right. . . . In Europe, too, high-tech, brand-name and copyright industries were successful in portraying themselves as the most promising and dynamic sectors capable of delivering growth and improved competitiveness when most other (traditional) industrial sectors were in relative decline.”105 Thus: “The EU in fact played a decisive role in the making of TRIPS.” And crucially, it did so on the basis of a comparable “competiveness” agenda—“which can roughly be stated as ‘higher IP protection = more innovation = improved competitiveness’”—to that which characterized the U.S. corporate case for TRIPS (and also, of course, the U.K. and U.S. cases for relaxed competition policy).106 Through the 1980s and 1990s, the politico-discursive concatenation of IP strengthening with national competiveness was increasingly compelling to a U.K. government anxious to boost growth and the balance of payments in the face of heightening international competition and, significantly, presiding over a domestic economy with strengths in two of the aforementioned triumvirate of IP-heavy industries (missing only software). Indeed, in 1994, the United Kingdom was on the cusp of launching a major new

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“creative industries” initiative predicated precisely on the concatenation in question.107 TRIPS and related developments, therefore, represents the first of those factors accounting for a deepening since the mid-1990s of the swing already in evidence in the United Kingdom in favor of IP versus competition protections. The second such factor is also connected to TRIPS, but concerns the implications of the agreement for competition policy per se. As we have seen throughout the book, major developments in either IP or competition law can scarcely not have direct significance for the other, and TRIPS was no different in this respect. Not only, moreover, did it condition henceforth what signatory nations could and could not do in the realm of IP-related competition policy; but it manifestly channeled them toward a distinctively noninterventionist stance, thus reinforcing the direction of the drift already underway in the case of the United Kingdom. Ullrich’s work is the main reference point in helping us to appreciate this. As he emphasizes, TRIPS did not explicitly dictate national competition policy in the way that it clearly did national IP policy; indeed, “the reservation of IPR-related competition policy to sovereign national determination” was one of what Ullrich identifies as three “guiding principles” to emerge from the competition rules set out in the agreement. But the other two guiding principles, when allied to the inherently expansionist nature of TRIPS with respect to IP protections, meant that the agreement did at least implicitly script national competition policy from the mid-1990s on. Those other two principles were, first, “a requirement of consistency between national IPR-related competition policy and the TRIPS Agreement’s principles of IP protection”; and second, “a concern to primarily target practices restricting the dissemination of protected technologies.”108 It is the first of these two that is pivotal. The reason, obviously, is that signatories were now required to make their competition policies consistent not with some hazy, free-floating concept of IP rights but with what we have already seen to be a tightly defined and highly protectionist regime. If IP was now politically-economically elevated, and competition policy had to be made “consistent” with it, then the latter was effectively subordinated in kind. Hence Ullrich’s conclusion that the requirement of consistency “must be read as a caveat against an excessive exercise of competition policy, which the TRIPS Agreement, by its purpose and express wording, otherwise leaves Members free to define. It means that

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they may not use antitrust regulation as a pretext to undermine the protection of IPRs as guaranteed by the TRIPS Agreement.”109 There was nothing in the TRIPS agreement, as Ullrich saw it, to gainsay such a stark conclusion. TRIPS not only impacted the dialectic of competition and monopoly by acting directly to buttress the latter, therefore, but by acting as a Trojan horse for the smuggling in of concomitant prohibitions on encouraging the former. Europeanization, Americanization, and Contemporary U.K. Competition Law At the same time—and here we turn to the third and final transnationally constituted factor behind the amplification of monopoly’s ascendance in the United Kingdom from the late 1990s—competition policy in the United Kingdom was itself now changing in ways that increasingly diminished its powers to boost competition, and which were only minimally related to the above IP developments. This process of change took place—and in fact, continues to take place—first and foremost through the increasing “Europeanization,” along various axes, of U.K. competition policy. To understand this recent burst of Europeanization and its implications for the monopoly-competition relation, however, some historical background on the relationship between the United Kingdom and European Union and their respective competition rules is essential. Competition rules were institutionalized within the political-economic framework of the EC/EU from its very outset. Most important in this regard were articles 85 (now 101) and 86 (now 102) of the Treaty of Rome (1957), which prohibit restrictive agreements and abuse of market dominance, respectively. (Merger control was not introduced into EU law until as late as 1989.) The European Commission, through the Directorate General for Competition, was traditionally responsible for developing and applying the European Union’s competition laws (the distinction between developing and applying is a critical one, as we shall see below), albeit with support from the European Court of Justice and, since 1991, the Court of First Instance. U.K. companies became formally subject to these laws when the United Kingdom acceded to the European Economic Community (EEC) in 1973. But two caveats are vital to bear in mind when considering the nature of the relationship between EU competition laws and the United Kingdom—both its companies and its own competition laws—through to the mid-1990s. First,

Remaking Monopoly for the Twenty-First Century

U.K. companies were (and are) only subject to EU law to the extent they engaged in trade with other member states; the European Union was not interested in alleged distortion of competition purely within individual member territories. Second, and more pointed in the present context, developments in U.K. and other national competition laws were formally independent of developments in EU law (and would remain so until 2004); and, in the early 1990s, the United Kingdom’s competition laws remained not only separate to the European Union’s rules but also largely uninfluenced by them. The European Union had chosen one approach, the United Kingdom another. From the mid-1990s, however, this began to change, with U.K. competition law becoming increasingly Europeanized. Had this rapprochement occurred any earlier, notably, it might conceivably have led in the United Kingdom to stronger competition law, and to a relative flowering of competition. For one thing, EU competition law had not only been generally more interventionist, at least since the mid-1970s, than its attenuated U.S. equivalent.110 It was also typically seen to be more interventionist than U.K. competition policy to the extent, observed Utton in 2000, that “being out of step with Europe is a position in which the MMC has often found itself.” Utton referred to the 1987 merger of British Airways and British Caledonian by way of illustration. Whereas the MMC was happy to wave the merger through with minimal concessions, “the European Commission, despite at the time being hampered by the lack of specific authority over mergers, was prepared to impose much more severe conditions.”111 For another thing, where the European Union handled cases involving our volatile mixture of competition concerns and IP rights, the former had ordinarily trumped the latter—in contrast to the dominant tendency, from the early 1980s, in the United Kingdom. Deciding how to handle this particular mixture had historically been no less challenging for EU than for U.K. or U.S. regulators. Indeed, writing in 1997, Alan Gutterman argued that “reconciling the existence of national patent rights with the overriding Treaty of Rome objectives of reducing and eliminating barriers to trade among the member states” had been “the most difficult issue for EC competition law regulators.” How had they approached this thorny issue, then? In general, Gutterman demonstrated, the Commission, in interpreting the relevant rules of the EC Treaty (articles 30 through 36 in the case of IP protections), had “made it clear that the overriding objective of free movement of goods

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within the common market is to take precedence over enforcement of national intellectual property rights.”112 Competition, in other words, trumped monopoly. As it was, however, the Europeanization of U.K. competition law began in earnest during the precise period when EU competition policy was itself beginning to transition from the historical, interventionist model sketched above to a model increasingly akin to U.S. antitrust—including, significantly, in terms of its relation to IP protections. If we take the question of the U.K. law’s progressive Europeanization first, it warrants repeating that this did not occur out of the blue: Most of the proposals for U.K. competition policy reform that surfaced in the years of “curious inaction” in the 1980s and early 1990s had, as discussed, been formulated along EU-type lines to one extent or another. And alignment with EU articles 101 and 102 (at that point, 81 and 82) was, in any event, the express objective of the subsequent U.K. Competition Act of 1998, which, covering anticompetitive agreements and abuse of dominant position, came into force in 2000 and saw, inter alia, the repeal of the longstanding restrictive practices regime.113 This act was then followed in 2002 by the Enterprise Act; this statute, coming into effect the following year and introducing a new merger regime, exhibited much less influence from its EU counterpart, but the die had evidently been cast. Meanwhile, the late 1990s and early 2000s also saw the European Union’s own approach to competition questions changing, in its case to a more U.S.-like model that was considerably more accommodating to existing or would-be monopoly powers, whether grounded in IP protections or not. Anyone with a passing familiarity with the sociology, politics, and thinking behind EU economic law-making would probably have been surprised that this convergence on U.S. principles and practices had not occurred earlier still. Not only, as Gerber has written, has the “thought and practice of European states . . . been continually confronted with the power of US antitrust law institutions and the weight and attractions of US antitrust thinking.”114 But at a more personal level, many—“perhaps,” reckons Waller, “a majority”—of the economists and lawyers who originally drafted the EC’s competition rules “had studied at famous law schools in the United States and were very familiar with, and drew inspiration from, United States antitrust laws”; and this back and forth human-epistemic flow has since continued.115 Furthermore, and perhaps most significant, prominent European-based academic economists such as Valentine Korah had been calling for the

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European Union to adopt a more U.S.-style approach since the heady days of the Chicago School’s ascendancy in the early 1980s.116 It is thus rather a curiosity that it is only relatively late in the day that such calls began to be taken more seriously and that, as Niels and Ten Kate noted in 2004, “overall EC competition law has been moving much closer toward U.S. antitrust. Since the mid-1990s, the European Commission has in various areas developed economic standards that are similar to the ones applied in the U.S.” Moving closer meant, naturally, becoming less interventionist, and it was thus symptomatic when in 2002 “the European Court of First Instance slapped the Commission on the wrist by overturning no less than three merger prohibitions, i.e., Airtours, Schneider Electric and Tetra Laval.”117 This transformation in EU competition policy toward a more U.S.like approach, in the late 1990s and early 2000s, was especially notable in relation to IP and the relationship between IP and competition laws. Again, this should not surprise us: TRIPS, itself partly an EU creation, was agreed in 1994, and its singular emphasis on strong IP protection could not help but jar with the legacy EU approach, identified by Gutterman, of generally giving competition concerns precedence over IP rights. Indeed, Steve Anderman claims that the tension between the two approaches was in evidence from the beginning of the 1990s, and surfaced particularly in relation to the commission’s desire to see EU companies competing successfully on the global stage, while also aiming to maintain internal competition. As we saw for the United Kingdom more specifically, this problem—and it was a problem, innovation frequently requiring cooperation and strategic alliances (raising the specter of article 101), and European “champions” often being internally dominant (potentially triggering article 102)—ultimately reflected deeper tensions between industrial and competition policy, as Anderman also observes. And if, prior to the 1990s, competition for EU regulators normally “won,” it is clear now that in the early 1990s things were beginning to change. Previously, for instance, the commission had viewed all joint ventures in oligopolistic markets as prima facie competition infringements, thus requiring (but not often receiving) exemptions; the beginning of the new decade, meanwhile, saw cases such as that of Odin Developments Limited, where a joint venture containing two restrictive IP provisions (one an exclusive license) was cleared.118 The shift to favoring IP—and monopoly power—over competition was simply hastened from the mid-1990s by TRIPS and, of course, by the

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parallel developments in EU competition law discussed above. IP protection was suddenly de rigueur, and the European Union was in the vanguard of the new orthodoxy. Of the twenty-four TRIPS-related disputes brought before the WTO dispute mechanism by 2000, notes Muzaka, the European Union or the United States (or both) initiated twenty-two, “invariably on behalf of specific IP business interests.” By the time of the European Union’s Lisbon Strategy (initiated in 2000), with its explicit signaling “of the importance of ‘adequately rewarding innovation and ideas in a knowledge-based economy,’” the “link between IP protection and European competitiveness [had been] almost transformed into an article of faith”; and in the early 2000s “the Commission continued to bring to the table various directives aimed at harmonising and strengthening IP protection and enforcement in the EU.”119 Simply stated, privileging competition over industrial (for which read also IP) policy was increasingly unthinkable in this context, irrespective of what was happening within EU competition policy per se. Thus, when Anderman writes, as he did in 2002, that EU competition law “accommodate[s] the exercise of IPRs according to the internal logic of intellectual property rights legislation up to a certain point,” it would perhaps have been more accurate to write that EU IP policy accommodates competition legislation “up to a certain point.” After all, “the overall judicial and administrative view” of, as an exemplar, article 82/102, as Anderman himself admitted, was that “competition law can only act in ‘exceptional circumstances’ to place a limit on the lawful exercise of intellectual rights; that is to say it is only in very carefully defined exceptional cases where competition law can be used to curb the full exercise of an intellectual property right as defined by its granting legislation.”120 In short, the European Union, by virtue in significant part of its economic laws’ growing Americanization, effected a volte-face of its own—reversing its tendency to privilege competition concerns over IP protection—in the decade or so beginning in the mid-1990s. And this, crucially, was also the decade during which U.K. competition law, already constrained in relation to IP by TRIPS and its requirement of national competition law’s consistency with strong IP protections, began to be Europeanized. These momentous parallel shifts have since deepened. That is to say, over the past decade, up to and including the present day, U.K. competition law has continued to Europeanize and EU competition law has continued to Americanize—contributing collectively to reinforcement of

Remaking Monopoly for the Twenty-First Century

the swing of the United Kingdom’s monopoly-competition legal pendulum. The key date in both respects was 2004, which heralded the “modernization” of EU competition law. First, since that year, the European Union has required member states to apply EU rather than national law in “most significant competition law cases” (specifically, cases involving any conduct with a European dimension). This requirement has, says Gerber, “greatly reduced the practical importance of national competition law systems,” even if the change nominally gave greater weight to the latter by shifting responsibility for aspects of the law’s application (but not, note, development) to member state competition authorities.121 More and more, competition law as applied in the United Kingdom today is, therefore, EU competition law. And second, EU competition law has itself substantively changed since 2004, although given the preceding discussion it is better to see what subsequently occurred as a continuation and intensification of existing trends than as the taking of a new direction. For the change in question was to what was unambiguously termed a “more economic approach” to competition law.122 The echoes of the Chicago School are, of course, impossible to miss. (The most striking acknowledgement of U.S. antitrust’s earlier reduction to a comparable “more economic approach” can be found in the preface to the second, 2001 edition of Posner’s antitrust textbook. “The first edition of this book [Antitrust Law], published a quarter of a century ago, bore the subtitle ‘An Economic Perspective’, implying there were other perspectives.  .  .  . In the intervening years, the other perspectives have largely fallen away.” As, therefore, did the subtitle.)123 “In place of the set of goals developed over time in EU case law that sought to protect the process of competition as well as foster economic integration in Europe,” writes Gerber, “the new conception of competition law posits one central goal, i.e. ‘consumer welfare’ as understood by neoclassical economics.”124 Accordingly, “the language, methods and perspectives of neoclassical economics” have now taken up the same “central position” within EU competition law as within U.S. antitrust.125 And with U.K. competition law having further Europeanized, it too, by implication, is now similarly dominated. In concluding this discussion of the tortuous, complex and overdetermined path along which the U.K. economic-legal pendulum has swung since the early 1980s, however, we would do well to recognize that this latter, seemingly indirect acquisition of U.S. competition policies was no

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more unwanted and innocent than the earlier acquisition of TRIPS. The aforementioned Korah, long-term enthusiast for Chicago, was based in London throughout the relevant period and was an influential voice domestically. Already in the 1980s, hers and similar voices were beginning to be heard there. As Tony Freyer has observed, both the Tebbit Guidelines of 1984 and the Liesner Committee studies of 1988 “incorporated a primary goal of efficiency defined in terms of competition.”126 Then, of course, there was the hands-off Odgers at the MMC in the mid-1990s. And last, as Gerber notes, the United Kingdom, particularly in the shape of the economist John Vickers, head of the OFT in the early 2000s, was highly influential in securing the European Union’s final, Chicago-ward push.127 If the United Kingdom has now ended up with the Chicago School approach to antitrust, nominally by the back door, it is because those with a say in such matters wanted it.

The Reassertion and Internationalization of Monopoly Powers When U.S. and U.K. legal complexes geared to supporting the powers of competition over those of monopoly began the process of reversing the direction of their leverage in the second half of the 1970s, both national economies were struggling, and had been since the beginning of the decade. A significant source of these struggles was the growing intensification of competition (itself an outcome, in part, of the law’s cumulative postwar work), with its downward pressure on prices, profits, and incentives to invest. The subsequent legal reversals, as delineated in the previous sections of this chapter, held out the prospect of helping capitalism to exit from crisis conditions and once more to reproduce itself—if not necessarily smoothly, then at least substantively, just as comparable reversals had done in the past, first in the early twentieth century and then again in the immediate postwar decades. This, it transpires, is indeed what happened. Capitalism in the United States and United Kingdom entered a second, mini golden age, which on most accounts lasted until the onset of the great financial crisis in 2008. Both economies had suffered recessions in the mid-1970s and at the very beginning of the 1980s. But the following quarter-century was one of almost uninterrupted, strong growth, pulling along investment levels and fueled in turn by them. Between 1983 and 2007 inclusive, each economy grew at an average annual rate, compounded and in real

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terms, of approximately 3 percent (just over in the case of the United States, just under in the United Kingdom), pausing for breath only relatively briefly in the early 1990s. This book is the first to argue, not only for the pivotal role of economic laws in effecting this stabilization of Anglo-American late capitalism and of its profit-making and accumulation dynamics, but also for figuring this role as part of a longer, repeating pattern of such stabilization— a pattern of legal “leveling”—stretching back to the beginning of the twentieth century. Yet it is certainly not the first account to insist that laws, and legal transformation, mattered to the particular period of recovery we are interested in here. We can, for instance, briefly consider the U.S. case for examples of other commentators who have identified the law—albeit in the shape of competition law or IP law but not, significantly, both—as crucial to capitalism’s successful post-1970s reproduction. Galambos has proffered precisely this argument for U.S. antitrust, or rather for its deliberate and forceful relaxation. In the 1980s and 1990s, he argues, as the U.S. economy was adjusting to a whirlwind of globalization that the United States had itself been instrumental in propagating, and “U.S. companies were trying frantically to meet global standards of efficiency and innovation,” a vigorous antitrust policy was seen by the domestic powers-that-were as wholly incongruous. “What mattered was having plenty of effective companies that could meet and best their international competitors.” Hence the “bold experiment in public policy” that was the Chicago-inspired shackling of interventionist antitrust. The outcome of this experiment? “The experiment succeeded,” argues Galambos. “As did a U.S. business system that had been struggling for some years to cope with intense global competition. While the new public policy was only one of the many factors that contributed to America’s business recovery, it was an important aspect of the nation’s economic turnaround and deserves our attention and understanding.”128 Indeed it does. But so too does the simultaneous strengthening of domestic U.S. IP laws. As we saw earlier, the singular most important institution to the enforcement of stronger IP protections in the 1980s United States— the Court of Appeals for the Federal Circuit (CAFC)—was the child of Jimmy Carter’s 1978 commission on industrial innovation. Neither this court nor the commission that gave rise to it are remotely as well known or intensely studied as the Chicago antitrust revolution. Yet arguably, if we are interested in the impact of law on capitalist political economy, they

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should be. In this regard we would do well to listen to Bruce Abramson, author of a 2007 book on the CAFC and (as a consultant on IP law) a very different commentator from Galambos (a history professor), who nonetheless recently made strikingly similar claims for IP law to those the latter has made for antitrust: “The [Carter] commission’s primary observation was that, at the time, the U.S. led the world in innovation but lagged in commercialization. The reinvigoration of the patent system was a critical component in reversing that slide.” The outcome of this experiment? “And it worked! Spectacularly! For the first two decades of the modern patent era, the American economy soared. American innovation and commercialization became the envy of the world.”129 Hyperbole or not, there is an essential truth in Abramson’s claim, just as there is in Galambos’s. The law’s changes made a substantive difference, once again, to capital and its ongoing viability. The evidence of their efficacy is widespread but is visible in particular in a metric to which we have had occasion to return repeatedly in this book: the share of income accruing to corporate profits (Figure I.1). In the United Kingdom, this share bottomed out in the middle of the 1970s and has been on an underlying upward trend in the period since, even if this upward trend has seen more than one interruption. In the United States the low point was reached slightly later (1982); the subsequent upward trend has been more pronounced and the interruptions to it fewer and less conspicuous. Needless to say, multiple factors lie behind this trend. One was the political attack, on both sides of the Atlantic, on entrenched and concentrated political-economic power of a very different sort from that which we have been considering in this book in relation to interventionist competition policy: for if Theodore Roosevelt, as has often been claimed, was a “trust-buster,” Reagan and Margaret Thatcher were quite clearly union busters. (In the United States in the first half of the twentieth century labor unions had in fact themselves often been envisioned as trusts, and had frequently been subjected to the antitrust laws accordingly.)130 From the mid-1980s both leaders famously assaulted and eroded the power of organized labor; and it is thus impossible to read the subsequent rise in the share of national income realized as profits except as the mirror image of a correlate fall in labor’s share of income precipitated in part by the weakening of labor’s bargaining position.131 The “in part” caveat is, however, vital. As Michal Kalecki long ago demonstrated conceptually and as history has shown empirically, the

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monopoly-competition dialectic at the heart of our narrative is a crucial determinant of income shares. In the 1950s, 1960s and early 1970s, as competitive forces in the United States and United Kingdom reasserted their materiality, having been actively subdued during the first half of the century, monopoly power’s sway declined and dragged down with it the share of income accruing to corporate profits; labor was the beneficiary (Chapter 5). From the mid-1970s (or in the U.S. case, the beginning of the 1980s), however, profit’s share recovered. And it did so, of course, in line with the extensive reassembly of monopoly powers, which gave capital the platform and leverage to win the distribution battle with labor, which was all the while being stripped of its own leverage by the state. Only once capital had confidence in its reemerging monopoly-based power to extract profit did it begin to invest heavily, widely, and consistently, thus driving renewed growth; as contemporary studies of economic growth have indicated, “the power of expected profits to motivate innovation,” in David Gould and William Gruben’s words, appears to be a vital precondition of capitalist dynamism.132 Yet the monopoly powers that now reappeared and the processes through which they were assembled were not the same as—even if they were structurally similar to—those that we documented in Chapter 4 in relation to the early twentieth century. Just as the sources and configurations of competition now looked different (above all they were now, as we have seen, markedly more international), so also did the sources and configurations of the monopoly powers needed to counterbalance competition’s relative excess. One critical difference between the periods and the monopoly powers characterizing them concerns the dynamics of protectionism. In the early twentieth century, trade protectionism had been a vital source of such powers for leading U.S. and U.K. companies. In the late twentieth century, by contrast, aside from notable individual exceptions (the heavily protected U.S. steel industry being one), there was much less trade protection and hence much less protectionism-based monopoly—this fact, of course, itself helping to explain the increasingly international nature of competition.133 Instead, the reassembly of capital’s monopoly powers since the mid-1970s overwhelmingly has been effected through two principal centralizing vehicles: consolidation (now largely unopposed by the law) and IP (now increasingly buttressed by it). Sometimes these vehicles have operated independently, but often their forces have been combined. David Harvey has noted this exact point

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and identifies a particularly important case of such combination: “The pharmaceutical industry, to take a paradigmatic example, has acquired extraordinary monopoly powers in part through massive centralizations of capital and in part through the protection of patents and licensing agreements.”134 Both the United States and the United Kingdom, then, furnish evidence for the widespread reassembly of monopoly powers through these two primary vehicles from the mid-1970s onward. In the case of the former vehicle, the data are unequivocal. As Ronan Powell and Alfred Yawson noted in 2005: “The last two decades, in particular, have witnessed unprecedented takeover activity in both the US and the UK.”135 In the case of IP-based centralization, meanwhile, consideration of those industries that have most strongly increased their contribution to U.S. and U.K. output and employment in recent decades—and of the concentrated nature of those industries—amply illustrates the point. Pharmaceuticals; media and entertainment; information and communication technologies; chemicals; electrical and consumer goods: Arguably, among the dominant sectors of today’s U.S. and U.K. economies, only financial services is not IP-intensive.136 In findings that will inevitably have pleased those policy makers who historically yoked each country’s national competitiveness to IP protection, recent reports estimated that IP-intensive industries—definition thereof, of course, being a terminally problematic matter—now contribute some 37 percent of domestic output in the United Kingdom and 35 percent in the United States.137 And in both places, the reassembly of monopoly powers has led inexorably to an economic world increasingly populated and dominated by concentrated corporate capital. Numerous authors have powerfully made this case at a general level, perhaps most accessibly Colin Crouch in his The Strange Non-Death of Neoliberalism, with its important emphasis on that crucial institution (the firm) obscured by the often favored—but restrictively dualistic—state-market optic.138 With respect to the United Kingdom, the case has also been made through a series of (ironically) scattered studies attesting to growing levels of concentration, and often also notably high levels of profitability, in all manner of different industry sectors—accounting, banking, brewing, energy utilities, grocery retail, manufacturing, and media among them.139 But this trend toward cumulating monopoly powers as evidenced in heavily concentrated industries has been charted more fully still for the United States. There are, for example, excellent book-length studies of

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colossal monopoly power being accumulated in major individual industries, Susan Crawford’s examination of the modern-day U.S. telecommunications sector being a prime example.140 Then there are important accounts of the same tendencies across the U.S. economy more widely. Significantly, such accounts have been compiled by critics from both left and right, John Bellamy Foster and Robert McChesney’s Endless Crisis representing an example of the former and Barry Lynn’s Cornered of the latter.141 Between them, and when combined with Crawford’s account, these two books paint a powerful picture of the profound reassertion of monopolistic vis-à-vis competitive forces in U.S. capitalism in recent decades. Take as an example, says Lynn, brewing, where “ABI and MillerCoors have locked down more than 90 percent of the U.S. market,” giving them “the power to jack up prices almost at will”; or advertising, where “over the past thirty years, four sprawling holding companies—WPP, Interpublic, Omnicom, and Publicis—[have] swallowed up almost the entire industry,” the first of these alone controlling over 300 agencies.142 Bellamy Foster and McChesney cite similarly striking statistics for industries ranging from banking to retail to manufacturing.143 But they also, interestingly, attempt to make estimates for the shares of total all-industry U.S. revenues and profits captured by the biggest U.S. firms—the top 200 in their calculations—and for changes in these ratios over time, as a form of proxy for the changing degree of industrial concentration in toto. Both revenue and profit shares, they show, have risen since the mid-1980s, in line with, and surely not unconnected to, the share of overall national income accruing to corporate profits, as discussed above: from approximately 25 percent to (in 2008) 30 percent in each case.144 There is, however, one final, crucial element to this story of the latterday, law-sanctioned and law-structured revival of monopoly powers, and of the capitalist recovery it underwrote, that we still need to attend to. As experienced in the United States and the United Kingdom, competition, we have seen, had by the late 1960s and into the 1970s become not only much more vigorous but much more international in nature. Competition’s intensification clearly demanded a response, which came, we have further seen, in the shape of the necessary restoration of the powers of competition’s dialectical counterpart, monopoly. Clearly also demanding a response, though, was competition’s newly international configuration. For let us look at it this way: If competition was now

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increasingly international, then how successful for its bearers and beneficiaries would the reassembly of monopoly power be if such power were, by contrast, strictly nationally circumscribed? In order to compete internationally in the era of globalization, it was, in short, more and more important to secure monopoly power internationally. Now, international monopoly power is, in itself, nothing new. International cartels have been a feature of the global economy since early in the twentieth century, and as we noted in the previous chapter the U.S. DOJ had tried its best to break them on more than one occasion. Such cartels are, all evidence suggests, still rife, with authorities’ attempts to prosecute them bearing relatively little fruit, some significant successes by the U.S. regulators excepted.145 International “strategic alliances” represent an equally longstanding corporate practice; much more respectable than cartels, of course, such alliances have nonetheless frequently been viewed by critics, as Mitchell Koza and Arie Lewin observe, “as a means for firms to gain market power and extract monopoly rents.”146 What is largely novel to the past few decades, however, is the crystallization of effective international monopoly powers through strengthened IP protection and through consolidation. In relation to the former, companies—notably including those in the pharmaceutical sector—had of course tried to erect international monopoly powers on the basis of territorialized IP rights for many decades; but TRIPS gave them much more power to do so than they had ever enjoyed before, for all of the reasons around strengthening, harmonization, and enforcement enumerated earlier. In relation to consolidation, meanwhile, it has been widely observed that since the early 1990s in particular, an increasing proportion of mergers and acquisitions—and especially of large-scale mergers and acquisitions—have been cross-border. Surveying the growing evidence of this trend from the perspective of the United States at the turn of the millennium, Bernard Black was moved to suggest that a transition of epochal proportions was actually taking place. “The current [merger] wave is considered the fifth U.S. takeover wave of the twentieth century. In fact, however, it makes increasingly less sense to see takeover booms and busts as national phenomena. The current wave can be considered, at least as accurately, to be the first truly international takeover wave. Conversely, the current wave will likely be the last that can be considered, even crudely, a U.S. wave.”147 Perhaps. What is incontrovertible, nevertheless, is that much major industrial consolidation is indeed now thoroughly international.

Remaking Monopoly for the Twenty-First Century

The critical result of which, needless to say, is just as it has been for unchecked within-territory consolidation, namely, greater and greater concentration of economic power in the hands of fewer, larger (and in this case, multinational) corporations—an outcome accurately predicted, it is fair to say, as long ago as the early 1970s by the likes of Stephen Hymer.148 In conclusion, therefore, it is useful simply to underline the present-day scale and significance of this growing materialization of what Alfred Chandler and others have labeled “global oligopoly.”149 Data concerning revenue generation and cash holdings make the depth of this trend starkly evident. In terms of revenue (the more important metric of the two), Bellamy Foster and McChesney cite data indicating that the proportion of global annual income accounted for by the largest 500 corporations in the world with operations in the United States and Canada is now in the region of 30 percent to 40 percent, having been lower than 20 percent as recently as 1960.150 But a recent study suggests that this is in fact a too conservative estimate of the degree of revenue concentration: It found that fewer than 150 multinational corporations (the majority of which, notably, are financial institutions), forming together what the study’s authors refer to as “an economic ‘super-entity’ in the global network of corporations” linked by “a giant bow-tie structure,” control 40 percent of global corporate revenues.151 Finally, another recent study calculated that just 32 percent of the nonfinancial members of the S&P Global 1200 index of companies account for approximately 80 percent of total cash held by such members.152 Monopoly power has reemerged with a vengeance since the 1970s; and it now has a thoroughly transnational disposition.

Conclusion The period since the mid-1970s represents, it is clear, another powerfully distinctive era in the ever-evolving relationship between monopoly and competition in the U.K. and U.S. economies, and in the role of the law in mediating that relationship. The period began with competition ascendant, labor relatively powerful, and companies reluctant to innovate and invest, with limited protection for the products of the former and hence limited justification for the latter. This state of affairs was due, in no small part, to the postwar work of the law, which had supported competition and attacked monopoly powers. In almost every conceivable register, however, the law’s work now went into sharp reverse: antitrust was

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relaxed; IP laws were extended and tightened; and in instances where the two were both implicated, IP increasingly won a conflict that previously it had consistently lost. Indeed, it did so to such an extent—and antitrust was blunted to such an extent—that very talk of such “conflict” per se, which had been a mainstay of legal-economic discourse for the entire twentieth century, became moot. The effect of all of this was actively to enable the reassembly of denuded corporate monopoly powers. And this, in turn, reenergized and bolstered the fragile dynamics of investment, profit generation, and accumulation. This sustained legal-economic reversal represents, we are now in a position to conclude, the third major distinctive episode of legal leveling of Anglo-American capitalist political economy of the past century. The first began at the very outset of the twentieth century; emerged also out of a scenario of excess competition and price and profit pressures; and also saw legal support for monopoly powers comfortably outweigh, for several decades, legal support for competition. The second began in the aftermath of World War II; emerged out of a scenario of widespread monopoly, weak labor, and stagnation embedded in problems of effective demand; and saw the law seriously take the fight to monopoly. All three episodes began at a moment of profound, even existential crisis in the dynamics of capital and in, most especially, its pivotal dialectic of monopoly and competition, deep imbalance in which was at the root of each crisis. And all three exercises in leveling helped to pull the economies in question out of crisis, redressing the existing imbalance in the relationship between monopoly and competition by providing support primarily to that element that had been in relative deficit. Surveying this history of repeated political-economic leveling and its periodic reverses, we are surely justified in asserting that the law—and its substantive work on the monopoly-competition dialectic—represents a major, enduring force in the history of capitalism and its regularization, not one making merely peripheral, periodic appearances. As Part II of this book has progressed through the history and political economy of these three periods, we have seen that even where history appears to repeat itself, it always does so in new ways, which is to say that familiar elements are conjoined with unfamiliar ones. If we compare the most recent, post-1970s episode with those that came before, it is perhaps the geography of the pertinent dynamics that has changed most, with internationalization coming strongly to the fore. This has been shown to be true, after all, both of the nature of competition (the

Remaking Monopoly for the Twenty-First Century

phenomenon of which there was a relative “excess” in the 1970s) and of the nature of the monopoly powers now (re)assembled to balance this competition out. Given such transformative geographies, it is no wonder that traditionally national laws for mediating the dynamics of competition and monopoly have for some time now been fraying at the edges. In the case of IP, TRIPS is the most striking example of such fraying; although it is not a law per se, TRIPS has the effect of an international law insofar as it requires signatories to align their national laws—of IP and competition—accordingly. In the case of antitrust, such fraying continues to be resisted, inasmuch as global antitrust does not yet exist; and U.S. antitrust, at least, remains a strictly national phenomenon in terms of both development and application. Yet the United Kingdom, by contrast, shows marked evidence of fraying: Not only have its competition laws been greatly influenced by external forces, but in the past decade it has increasingly been required to apply EU laws rather than its own. Deep-seated geographical transformation will clearly continue, then, to have major implications for the future development and implementation of both antitrust and IP law. The coda, to the degree that it speculates about the possible contours of such a future, addresses precisely these implications. But we can conclude the historical aspect of this primarily historical book by acknowledging that the geographical transformations in question also have obvious, if not necessarily straightforward, implications for the scholarly analysis of competition-related laws and their political-economic effects. In a book focused almost entirely on the twentieth century, analyzing the United States and United Kingdom largely separately, if in parallel, seemed a logical and meaningful approach; for all the parallels and, latterly, direct convergence between the two countries’ experiences, their legal and political-economic dynamics were not only crucially different but also, in large measure, separate— and hence separable. Whether the same approach would be viable for a book written fifty years, or even just twenty years from now, looking back at the Anglo-American laws and law-shaped political economies of the early twenty-first century, remains to be seen. On current, cumulating evidence, however, it seems increasingly unlikely.

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Back to Balance? The political economy never sits still, and neither, in interpretation and implementation if not doctrinal form, does the complex of laws that frame, regulate, and mediate it. Since the late nineteenth century, in the United States and the United Kingdom, laws pertaining to competition and intellectual property (IP) have undergone repeated, wholesale transformation—responding to, and reformatting in turn, the politicaleconomic milieu whose fairness, opportunities, incentives, and efficiencies they have, by turns, been designed collectively to optimize. The Great Leveler has charted the major episodes of such transformation and has sought to explain from conceptual first principles how and why they occurred, and how and why they performed the work they did. The last such episode began some forty years ago, from which point, in both countries, a legal system hitherto geared and applied largely to promote competitive forces saw its primary levers fundamentally recalibrated, and was increasingly mobilized in the reassembly of monopoly powers. Forty years, however, is a long time by any reckoning, and arguably several lifetimes in the context of Anglo-American political economies that have since had to come to terms with neoliberalization, financialization, and more globalization. The time is therefore ripe for a taking of stock. How, four decades on, might we characterize and seek to understand the current conjuncture, in regard at once to the political economy of capitalism, to the monopoly-competition dialectic inherent to it, and to the particular position and purchase of the laws implicated therein? And with what implications for the future of the configurations and relations in question? These are the vital questions raised, briefly and— particularly in the last, futuristic respect—necessarily speculatively, in this coda.

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Some of the answers will be apparent, as they should be, in what has gone before in the book proper. Specifically, it seems clear that the direction of impact of the law has not substantively changed, in either territory. In other words, it continues, cumulatively, to support monopoly over competition; IP protection remains ascendant, competition law subordinated. Were this not the case, and a further reversal or even a meaningful rebalancing had occurred, we would have required a Chapter 7. Yet to recognize this is not necessarily to tell the whole story, as a short reprisal of the book’s main themes will testify. On each occasion that the law has been called upon to help correct imbalance in the dynamics of monopoly and competition, with the balance of IP and competition laws (re)configured accordingly, it has helped crisis-facing U.S. and U.K. capitalism to stabilize, regularize, and move forward once more. It has, in short, imparted to the monopoly-competition dialectic that degree of balance that is evidently necessary for profit making and accumulation systemically to resume. And yet: It has never yet done so sustainably. For the process of rebalancing has, on each occasion, gone too far. By the 1940s, an original deficit of monopoly powers had become, by contrast, a deficit of competition; and by the 1970s, with the legal machinery having progressively been put into reverse, this latter deficit had reverted, once more, to a relative dearth of monopoly. Not only is capital’s political economy inherently unstable, it seems, but so too is the work of the law in “correcting” such instability. A happy, enduring medium—of monopoly with competition, antitrust with IP—has never yet been found and maintained. The argument that U.S. and U.K. law continues on balance to support monopolistic versus competitive forces, then, and indeed that such support helped the economies in question emerge successfully from the crisis conditions of the 1970s, says nothing about the political economy of the here and now or the law’s relation to it. Or expressed another way: Simply because the law continues to “work” in one direction does not mean that such work is what the underlying political economy requires. The law has overcompensated in the past—taking the monopolycompetition dialectic well beyond what is actually required by way of rebalancing—and there is no guarantee that it will not do so, or has not done so, again. In fact, there are growing signs that this is exactly what has happened— that having contributed to stabilizing an Anglo-American capitalism suffering in the 1970s from intensified competition and dwindling monopoly

Coda

powers, the law has since contributed to reanimating monopoly, and stifling competition, to such a degree that excess monopoly is now capital’s existential problem. Such signs are both specific and more general in nature, and are increasingly being recognized for what they are. At the more specific end of the spectrum, there were indications from as early as the beginning of the 1990s that strengthened and broadened IP protection, unencumbered by the threat of interventionist antitrust, was now motivating companies in ways ultimately counterproductive to investment, innovation, and growth. Rather than exploiting such protections in the positive manner envisioned in classical economic theory—as an incentive to risk taking, in the confidence that protection of innovations promised profits—firms were, as Robert Merges memorably put it, “‘pigging out’ at the IP trough.”1 Roughly translated, this meant ruthlessly exploiting monopoly power while it lasted and abstaining from the altogether more challenging endeavor of seeking to innovate and to commercialize innovations in competition with others—and thus contributing little if anything to capitalist dynamism and growth. Such rent seeking, and the atrophy it precipitates, has been widely and increasingly highlighted, and by scholars writing from a variety of perspectives. Michael Perelman, for instance, observes it in the early-1990s licensing strategies of U.S. semiconductor companies such as Texas Instruments, which, buoyed by the Semiconductor Chip Protection Act (1984), seemingly became preoccupied with the aggressive pursuit of rents and concomitant litigation of alleged IP infringement. Royalties, Perelman shows, soon exceeded operating income, thus transforming the industry “from a manufacturing industry to a service industry.” But it was “a perverse kind of service sector. Rather than directly providing services, they merely demanded payment for their intellectual property.”2 Similarly, albeit from a different normative standpoint, Edmund Phelps argues in his Mass Flourishing that socioeconomic flourishing goes hand in hand with innovation, but that levels of innovation in the West have declined precipitously in recent decades and stagnation has set in. Phelps identifies a number of reasons for this, but one is powerful IP protection—he writes menacingly of a “dark thicket of patents”— that not only encourages the few to seek rents but also actively discourages innovation by the “masses.”3 At its most extreme, such a perverse political economy is seen to materialize in the United States in the contemporary activities of so-called patent assertion entities, or less generously, patent “trolls.” These entities

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take the Texas Instruments approach to its logical conclusion inasmuch as they typically do not even offer a pretense of using IP rights to foster and protect actual productive innovation and new technology exploitation. Instead, they simply buy up swathes of obscure patents in the hope that somebody else attempts to commercialize a product to which the patent somehow relates. They are thus quintessential rent-seeking bodies, acquiring “property” in the hope exclusively that others will encroach upon it and become liable to pay fees or suffer the litigious consequences. The New York Times recently profiled one such U.S. company, Intellectual Ventures, which over thirteen years had acquired some 70,000 patents and “has little business other than licensing patents it has bought, collecting fees and threatening or filing lawsuits against companies it says have stolen its property.” Such trolls, researchers estimate, are now responsible for as many as 60 percent of all U.S. patent infringement lawsuits (of which there were approximately 4,200 in total in 2012).4 These “frivolous” lawsuits, according to the Economist, cost U.S. companies some $29 billion in 2011.5 And then, not unrelatedly, there is William T. Gallagher’s finding “that ‘repeat player’ trademark and copyright owners (and their lawyers) knowingly assert weak IP claims at times—precisely because it works, as enforcement targets are unable or unwilling to resist claims that may lack legal merit due to the costs and uncertainties of threatened litigation.”6 If ever there was an argument that expansionist IP law invites stagnation by excessively encouraging monopoly power accumulation, repeat players and patent trolls would appear to provide it. At a more intermediate political-economic level, perhaps the strongest evidence that the law has in recent decades helped take capitalism from instability on one side of the monopoly-competition knife edge to instability on the other is found in the capital-labor relation, and in particular in data illustrating these constituencies’ respective abilities to capture social income. As we saw in the final chapter, labor’s share of national income had reached a historic highpoint in the United States and United Kingdom by the late 1970s, with its bargaining position boosted by the relative weakness of fragmented, internally competitive capital. The share of income accruing to corporate profits, as we also saw, required bolstering to provide capital with the confidence to invest widely and consistently. And it received precisely the injection it required, by virtue not only of the law’s renewed support of monopoly but also of the state’s assault on organized labor. Hence, profit’s share of income recovered while labor’s share fell.

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But instead of the relative shares then stabilizing as approximate balance between monopoly and competition was achieved, the trend in question has simply continued. As such, the share of national income accruing to profits recovered to and surpassed the previous historic highs achieved in the monopoly-power-saturated years of the early 1950s (Figure I.1). The collusive wage suppression strategies allegedly adopted by Apple and other leading contemporary global IT firms, and with which we began this book, are only oligopoly capital’s most explicit means of maximizing this share; exploitation of the types of patent-based monopoly power wielded by Apple in the smartphone space, and of monopoly powers assembled through structural consolidation or even simple accumulation, provides the leverage to deliver the same victorious outcome vis-à-vis labor, even if the mechanism is less overt. Perceptive commentators, piggybacking on the Piketty phenomenon, are just now beginning therefore to make the rather obvious link—pivoted on labor’s relative immiserization—between corporate monopoly power on the one hand and, on the other hand, extreme and growing levels of inequality. “The lack of competition in many sectors of the U.S. economy,” claim Lina Khan and Sandeep Vaheesan, is “a powerful driver of economic disparity” insofar as monopolists “use their power to raise prices, drive down wages and foreclose opportunity. Wealth is transferred from consumers, workers and entrepreneurs to affluent executives and shareholders.”7 Finally, at the most generalized level of all, and arguably also most significant of all, the thesis that the law’s work of the past forty years has converted a relative excess of competition in the United Kingdom and United States into a relative excess of monopoly sits comfortably with leading interpretations of our contemporary era’s most significant political-economic event: the global financial crisis that began in 2008. Not only that, but to the extent that excess monopoly power does indeed square with prevailing crisis theory, it is even possible to suggest that such an excess was and is one of the main underlying causes of contemporary crisis. This suggestion clearly needs fleshing out, and a revealing way to do so is to examine the influential argument for the crisis’s derivation put forward by David Harvey in The Enigma of Capital. Harvey’s key point— and it has been reiterated, in one way or another, by commentators from all sides of the debate—is that even if the crisis crystallized as one in and of finance, it must nevertheless be understood as a crisis of capitalism and its core historical-geographical dynamics much more broadly.8

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To appreciate why the crisis occurred, Harvey insists, we need to look back to at least the 1970s—in our own scheme of things, to the period during which the Anglo-American capitalist political economy (including its regularizing systems of legal leveling) was required fundamentally to shift course in order to deal with a prevailing relative excess of competition and the imbalances it fostered (notably including labor’s relative, if short-lived, ascendancy). For the response to political-economic crisis in and from that moment sowed the seeds, Harvey maintains, of what was to come three decades later. The “underlying problem” would ultimately be “excessive capitalist empowerment vis-à-vis labour and consequent wage repression” beginning in the mid-1980s; this in turn soon triggered “problems of effective demand papered over by a creditfuelled consumerism of excess” in countries such as the United States and United Kingdom; and these borrowing excesses, particularly in relation to housing markets, thus set the stage for a crisis in the 2000s whose “epicentre” lay “in the technologies and organisational forms of the credit system and the state-finance nexus.”9 For Harvey, the primary basis for capital’s all-important “excessive empowerment” was the state’s demolition of the unions; but as we saw in Chapter 6, the massive reinforcement of monopoly powers also played a crucial role. Thus, just as in the period immediately following World War II, capitalism’s problems were/are now ones rooted in labor’s relative disempowerment visà-vis dominant, monopoly-buttressed capital, and in the tensions that such disempowerment inevitably engenders between the production and realization of value.10 If Harvey and others making similar crisis arguments are right—and the thrust of this book, particularly Chapters 5 and 6, suggests they are—then contemporary capitalism in its U.S.- and U.K.-based manifestations has indeed clearly become imbalanced in regard to the monopolycompetition relation, with the former in demonstrable surfeit. When this has happened in the past, as it had evidently done by the end of World War II, the law and its makers and executors have eventually responded. But both in that particular instance, and when the obverse set of circumstances—a surfeit of competition—has pertained, arguments that the law needed to respond were typically in evidence from several years before action actually occurred, with the steady accretion of such arguments ultimately making change irresistible. It therefore lends further substance to our postulate that AngloAmerican capitalism has once more entered a state of imbalance along the

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monopoly-competition axis that in recent years exactly such arguments have again begun to reemerge. Just as, in the 1970s, especially in the United States, there were repeated and forceful calls for the enforcement of competition law to be relaxed before it was relaxed, and for IP laws to be strengthened before they were strengthened, we are increasingly witnessing a championing of one more swing of the legal pendulum—for competition law to be strengthened and IP law to be relaxed. This championing, moreover, is frequently predicated precisely on the view that the law has effected “excessive” work on monopoly-competition dynamics over the past forty years, and on a commensurate understanding of the problems that such work has ultimately precipitated. For one thing, having been long dormant, arguments for the necessity of interventionist antitrust are again in the air—even in the United States (the spiritual as well as material home of the Chicago School), and even from Chicago economists themselves and from their supporters amongst the ranks of liberal commentators. The financial crisis certainly gave particular force to such arguments, with the likes of MIT professor Simon Johnson identifying antitrust scrutiny explicitly of “too-big-to-fail” financial institutions as “a sensible idea that is long overdue.”11 But the argument is much more broadly targeted—if not yet broadly accepted—than to finance alone. Chicago economist Luigi Zingales, for example, in A Capitalism for the People (2010), described and lambasted a U.S. “crony capitalism” riddled with monopoly powers and extolled the benefits of traditional approaches to antitrust law as one of the obvious solutions.12 More visibly, Michael Ignatieff penned a passionate opinion piece in the Financial Times in early 2014 saying that the “power of the new technology barons must be held in check” and that antitrust—real, interventionist, classical antitrust—was the answer: “Every disruptive innovator seeks monopoly. That is why Roosevelt and the progressives fought so hard to break up cartels in energy and transport. For the progressives, as for 19th-century liberals such as Gladstone, free competition was more than an economic goal. It was essential to preserve a pluralist democracy in which the economic power of the few was offset by the political power of the many. In the 21st century, democracy’s true challenge is to sustain the competition that protects economic innovation and democratic freedom alike. Here, the Victorian progressives were right: if the problem is monopoly power, the solutions lie in vigorous, unabashed and progressive competition policy.”13 Strong words of course, but not, in the

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emergent climate, unique ones. In the same newspaper, Tim Harford recently argued that while monopolists can “sometimes use their scale and cash flow to produce real innovations,” the “ferocious cut and thrust of smaller competitors seems a more reliable way to produce many of the everyday innovations that matter”—and that with such cut and thrust “no longer so cutting or thrusting as it once was,” and instead the “entrenched advantages” of “incumbent players” meaning “higher prices and less innovation,” a vehicle for renewing innovation and growth is necessary. No policy offers a watertight guarantee, he admitted, but “assertive competition policy would improve our odds.”14 Meanwhile, recent calls for a correlate weakening of IP protections have been even more vociferous and even more widely propagated. Such calls had been prefigured from as early as the mid-1990s. Perelman’s aforementioned work on IP-based monopoly and rent-seeking belongs in this category. So too the innovative work on law and the “information society” by James Boyle, who conjectured that the United States was moving toward a future of IP rights “so expansive that they make it much harder for future independent creators actually to create,” thus slowing and inhibiting “the very process”—innovation—“on which the expansionists premise their arguments.”15 Merges also accurately anticipated such calls when he surveyed, at the turn of the millennium, the great historic U.S. shift in favor of IP protection versus antitrust since the early 1980s (Chapter 6), and wondered whether there was a “long-term threat of this shift [resulting], to borrow a phrase, in ‘too much property.’”16 Today, numerous critics are in no doubt that there is, indeed, too much (intellectual) property—the threat has been realized, Merges’s “long term” is here, now—and that the historic trend toward stronger IP protection therefore needs to be reversed. We briefly encountered some such critics in Chapter 6: those, such as Lawrence Lessig and Yochai Benkler, who condemn restrictive copyright as a form of enclosure of cultural products. But these critics are today joined in their critique of expansionist IP by a perhaps unlikely cast of allies, hailing from considerably more conservative, mainstream ranks. Phelps, an economics Nobel Laureate, is one who urges a substantial scaling back of patent law.17 Another is Michael Heller, professor of real estate law at Columbia, the title of whose 2008 book The Gridlock Economy: How Too Much Ownership Wrecks Markets, Stops Innovation, and Costs Lives leaves little to the imagination of the reader.18 A third is the libertarian economist Alex Tabarrok, who articulated his case for relaxed patent laws

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most emphatically in his short 2011 book Launching the Innovation Renaissance.19 Gordon Crovitz, the Wall Street Journal columnist (and former publisher) and cheerleader for such thinkers, recently put the case for circumscribed patent law as follows: “Instead of encouraging innovation, patent law has become a burden on entrepreneurs, especially startups without teams of patent lawyers.”20 In the context of this book, there are two especially noteworthy aspects to these growing calls for strong IP laws to be reined in. The first concerns the explicitly historical dimension of the argument. Crucially, in its more nuanced and informed variants, this is not a simplistic, ahistorical argument against IP in general or even against strong IP per se. It is an argument that strong IP protection is the wrong legal medicine for the health problems afflicting today’s economy. Appreciating this nuance is critical. It is articulated most clearly today by another advocate for disassembling IP rights, Bruce Abramson. Contra more sweeping criticisms of contemporary IP law, Abramson insists that the current problem is one not of “policy prescription” so much as “policy sclerosis.” His explanation begins: “Thirty-plus years ago, Congress put the patent system into ‘strengthen’ mode” (when, as we have seen, such strengthening was exactly what the U.S. economy, struggling as it was with intense competitive forces, required). Yet, having switched the system to “strengthen” mode, the state then simply “left it there.” The economy recovered and changed, but the law did not change with it; and no policy, says Abramson, “can possibly become stronger forever without passing the point of optimality.” That point of optimality— in our framework, the point at which the dialectic of monopoly and competition was in balance—was eventually passed. Abramson hence summarizes the present predicament thus: “Our public actors have not sought to realign [patent policy] with economic needs for more than three decades.”21 The policy was right for the political economy of the 1970s; it is wrong for the political economy of today. The second noteworthy aspect of this burgeoning critique concerns its historical politico-discursive antecedents. If policies often hark back to those of earlier eras, then so also do the intellectual arguments informing or opposing them. This is patently true of Heller- and Tabarrok-style arguments for the dilution of contemporary patent law, which replicate very closely—even if they do not acknowledge—those advanced in the 1930s, most prominently in the United Kingdom, by Lionel Robbins, Arnold Plant, and others among the first generation of avowedly

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neoliberal economists. As discussed briefly in Chapter 4, and studied in detail by Adrian Johns, these economists had urged a substantial paringdown of IP rights, and on more or less exactly the same grounds as those posited today.22 The main point, of course, is that today’s AngloAmerican political economy arguably resembles that of the mid- to late 1930s in ideational as well as more material respects. Then, the economy was still struggling to recover from deep and prolonged recession; corporate monopoly powers were ascendant and very often predicated on strong legal protections for IP; and such powers, and the IP rights underpinning them, were increasingly subject to criticism by neoliberal economists. All three features of the period apply equally today. On the face of things, therefore, we would seemingly be justified in anticipating yet another historic reversal in the work of the law—and specifically one akin to that which occurred after World War II, when action was taken in the United States and United Kingdom, in the realms of both IP and competition laws, to curtail monopoly powers and bolster competition. To the extent that it is characterized by a relative excess of monopoly power, the contemporary political economy is not only amenable to but, for its successful (albeit altered) reproduction, needful of just such a reversal. And the argument that this reversal is required has, as we have just seen, been gathering momentum in the public domain in recent years. Indeed, it is not insignificant that this latter argument frequently comes from those to whom the powersthat-be do tend to listen. In this respect it is instructive to observe that some commentators suggest, if not exactly in these terms, that just such a reversal in the law’s work has in fact already begun. They see signs of the worm turning in developments in competition law and IP law, independently, but perhaps especially in that complex and combustible legal-economic space where the two meet. In this particular space the signal case of the past two decades has indisputably been that involving Microsoft; and by briefly considering readings of and reflections on that particular case, we can tease out and distill more general arguments about antitrust and IP law avowedly changing direction. The Microsoft case was and is critical, not only due to the scale and influence of the company in question and its symbolization of the “new” economy of the late twentieth century, but also because IP and antitrust issues were so tightly bound up with one another in the legal proceedings. An attempt will not be made here to summarize what ultimately

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became a frighteningly complicated case—a case, indeed, that never was one case, comprising as it did not only multiple regulatory authorities (in particular in the European Union and the United States) but also multiple and interconnected actions, complaints, appeals, and so forth. It is, however, worth noting that the U.S. “case” was initiated in 1998 and was essentially concluded by 2004, that the main EU case began in 1993 and lasted until 2004 (although related investigations and fines followed), and that the EU competition authority is widely seen to have taken a somewhat sterner line with the company than the U.S. authorities.23 In reflecting on the case, then, various commentators have interpreted it as heralding a shift away from the toothless antitrust approach associated with the Chicago School, and concomitantly away from the prevailing orthodoxy, in the United States and European Union alike, of IP generally trumping antitrust. For William Page and John Lopatka, for instance, the case represented an explicit revival of “the tradition of the public monopolization enforcement.”24 In this it was inspired, they observe, by post-Chicago economics that, incorporating network effects and path dependence analysis, suggested some of the practices the classic Chicago model showed to be harmless might not in fact be so in certain circumstances. David Hart viewed the case in the same light, noting more widely how the “new critics of the Chicago School . . . gave the antitrust enforcement agencies a new rationale for activism.”25 Louis Galambos even went so far as to proclaim that the U.S. suit against Microsoft had “decisively ended the [Chicago] experiment that had begun in 1981.”26 In respect specifically of the antitrust nexus with IP law, meanwhile, and specifically of the European Union’s Microsoft suit, Daniel Spulber intuited “a shift in competition policy at the expense of protections for intellectual property”—a shift, that is to say, away from the dominant EU (and U.S.) propensity of the era (Chapter 6).27 Yet, considered with the benefit of hindsight approximately a decade after its effective conclusion, the Microsoft case cannot truly be envisioned as having presaged a wider reversal of Anglo-American economic-legal orthodoxies. To the extent that such a reversal has begun to take place, it has been exceedingly limited in scope and depth. In terms of competition law in both the United Kingdom and United States, the same dominant patterns—including vis-à-vis IP law—remain in evidence. Indeed, even Hart, for all his recognition of a “new rationale” for antitrust “activism,” was realistic (writing in 2001) about the genuine likelihood of meaningful change. Strikingly, his shrewd overall assessment

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of U.S. antitrust at the millennium and in the midst of Microsoft could equally well be applied today: “The Chicago School’s skepticism about the competence of antitrust policy-making institutions has been absorbed even by many of its critics.” Thus: “The Chicago School remains a potent force.” And so: The authorities “explicitly reject a return to the rigid rules of the 1970s. . . . Cooperation among competitors, like the major auto manufacturers, that would have been viewed with extreme skepticism by the agencies a generation ago, is now routinely accepted.”28 Similarly, although some commentators have swallowed and regurgitated the hyperbole, the U.S. government’s recent decision to take action against patent trolls hardly represents the “obituary for software patents” that the Economist excitedly called it.29 Most important, however, even if a trend to a new, obverse configuration of legal forces is nominally underway, it is difficult to foresee it achieving much more than the very limited progress attained so far. In other words, there are powerful grounds for doubting that a meaningful reversal of the law’s effective polarity—to a structure where the forces of competition would once again be supported more than those of monopoly, as occurred after World War II—can or will happen. And given that, on our account, the political economies of the United States and United Kingdom increasingly require such a reversal for the sake of relatively smooth socioeconomic reproduction, such a conclusion clearly has significant implications. It is based in part on what has happened, and is happening, in the realm of IP and IP law. The economies of the United States and United Kingdom, as we saw in Chapter 6, have increasingly come to be dominated by IP-intensive industries, and moreover, ones featuring high levels of industry concentration. This, of course, was very much the outcome of government policy. But given the lobbying power of the companies in question, it would now take an act of almighty political will substantially to weaken existing IP protections and thus to undo that historical work and the monopoly powers it bequeathed. Taking on powerless patent trolls is one thing; taking on GlaxoSmithKline or Comcast is another thing altogether.30 Equally, for reasons that made sense to the respective governments at the time, the U.S. and U.K. governments of course signed away much of their own autonomy to (re)make domestic IP law when establishing TRIPS in the mid-1990s. Politically, TRIPS, and the diminishing of national autonomy it entails, was painstaking and problematic to assemble; it would likely be no less difficult to disassemble,

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even if the desire for such disassembly existed in the territories in question (and it is far from clear that it does, or will any time soon). But the conclusion that a further swing of the legal pendulum explored in this book is unlikely is based much more on developments in the realm of competition law and in the constellations of politicaleconomic power that have traditionally been such law’s central object of concern. For as Chapter 6 showed, monopoly powers today are only rarely nationally constituted; rather, typically they are thoroughly transnational. This has numerous profound implications, and it is with these that we end our analysis. In the first place, the internationalization of monopoly powers removes—recalling Marx’s conceptualization of monopoly and competition—one of the key “counteracting tendencies” of the previous century, whereby the forces of economic centralization could be and were restrained by forces of decentralization. If monopoly powers crystallized at the national scale, there always remained the possibility, in a “free trade” environment, of national “corporate power” being “disciplined,” as Keith Cowling and Philip Tomlinson put it, by “growth in import ‘competition,’” as happened in the 1960s and the 1970s in the United States and United Kingdom. What the same authors describe, however, as the recent “rise in the transnational organisation of production and the resultant control of trade by the transnational giants” effectively obviates that crucial counteracting tendency.31 That the consolidation and concentration trends of recent decades have explicitly encompassed, nationally and internationally, “the communications, information technology (IT) and media industries”—think once more of the Microsoft and Apple cases, and of an EU competition probe into Google that is already five years old—is also vitally significant.32 For in those industries too existed another engine of potential decentralization, or at least one that was often heralded as such. The high hopes long invested in those industries by competition advocates explain in part Ignatieff ’s aforementioned polemic against today’s “technology barons”—those, as at companies such as Apple and Google, who have increasingly eclipsed Bill Gates, but are enjoying and exploiting comparable monopoly powers. As Cowling and Tomlinson say, monopolization in the technology sector is particularly painful for liberals to behold “since IT was considered, by many observers, as a means to nullify the effects of monopoly power.”33 It has done nothing of the sort, as attacks on “intellectual monopoly capitalism” make plain.34

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In the past, of course, if counteracting tendencies in “the market” did not do their work, the state retained the option of doing this work itself, through competition policy. But the transnationalization of monopoly power militates powerfully not only against capital counteracting concentration of its own accord (by closing off a vital potential geographical source of renewed intercapitalist competition) but also against governments compelling capital to do so. The reason is straightforward. With notable regionalist exceptions, of which the European Union is the most important and most obvious example, competition policy remains in its application overwhelmingly a national phenomenon. By implication, unless national competition authorities are able collectively to coordinate their activities to the extent of effectively reviewing and policing internationally constituted monopoly, capital’s power to monopolize markets increasingly escapes the scalar bounds of the state’s capacity to mitigate it.35 Hence, even those commentators who saw in the Microsoft case evidence of the U.S. government successfully pushing back against the noninterventionist Chicago philosophy accepted that any such victory would in critical respects be a pyrrhic one. Galambos, who identified Microsoft with the “end” of the Chicago experiment, captured this irony as follows: “In this industry and others, one can see the outlines of a future in which global oligopolies will be the norm. Seen in that context, neither the Microsoft antitrust suit . . . nor the Clinton Administration’s efforts to block mergers were likely to change the trend toward global consolidation. They could handicap U.S. firms attempting to achieve strong positions in the new global oligopolies, but they were unlikely to prevent further globalization. . . . Federal actions against Microsoft and other companies asserted the power of the federal government to shape a business system that had already been transformed by economic and technological changes beyond the control of any single government.”36 Whether post-Chicago really was or is post Chicago is, in this particular sense, beside the point. What evidence is there, then, of competition authorities in different jurisdictions aligning and coordinating their work in such a way that the economic-geographical trends alluded to by Galambos could, or can, be controlled, and a balance in the dialectic of monopoly and competition at the international scale maintained or restored? The short answer is: very little. As noted earlier, all historic endeavors to create a global antitrust authority or policy have withered on the vine. There is

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an International Competition Network, launched in 2001 by antitrust officials from fourteen jurisdictions (including the United States, United Kingdom, and European Union); but it is ultimately just an informal forum through which its competition-authority members maintain contact and minimally address topical issues, not one within which actual internationally binding policy is created. Instead, to the extent that it exists, international antitrust beyond the jurisdiction of explicitly multinational competition authorities such as the European Union relies entirely on ad hoc coordination. And the record here, to put it kindly, is poor, as the ever-illuminating Microsoft case, as clearly as any other, makes plain. In 2008, reflecting on that case and on the antitrust issues raised by similarly multinational companies, Abbott Lipsky concluded simply that “coordinating EU-U.S. approaches to the conduct of globally significant firms—viz., IBM and Microsoft—is visibly unsuccessful.”37 All of this—the increasingly cross-border nature of monopoly power, the associated impotence of stand-alone national competition authorities, and the paucity of meaningful and effective international coordination between such authorities—has over the past decade sustained calls for a truly global, integrated antitrust regime of one sort or another. “The implication,” says Lipsky, echoing countless other entreaties, “seems clear: there must be a new model—a model not based on such a huge diversity of supranational, national, and subnational enforcement structures.” And yet the grounds for optimism in this regard are, he observes, few and far between, not least because “even the outlines of such a model have yet to emerge.”38 For our purposes, the primary implication is a related but different one: It is that absent such a global antitrust practice, the ongoing proliferation of international monopoly powers makes the notion of a fresh round of legal leveling, along the lines of the historic rounds depicted in this book, ever harder to envision. In the Anglo-American political economy such leveling, in the form of a meaningful reassertion of the power of the law to support the competition component of the monopoly-competition dialectic rather than the monopoly component currently buttressed, is increasingly necessary; and increasingly widely, it is recognized as such. But the barriers to its materialization appear formidable this time around. Perhaps, therefore, we are now finally transitioning to a new stage of capitalism, one characterized above all by the crystallization of commanding monopoly powers at the international scale—a capitalism,

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indeed, much like that described in Harvey’s The New Imperialism.39 If so, those who wrote forcefully in the twentieth century about the dawn of a monopoly stage of capitalism—and especially those, like Lenin, who identified this stage precisely with a new imperialism—were arguably right after all, albeit significantly premature in their prognosis. One way or another, time will soon tell.

Abbreviations Notes Acknowledgments Index

A B B R E V I AT I O N S

AT&T CAFC DJIA DOJ EC EEC EU FTC GE IP IPC IPR MMC MPS NBA OECD OFT RPC TRIPS WTO

American Telephone & Telegraph Court of Appeals for the Federal Circuit (U.S.) Dow Jones Industrial Average (U.S.) Department of Justice (U.S.) European Community European Economic Community European Union Federal Trade Commission (U.S.) General Electric intellectual property Intellectual Property Committee (U.S.) intellectual property right(s) Monopolies and Mergers Commission (U.K.) Mont Pèlerin Society Net Book Agreement Organisation for Economic Co-operation and Development Office of Fair Trading (U.K.) Restrictive Practices Court (U.K.) Trade Related Aspects of Intellectual Property Rights World Trade Organization

NOTES

Introduction 1. In re: High-Tech Employee Antitrust Litigation, 11-CV-2509-LHK (N. D. Cal.). 2. Apple Inc. Samsung Electronics Co. Ltd. Et al. C 12–0630 (N. D. Cal.). 3. P. Krugman, “Robots and robber barons,” New York Times, 10 December 2012. 4. The United Kingdom does not track corporate profits in its national accounts. Gross operating surplus is generally considered the best available proxy, but as the comparison with the U.S. data suggests, it includes certain items not incorporated within the U.S. corporate profits metric. 5. On the history and approach of the regulation school, see especially B. Jessop and N-L Sum, Beyond the Regulation Approach: Putting Capitalist Economies in Their Place (Cheltenham: Edward Elgar, 2006). 6. B. Jessop, “Regulation theories in retrospect and prospect,” Economy and Society 19 (1990): 153–216, at 154. 7. S. Gill and A. Cutler, “New constitutionalism and world order: A general introduction,” in Gill and Cutler, eds., New Constitutionalism and World Order (Cambridge: Cambridge University Press, 2014, 1–21), 1. 8. Two other sets of laws are clearly relevant to the mediation of the system of accumulation that is capitalism, including its competition dynamics. The first is trade policy, which is typically law in reality if not in name; this is specifically discussed later in the introduction and features prominently in the empiricalhistorical sections of the book (Part II), even if—for reasons to be specified—it is not one of the book’s two main areas of dedicated interest. The second is contract law. Contracts constitute the legal basis for vast swathes of significant commercial transactions under capitalism, and hence are relevant. Yet their universality and inherent malleability make it difficult to generalize about them and the laws underwriting them, at least where competition is concerned; they are essential scaffolding for the economy within which competition plays out. Sometimes (e.g., in the case of exclusive dealing contracts; see Chapter 5) they might be

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Notes to Pages 3–7 anticompetitive (and the English common law of contracts in restraint of trade was in fact an important inspiration for what became modern competition law worldwide); but sometimes—perhaps most notably, for us, when they infringe on intellectual property rights and thus fall foul of IP laws—they are not. 9. B. Jessop, “The complexities of competition and competitiveness: Challenges for competition law and economic governance in variegated capitalism,” in M. Dowdle, J. Gillespie, and I. Maher, eds., Asian Capitalism and the Regulation of Competition: Towards a Regulatory Geography of Global Competition Law (Cambridge: Cambridge University Press, 2013, 96–120), 97. 10. It won: Samsung was ordered in May 2014 to pay Apple $119.6 million in damages for patent violations. But most observers considered this a pyrrhic victory (e.g., “Samsung ordered to pay Apple $120m for patent violation,” Guardian, 3 May 2014). For one thing, Apple had sought over $2 billion in damages. For another, it had also sought a ban on U.S. sales of several Samsung products; it did not get this, either. 11. And in this case, at least at the time of writing (November 2014), it appears that Apple and its codefendants has lost. In April 2014, lawyers for the two sides reached a proposed $324 million out-of-court settlement. In August 2014, however, judge Lucy H. Koh of the U.S. District Court of San Jose, California, rejected this deal as insufficient, arguing that the evidence in the case was compelling (“Court rejects deal on hiring in Silicon Valley,” New York Times, 8 August 2014). Unless the two sides can agree a new settlement meeting Koh’s approval, the case will go to trial. 12. Krugman, “Robots and robber barons.” 13. B. DeLong, “Marx and the Mechanical Turk” (31 March 2014). Available at: http http://www.project-syndicate.org/commentary/j--bradford-delong-wonders-whether-capital-now-substitutes-for--rather-than-complements--labor. 14. J. Stiglitz, The Price of Inequality: How Today’s Divided Society Endangers Our Future (New York: W. W. Norton, 2012), 44. 15. On the basic elements and main limitations of neoclassical understandings of competition, see especially R. Backhouse, “Competition,” in J. Creedy, ed., Foundations of Economic Thought (Oxford: Blackwell, 1990, 58–86); and G. Duménil and D. Lévy, “The dynamics of competition: A restoration of the classical analysis,” Cambridge Journal of Economics 11 (2005): 133–164. 16. Strictly speaking, Marx, in Capital, authored not a political economy but a critique thereof, where the political economy in question was that of Adam Smith and David Ricardo. Nevertheless, his work can still usefully be—and typically is—characterized as a form of political economy, albeit one varying in critical ways from that of his predecessors; and such is the perspective adopted in this book. 17. A. Berle, The 20th Century Capitalist Revolution (New York: Harcourt, Brace, 1954); P. Baran and P. Sweezy, Monopoly Capital: An Essay on the

Notes to Pages 7–11 American Economic and Social Order (New York: Monthly Review, 1966); P. Boccara, Études sur le capitalisme monopoliste d’Etat, sa crise et son issue (Paris: Éditions Sociales, 1974). 18. J. Foster and R. McChesney, The Endless Crisis: How Monopoly-Finance Capital Produces Stagnation and Upheaval from the USA to China (New York: Monthly Review, 2012). For critical readings of the popular financialization argument, see B. Christophers, “Anaemic geographies of financialisation,” New Political Economy 17 (2012): 271–291; Banking Across Boundaries: Placing Finance in Capitalism (Oxford: Wiley-Blackwell, 2013), chapter 6; and “The limits to financialization,” Dialogues in Human Geography, forthcoming. 19. Foster and McChesney, Endless Crisis, 67; original emphasis. 20. D. Harvey, “The art of rent: Globalization, monopoly and the commodification of culture,” Socialist Register 38 (2002): 93–110, at 97. 21. Ibid.; original emphasis. 22. R. Brenner, The Economics of Global Turbulence (London: Verso, 2006). 23. K. Cowling, Monopoly Capitalism (London: Macmillan, 1982). 24. G. Duménil and D. Lévy, The Economics of the Profit Rate: Competition, Crises and Historical Tendencies in Capitalism (Cheltenham: Edward Elgar, 1993). 25. D. Gordon, T. Weisskopf, and S. Bowles, “Power, accumulation, and crisis: The rise and demise of the postwar social structure of accumulation,” in R. Cherry, ed., The Imperiled Economy, Book I: Macroeconomics from a Left Perspective (New York: Monthly Review, 1987, 43–57), 44. 26. T. Piketty, Capital in the Twenty-First Century (Cambridge, MA: Belknap, 2014), chapter 6; see especially M. Kalecki, Theory of Economic Dynamics (New York: Rinehart, 1954). 27. K. Marx, “Letter from Marx to Pavel Vasilyevich Annenkov” (December 1846). Available at: http://marxists.anu.edu.au/archive/marx/works/1846/letters/46_12_28.htm. 28. Ibid. 29. E. Chamberlin, The Theory of Monopolistic Competition (Cambridge, MA: Harvard University Press, 1933). 30. Duménil and Lévy, Economics, 76. 31. Although, James Clifton argues that the notion that capitalism has somehow become “less competitive” over time also derives from the neoclassical, mainstream apparatus, and specifically its inadequate conception of competition. See his “Competition and the evolution of the capitalist mode of production,” Cambridge Journal of Economics 1 (1977): 137–151. 32. D. Harvey, Seventeen Contradictions and the End of Capitalism (London: Profile, 2014), chapter 10. 33. See also G. Arrighi, “Towards a theory of capitalist crisis,” New Left Review 111.3 (1978): 3–24.

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Notes to Pages 11–23 34. Harvey, Seventeen Contradictions, 144. 35. Ibid., 144–145; emphasis added. 36. V. Lenin, Imperialism, the Highest Stage of Capitalism, first published in 1917 in pamphlet form, reprinted in Selected Works, volume 1 (Moscow: Progress, 1963, 667–766); R. Hilferding, Finance Capital: A Study in the Latest Phase of Capitalist Development (New York: Routledge, 2006 [1910]). 37. P. Carstensen, “How to Assess the Impact of Antitrust on the American Economy: Examining History or Theorizing,” Iowa Law Review 74 (1989): 1175–1217, at 1192. 38. W. Gallagher, “Trademark and copyright enforcement in the shadow of IP law,” Santa Clara Computer & High Technology Law Journal 28 (2012): 453–497. 39. Department of Justice, “Justice department requires six high tech companies to stop entering into anticompetitive employee solicitation agreements” (24 September 2010). Available at: http://www.justice.gov/opa/pr/2010/September/ 10-at-1076.html. 40. P. David, “Intellectual property institutions and the panda’s thumb: patents, copyrights, and trade secrets in economic theory and history,” in National Research Council, ed., Global Dimensions of Intellectual Property Rights in Science and Technology (Washington: National Academy Press, 1993, 19–61), 21. 41. Harvey, “Art of rent,” 98. 42. As Hanns Ullrich observes of the single most important trade agreement examined in this book, the 1994 WTO Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) (Chapter 6): “Because the TRIPS Agreement was negotiated and conceptualised as a trade agreement, it is based on the principles of territoriality, of the protection of home markets, and of substantive trade reciprocity, rather than on principles of protecting intellectual property or competition as such, let alone on principles of protecting the intellectual property or competition regimes of other Members or in their markets.” In “Expansionist intellectual property protection and reductionist competition rules: A TRIPS perspective,” Journal of International Economic Law 7 (2004): 401–430, at 408. 43. Arrighi, “Towards a theory,” 14. 44. In this regard it is also significant that the WTO places responsibility only on governments, and not on private parties. Designed to ensure that government measures do not disadvantage foreign companies, WTO agreements are powerless to counter private restraints of international trade. 45. D. Gerber, Global Competition: Law, Markets, and Globalization (Oxford: Oxford University Press, 2012), 3; original emphasis. 46. Compare D. Harvey, “History versus theory: A commentary on Marx’s method in Capital,” Historical Materialism 20.2 (2012): 3–38. 47. D. Gerber, Law and Competition in Twentieth-Century Europe: Protecting Prometheus (Oxford: Oxford University Press, 2001), 26.

Notes to Pages 29–33

1. Competition under Capitalism 1. B. Jessop, “The complexities of competition and competitiveness: Challenges for competition law and economic governance in variegated capitalism,” in M. Dowdle, J. Gillespie, and I. Maher, eds., Asian Capitalism and the Regulation of Competition: Towards a Regulatory Geography of Global Competition Law (Cambridge: Cambridge University Press, 2013, 96–120), 97. 2. J. Vickers, “Concepts of competition,” Oxford Economic Papers 47 (1995): 1–13, at 3. 3. The only three I am personally aware of are: Y. Brenner, Capitalism, Competition and Economic Crisis: Structural Changes in Advanced Industrialised Countries (Brighton: Wheatsheaf, 1984); G. Duménil and D. Lévy, The Economics of the Profit Rate: Competition, Crises and Historical Tendencies in Capitalism (Cheltenham: Edward Elgar, 1993); and S. Bowles, R. Edwards, and F. Roosevelt, Understanding Capitalism: Competition, Command, and Change (New York: Oxford University Press, 2005). 4. I use the term “classical political economy” in the broadest sense here, to include Marx as well as the “classical” (bourgeois) political economists (Smith and Ricardo, in particular) of whom Capital itself constituted a critique. 5. J. Mill, Principles of Political Economy, volume 1 (London: John W. Parker, 1848), 284. 6. Compare G. Duménil and D. Lévy, “The dynamics of competition: A restoration of the classical analysis,” Cambridge Journal of Economics 11 (2005): 133–164. 7. R. Backhouse, “Competition,” in J. Creedy, ed., Foundations of Economic Thought (Oxford: Blackwell, 1990, 58–86), 59. 8. Backhouse (ibid., 82) describes attention to nonprice forms of competition as a “major development” of postwar orthodox economics, but Marx, inter alia, had addressed the issue much earlier. 9. J. Galbraith, American Capitalism: The Concept of Countervailing Power (Boston: Houghton-Mifflin, 1952), 13. 10. Jessop, “Complexities,” 102. 11. Galbraith, American Capitalism, 14. 12. Jessop, “Complexities,” 104. 13. Backhouse, “Competition”; Vickers, “Concepts.” 14. Vickers, “Concepts,” 4. 15. Galbraith, American Capitalism, 13; Backhouse, “Competition.” 16. A. Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, 5th edition (London: Methuen, 1904 [1776]), book 1, chapter 7. Available at: http://www.econlib.org/library/Smith/smWN.html. Throughout this (i.e., my) book, where I cite from texts by Smith or Marx, I cite from editions of the relevant works that are freely available online, at http://www.econlib.org (Smith)

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Notes to Pages 33–37 and http://www.marxists.org (Marx). This, I think, makes it much easier for readers readily to access the pertinent parts of the texts in question. In each chapter of the book, on first citation of each text, I provide the full text title and publisher information, the full URL, and the chapter number (but no page numbers) from which the citation is taken. On each subsequent reference, I provide just the short title and the chapter number. 17. A Marx who, interestingly, also sometimes called upon the competitionas-freedom imagery, writing of “free competition”—a phrase also used by Smith and perhaps borrowed from him—bringing out “the inherent laws of capitalist production.” K. Marx, Capital: A Critique of Political Economy, volume 1 (Moscow: Progress, 1887 [1867]), chapter 10. Available at: http://www. marxists.org/archive/marx/works/1867-c1/. 18. Smith, Inquiry, book 1, chapter 12. 19. Duménil and Lévy, Economics, 35; H. Nikaido, “Marx on competition,” Journal of Economics 43 (1983): 337–362. On Ricardo, see Backhouse, “Competition,” 62. 20. K. Marx, Capital: A Critique of Political Economy, volume 3 (New York: International Publishers, 1894), chapter 9. Available at: http://www.marxists. org/archive/marx/works/1894-c3/. 21. Marx, Capital, volume 3, chapter 12. 22. Compare Jessop, “Complexities,” 98–100. 23. Marx, Capital, volume 3, chapter 12; original emphasis. 24. Ibid., chapters 12, 10. 25. Ibid., chapter 12; original emphasis. 26. Ibid., chapter 10. 27. Ibid., chapter 50. 28. Ibid. 29. R. Heilbroner, “Economics and political economy: Marx, Keynes, and Schumpeter,” Journal of Economic Issues 18 (1984): 681–695. Such an approach to competition has been developed and elaborated most innovatively in recent years by Massimo de Angelis, for whom “the market” constitutes a panoptical modality of power entailing substantial circumscription of individual freedoms, and wherein competition, supplemented by property rights, is the central disciplinary mechanism for the distribution of “punishments” and “rewards.” M. De Angelis, “The market as disciplinary order: A comparative analysis of Hayek and Bentham,” Research in Political Economy 20 (2002): 293–317. 30. Heilbroner, “Economics and political economy.” 31. To the extent that there existed such a motor it was, for Keynes, his famous “animal spirits.” This concept—no less naturalized than Smith’s or Keynes’s own competitive impulse—has of course been much debated since, but it essentially equated in Keynes’s own writing with individuals’ instinctual

Notes to Pages 37–42 urge to positive action and their spontaneous optimism; it was not an innate desire per se to compete with others. And as such, the engine of capitalism’s growth existed separately from the competitive impulse; the latter, for all its disciplinary power, was “essentially neutral with respect to growth” (Heilbroner, “Economics and political economy,” 687). 32. Ibid. See also Jessop, “Complexities”: “Competition is the external expression of the internal drive of capital as capital to expand and to produce surplus value and realize it in the form of profit” (96; original emphasis). 33. Marx, Capital, volume 1, chapter 24. 34. Ibid. 35. Ibid., chapter 12. 36. Ibid., chapter 10. 37. R. Bellofiore, “Marx after Schumpeter,” Capital & Class 8.3 (1985): 60–74, at 70. 38. Heilbroner, “Economics and political economy.” For a slightly different view on Schumpeter on competition, see Backhouse, “Competition,” 63–65. 39. Heilbroner, “Economics and political economy,” 687. 40. K. Marx, “Letter from Marx to Pavel Vasilyevich Annenkov” (December 1846). Available at: http://marxists.anu.edu.au/archive/marx/works/1846/letters/ 46_12_28.htm. 41. Hence, when Michel Foucault, in The Birth of Biopolitics, vaguely characterizes as “one of the classical conceptions of the economy” the argument that “competition cannot be left to develop without monopolistic phenomena appearing at the same time” and thus that monopoly is “part of the economic and historical logic of competition . . . a semi-natural, semi-necessary consequence of competition in a capitalist regime,” the particular conception he is referring to is, clearly, Marx’s. See M. Foucault, The Birth of Biopolitics: Lectures at the Collège de France, 1978-1979, ed. E. Senellart and trans. G. Burchell (Basingstoke: Palgrave Macmillan, 2008), 134. 42. Marx, “Letter to Annenkov.” 43. Foucault, Birth of Biopolitics, 134. 44. A. Berle, The 20th Century Capitalist Revolution (New York: Harcourt, Brace, 1954), 45. 45. D. Harvey, The Limits to Capital (Oxford: Blackwell, 1982), 144. 46. G. Arrighi, Adam Smith in Beijing: Lineages of the 21st Century (New York: Verso, 2009). 47. Smith, Inquiry, book 1, chapter 10. 48. T. Veblen, The Theory of Business Enterprise (New York: Charles Scribner’s Sons, 1912), 54. Or as Harvey more recently stated: “Capitalists actively cultivate monopoly powers. They thereby realize far-reaching control over production and marketing and hence stabilize their business environment to allow for rational calculation and long-term planning, the reduction of risk

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Notes to Pages 42–47 and uncertainty, and more generally guarantee themselves a relatively peaceful and untroubled existence.” D. Harvey, “The art of rent: Globalization, monopoly and the commodification of culture,” Socialist Register 38 (2002): 93–110, at 96. See also D. Harvey, Seventeen Contradictions and the End of Capitalism (London: Profile, 2014), 140: “Capital is, we can conclude, in love with monopoly. It prefers the certainties, the quiet life and the possibility of leisurely and cautious changes that go with a monopolistic style of working and living outside of the rough and tumble of competition.” 49. Smith, Inquiry, book 1, chapter 11. 50. Ibid. 51. The citation is from P. McNulty, “A note on the history of perfect competition,” Journal of Political Economy 75 (1967): 395–399, at 395–396. 52. Ibid., 396. 53. Smith, Inquiry, book 1, chapter 7; emphasis added. 54. Ibid., book 1, chapter 10; emphasis added. 55. Ibid., book 1, chapters 11, 10. 56. Ibid., book 1, chapter 10. 57. Ibid. 58. Marx also discussed monopolization in terms of a dynamic of so-called concentration, occurring alongside centralization. Where the latter involves separate capitals merging to create bigger individual capitals, the former involves already larger capitals growing their scalar dominance by virtue of the accumulation process alone: compound growth ineluctably exacerbating existing scale differences. Marx placed greater emphasis on centralization and so, in turn, does this book. But as in Marx, the generic term “monopolization” is intended to denote the formation of larger capitals by either means. 59. Marx, Capital, volume 1, chapter 25. 60. Foucault, Birth of Biopolitics, 134. 61. Marx, Capital, volume 1, chapter 25. 62. Ibid. 63. Ibid. 64. Ibid. 65. Harvey, Seventeen Contradictions, 134; original emphasis. 66. K. Marx, “Rent of land,” in Economic & Philosophic Manuscripts of 1844 (Moscow: Progress, 1959 [1844]). Available at: http://www.marxists.org/ archive/marx/works/1844/manuscripts/preface.htm. 67. Ibid.; original emphasis. 68. K. Burch, “The ‘properties’ of the state system and global capitalism,” in S. Rosow, N. Inayatullah, and M. Rupert, eds., The Global Economy as Political Space (Boulder, CO: Lynne Rienner, 1994, 37–59). 69. Harvey, Seventeen Contradictions, 135; emphasis added.

Notes to Pages 48–51 70. J. Clifton, “Competition and the evolution of the capitalist mode of production,” Cambridge Journal of Economics 1 (1977): 137–151, at 137. 71. Jessop, “Complexities,” 99–100. 72. Harvey, Limits, 153. 73. Veblen, Theory, 54. 74. M. Kalecki, Selected Essays on the Dynamics of the Capitalist Economy, 1933–1970 (Cambridge: Cambridge University Press, 1971), 158. 75. McNulty, “Note,” 397; original emphasis. 76. Clifton, “Competition,” 137. 77. Backhouse, “Competition,” 58. 78. Compare M. Friedman, Capitalism and Freedom (Chicago: University of Chicago Press, 1962), 119–20. 79. F. Hayek, Individualism and Economic Order (Chicago: University of Chicago Press, 1948), 96. 80. Jessop, “Complexities,” 102. 81. Kalecki, Selected Essays, 158. 82. E. Chamberlin, The Theory of Monopolistic Competition (Cambridge, MA: Harvard University Press, 1933). 83. Ibid., xii, 5, 57, 63. 84. Backhouse, “Competition,” 72. 85. Chamberlin, Theory, 10. 86. McNulty, “Note,” 398. 87. Harvey, Seventeen Contradictions, 145. See also B. Fine and A. Murfin, Macroeconomics and Monopoly Capitalism (Brighton: Wheatsheaf, 1984), “which recognises monopolisation as co-terminous with and not exclusive of competition” (78); and R. Bryan, “Monopoly in Marxist method,” Capital & Class 26 (1985): 72–92. 88. P. Baran and P. Sweezy, Monopoly Capital: An Essay on the American Economic and Social Order (New York: Monthly Review, 1966). 89. V. Lenin, Imperialism, the Highest Stage of Capitalism, first published in 1917 in pamphlet form, reprinted in Selected Works, volume 1 (Moscow: Progress Publishers, 1963, 667–766); J. Schumpeter, Capitalism, Socialism and Democracy (New York: Harper & Row, 1942); R. Hilferding, Finance Capital: A Study in the Latest Phase of Capitalist Development (New York: Routledge, 2006 [1910]); Galbraith, American Capitalism; M. Kalecki, Theory of Economic Dynamics (New York: Rinehart, 1954); Berle, 20th Century Capitalist Revolution. 90. Schumpeter, Capitalism, Socialism and Democracy, 90n5. 91. Baran and Sweezy, Monopoly Capital, 48. 92. Marx, “Letter to Annenkov”; O. Knauth, “Capital and monopoly,” Political Science Quarterly 31 (1916): 244–259, at 244.

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Notes to Pages 51–59 93. Marx, Capital, volume 3, chapter 15. 94. Harvey, Limits, 141. 95. M. Burawoy, Manufacturing Consent: Changes in the Labor Process under Monopoly Capitalism (Chicago: University of Chicago Press, 1979), 195. 96. Compare Duménil and Lévy, “Dynamics.” 97. Harvey, “Art of rent,” 97; original emphasis. 98. Respectively, Harvey, Limits, 154; Seventeen Contradictions, 135. 99. Their “central proposition,” according to Fine and Murfin (Macroeconomics, 78), being that “the analysis contained in Marx’s Capital is no longer appropriate to an understanding of the modern economy in which the monopoly of the twentieth century has displaced the free competition of the nineteenth.” A comparable departure from the Marx of Capital also applies, notably, to what is perhaps the main strand of critique of the “monopoly capital” thesis within latter-day Marxism, which is the autonomist tradition. Critical of the idea that monopoly capital has become all-powerful, primarily on account of its implicit denial of working-class agency, the autonomist critique nonetheless represents a no less radical break from classical Marxism, although the nature of the departure—grounded in the presumed automation of production and its implications for the capital-labor relation—is different. 100. Marx, Capital, volume 1, chapter 25. 101. Ibid. Note in the 4th German edition. 102. F. Knight, “Immutable law in economics: Its reality and limitations,” American Economic Review 36.2 (1946): 93–111, at 102. 103. R. Williams, Keywords: A vocabulary of culture and society (London: Fontana, 1983). “Capitalism” was included; so too were “class,” “industry,” “labour” and—perhaps most significant—“monopoly.”

2. Exchanging Production for Markets 1. Schumpeter’s work has been especially influential in this regard. See J. Schumpeter, Business Cycles: A Theoretical, Historical and Statistical Analysis of the Capitalist Process (New York: McGraw-Hill, 1939). 2. See “Kuznets swings” and “Kondratiev waves,” respectively. S. Kuznets, Secular Movements in Production and Prices: Their Nature and their Bearing upon Cyclical Fluctuations (Boston: Houghton Mifflin, 1930); N. Kondratiev, “The Major Economic Cycles,” Voprosy Conjunktury [Problems of economic conditions] 1 (1925): 28–79. 3. Respectively, R. Jessop and N-L. Sum, Beyond the Regulation Approach: Putting Capitalist Economies in Their Place (Cheltenham: Edward Elgar, 2006), 214; R. Jessop, “Regulation theories in retrospect and prospect,” Economy and Society 19 (1990): 153–216, at 154.

Notes to Pages 59–64 4. R. Boyer, The Regulation School: A Critical Introduction (New York: Columbia University Press, 1990), 11, 81. 5. Jessop, “Regulation theories,” 171–172. 6. R. Jessop, “Revisiting the regulation approach: Critical reflections on the contradictions, dilemmas, fixes and crisis dynamics of growth regimes,” Capital & Class 37 (2013): 5–24, at 11. 7. J. Peck and A. Tickell, “Local modes of social regulation? Regulation theory, Thatcherism and uneven development,” Geoforum 23 (1992): 347–363, at 349. 8. Respectively, A. Lipietz, Miracles and Mirages: The Crisis of Global Fordism (London: New Left, 1987), 33; Boyer, Regulation School, 13. 9. R. Boyer, “Introduction,” in R. Boyer and Y. Saillard, eds., Regulation Theory: The State of the Art (London: Routledge, 2002, 1–10), 1. 10. Cited ibid., 1. 11. Boyer, Regulation School, 2. 12. See F. Block, “Crisis and renewal: The outlines of a twenty-first century new deal,” Socio-Economic Review 9 (2011): 31–57, for a regulationist-inspired perspective on the types of institutional changes required today to transition the world to a new, stable accumulation system in the wake of the global financial crisis. 13. E.g., J. Peck and A. Tickell, “Searching for a new institutional fix: The after-Fordist crisis and the global-local disorder,” in A. Amin, ed., Post-Fordism: A Reader (Oxford: Blackwell, 1994, 280–315). 14. M. Berman, All That Is Solid Melts into Air: The Experience of Modernity (New York: Simon & Schuster, 1982). 15. Jessop and Sum, Beyond the Regulation Approach, chapter 2. 16. Lipietz, Miracles and Mirages, 15–16. 17. Peck and Tickell, “Local modes,” 349. 18. M. Aglietta, A Theory of Capitalist Regulation: The US Experience (London: New Left, 1979); Lipietz, Miracles and Mirages; Boyer, Regulation School. 19. Jessop and Sum, Beyond the Regulation Approach. 20. “Special issue on the regulation approach and the contemporary crisis,” Capital & Class 37 (2013): 3–141. 21. E.g., Jessop, “Revisiting the regulation approach,” 11. 22. E.g., R. Boyer, “Technical change and the theory of ‘regulation,’” in G. Dosi, C. Freeman, R. Nelson, G. Silverberg, and L. Soete, eds., Technical Change and Economic Theory (New York: Columbia University Press, 1988). Compare P. Baran and P. Sweezy, Monopoly Capital: An Essay on the American Economic and Social Order (New York: Monthly Review, 1966). 23. Aglietta, Theory. See also S. Bahçe and B. Eres, “Competing paradigms of competition: Evidence from the Turkish manufacturing industry,” Review of Radical Political Economics 45 (2013): 201–224.

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Notes to Pages 64–69 24. Jessop, “Regulation theories,” 172. 25. R. Brenner and M. Glick, “The regulation approach: Theory and history,” New Left Review 188 (1991): 45–119, at 49; emphasis added. 26. Boyer and Saillard, Regulation Theory. 27. Jessop and Sum, Beyond the Regulation Approach, 216. 28. Peck and Tickell, “Local modes,” 349. 29. Cited in Boyer, “Introduction,” 1; emphasis added. 30. Boyer, Regulation School, xii. 31. M. Watts, “Hazards and crises: A political economy of drought and famine in Northern Nigeria,” Antipode 15.1 (1983): 24–34, at 26. 32. J. Kincaid, “Production vs. realisation: A critique of Fine and Saad-Filho on value theory,” Historical Materialism 15.4 (2007): 137–165. To be clear, I am excluding here from “political economy” more orthodox work within the economics or political science mainstream that sometimes also goes under the banner of political economy, and which typically does extend well beyond questions of production. Some such work (e.g., that of Jean-Jacques Laffont and Jean Tirole) is, essentially, mainstream neoclassical economics with political economy used as a synonym. Other work (e.g., by Allan Drazen, Dani Rodrik, Guido Tabellini, and others) is more interested in the mutual relations between politics and economies, or economic policy; the economics that features therein is typically closer to the contemporary mainstream than to political economy in the classical sense. 33. See especially M. Watson, “Ricardian political economy and the ‘varieties of capitalism’ approach: Specialization, trade and comparative institutional advantage,” Comparative European Politics 1 (2003): 227–240. 34. G. Arrighi, Adam Smith in Beijing: Lineages of the 21st Century (New York: Verso, 2009). 35. D. Harvey, “History versus theory: A commentary on Marx’s method in Capital,” Historical Materialism 20.2 (2012): 3–38, at 10. 36. Ibid., 10, 12. 37. G. Henderson and E. Sheppard, “Marx and the spirit of Marx,” in S. Aitken and G. Valentine, eds., Approaches to Human Geography (London: Sage, 2006, 57–74), 61–62. 38. Cited in D. Ankarloo and G. Palermo, “Anti-Williamson: A Marxian critique of new institutional economics,” Cambridge Journal of Economics 28 (2004): 413–429, at 424n2. 39. Henderson and Sheppard, “Marx and the spirit of Marx,” 61. JeanChristophe Agnew is especially perceptive on this point, arguing that for Marx it is impossible to distinguish clearly between “the market as a mode of organization” and “the market as a mode of mystification” because “the rise of capitalist production is inseparable from the forms of mystification by which its characteristic system of surplus-extraction is concealed.” J-C Agnew, “The

Notes to Pages 69–74 threshold of exchange: Speculations on the market,” Radical History Review 21 (1979): 99–118, at 107. 40. K. Marx, Capital: A Critique of Political Economy, volume 2 (Moscow: Progress, 1956 [1893]), chapter 6. Available at: http://www.marxists.org/ archive/marx/works/1885-c2/. 41. K. Marx, Capital: A Critique of Political Economy, volume 3 (New York: International, 1894), chapter 16. Available at: http://www.marxists.org/archive/ marx/works/1894-c3/. 42. D. Harvey, A Companion to Marx’s Capital, Volume 1 (London: Verso, 2010), 233–234. 43. Agnew, “Threshold of exchange,” 115; original emphasis. 44. Harvey, “History versus theory,” 26. 45. Lipietz, Mirages and Miracles, 30. 46. See, for instance, A. Bacevich, “He told us to go shopping. Now the bill is due,” Washington Post, 5 October 2008. 47. K. Marx, The Poverty of Philosophy (Moscow: Progress, 1955 [1847]), chapter 1. Available at: http://www.marxists.org/archive/marx/works/1847/ poverty-philosophy/. 48. Harvey, “History versus theory,” 6, 17. 49. Agnew, “Threshold of exchange,” 115. 50. Harvey, “History versus theory,” 12. 51. See especially Greta Krippner’s work: “The financialization of the American economy,” Socio-Economic Review 3 (2005): 173–208; Capitalizing on Crisis: The Political Origins of the Rise of Finance (Cambridge, MA: Harvard University Press, 2011). 52. I discuss these arguments at length in B. Christophers, Banking Across Boundaries: Placing Finance in Capitalism (Oxford: Wiley-Blackwell, 2013), at 235–238. Compare D. Harvie, “All labour is productive and unproductive,” unpublished manuscript (2003), 23. Available at: https://www.ntu.ac.uk/research/document_uploads/31292.pdf. 53. Marx, Capital, volume 3, chapter 16; emphasis added. 54. Ibid., chapter 16. 55. Harvey, “History versus theory,” 16; emphasis added. 56. D. Harvey, The Limits to Capital (Oxford: Blackwell, 1982), 140–141. 57. Respectively, ibid., 141; A. Emmanuel, Unequal Exchange: A Study of the Imperialism of Trade (New York: Monthly Review, 1972), 327; original emphasis. 58. M. Smith, Invisible Leviathan: Marxist Critique of Market Despotism Beyond Postmodernism (Toronto: University of Toronto Press, 1995), 109. 59. R. Walker, “Contentious issues in Marxian value and rent theory: A second and longer look,” Antipode 7.1 (1975): 31–53, at 32. See also Kincaid, “Production vs. realisation.”

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Notes to Pages 75–82 60. Harvey, “History versus theory,” 23, 24. 61. Ibid., 27. 62. In terms of the last, see K. Karatani, The Structure of World History: From Modes of Production to Modes of Exchange (Durham, NC: Duke University Press, 2014). 63. M. Sandel, What Money Can’t Buy: The Moral Limits of Markets (London: Allen Lane, 2012), 5. 64. See especially Boyer, “Technical change,” 12. 65. Ibid. 66. Harvey, Limits; see especially chapters 7, 10, and 13. 67. D. Harvey, The Urbanization of Capital: Studies in the History and Theory of Capitalist Urbanization (Oxford: Blackwell, 1985), 4. 68. See especially R. Jessop, “The crisis of the national spatio-temporal fix and the tendential ecological dominance of globalizing capitalism,” International Journal of Urban and Regional Research 24 (2000): 323–360; and “Spatial fixes, temporal fixes and spatio-temporal fixes,” in N. Castree and D. Gregory, eds., David Harvey: A Critical Reader (Oxford: Blackwell, 2006, 142–166). There are also striking parallels between Harvey’s theorization of spatial fixes and Lipietz’s discussion of the historical production of “territorialized economic space” in Mirages and Miracles. 69. E.g., Harvey, “History versus theory”. 70. E.g., B. Christophers, “Revisiting the urbanization of capital,” Annals of the Association of American Geographers 101 (2011): 1347–64. 71. D. Harvey, The New Imperialism (Oxford: Oxford University Press, 2003). 72. See especially G. Arrighi, “Spatial Fixes, Switching Crises, and Accumulation by Dispossession,” in C. Chase-Dunn and S. Babones, eds., Global Social Change: Historical and Comparative Perspectives (Baltimore, MD: Johns Hopkins University Press, 2006, 201–212); P. Cerny, “Restructuring the state in a globalizing world: Capital accumulation, tangled hierarchies and the search for a new spatio-temporal fix,” Review of International Political Economy 13 (2006): 679–695; J. Glassman, “Recovering from crisis: The case of Thailand’s spatial fix,” Economic Geography 83 (2007): 349–370; A. Herod, “From a geography of labor to a labor geography: Labor’s spatial fix and the geography of capitalism,” Antipode 29 (1997): 1–31; E. Wyly, M. Atia, and D. Hammel, “Has mortgage capital found an inner-city spatial fix?,” Housing Policy Debate 15 (2004): 623–685.

3. Law as Leveler 1. C. May, “Thinking, buying, selling: Intellectual property rights in political economy,” New Political Economy 3 (1998): 59–78, at 59.

Notes to Pages 82–88 2. “Strangian” is a reference to the work and influence of the “international political economy” scholar Susan Strange. For examples of this type of political economy of antitrust see, e.g., T. Baskoy, The Political Economy of European Union Competition Policy (London: Routledge, 2008); or P. Mehta, ed., Evolution of Competition Laws and Their Enforcement: A Political Economy Perspective (London: Routledge, 2011). Of IP law see, e.g., C. May, A Global Political Economy of Intellectual Property Rights: The New Enclosures? (London: Routledge, 2000); or M. Pugatch, The International Political Economy of Intellectual Property Rights (Cheltenham: Edward Elgar, 2004). And of antitrust and IP law, S. Sell, Power and Ideas: North-South Politics of Intellectual Property and Antitrust (Albany: SUNY Press, 1998). 3. The phraseology is David Harvey’s, in his “History versus theory: A commentary on Marx’s method in Capital,” Historical Materialism 20.2 (2012): 3–38. 4. Ibid. 5. Ibid., 27. 6. K. Marx, Capital: A Critique of Political Economy, volume 3 (New York: International, 1894), chapter 50. Available at: http://www.marxists.org/archive/ marx/works/1894-c3/. 7. Ibid., chapter 50. 8. Ibid., chapter 15. 9. R. Hilferding, Finance Capital: A Study in the Latest Phase of Capitalist Development (New York: Routledge, 2006 [1910]), 198. 10. Ibid., 205. Adam Smith had said much the same thing: “A monopoly granted either to an individual or to a trading company has the same effect as a secret in trade or manufactures. The monopolists, by keeping the market constantly under-stocked, by never fully supplying the effectual demand, sell their commodities much above the natural price, and raise their emoluments, whether they consist in wages or profit, greatly above their natural rate.” An Inquiry into the Nature and Causes of the Wealth of Nations, 5th edition (London: Methuen, 1904 [1776]), book 1, chapter 7. Available at: http://www.econlib. org/library/Smith/smWN.html. 11. Hilferding, Finance Capital, 212. 12. Ibid. See especially 228–230. 13. Ibid., 230, 233. 14. Ibid., 234. 15. Ibid., 228. 16. Ibid., 230, 232. As other writers noted in the same period, this was not just a question of affordability, or literal capacity to pay. There were and are important elasticity effects, for commercial as well as consumer purchases. Arthur Hadley illustrated these with reference to the history of the French copper

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Notes to Pages 88–90 syndicate of 1888, which “obtained control of the copper product of all the best mines of the world,” and then “attempted to raise the price of copper from nine cents a pound to sixteen,” but “failed disastrously” because its pricing strategy shrank consumption. “Even the strongest of monopolies,” he observed, “must make its price low enough to cause the public to buy its goods or services.” A. Hadley, Economics: An Account of Relations Between Private Property and Public Welfare (New York: Putnam, 1896), 180. 17. M. Kalecki, Selected Essays on the Dynamics of the Capitalist Economy, 1933–1970 (Cambridge: Cambridge University Press, 1971), 51, 63. 18. M. Kalecki, Essays in the Theory of Economic Fluctuations (London: Allen & Unwin, 1939), 22; original emphasis. 19. Kalecki, Selected Essays, 63. 20. Kalecki’s argument concerning the degree of monopoly and the labor share of income has been the subject of considerable debate among Marxian scholars. Its champions include P. Baran and P. Sweezy, Monopoly Capital: An Essay on the American Economic and Social Order (New York: Monthly Review, 1966); and K. Cowling, Monopoly Capitalism (London: Macmillan, 1982). Its critics include, most stridently, B. Fine and A. Murfin, Macroeconomics and Monopoly Capitalism (Brighton: Wheatsheaf, 1984). The latter maintain (ibid., 81) that although the Kaleckian model has “intuitive plausibility,” under closer analytical scrutiny it “only survives unimpaired under the most stringent conditions” (e.g., it relies on consumer goods producers exerting power over both customers and suppliers). More broadly, they attack Kalecki—and his followers—as “postKeynesian” for overemphasizing exchange relations and underplaying relations of production. My own view is that Fine and Murfin’s critique is unwarranted, or at the very least, overcooked. To be sure, it would be wrong to “put aside the analysis of production relations as if these could be examined separately from and without effect on market relations” (135; a point I return to shortly in relation to antitrust). But for reasons elaborated in chapter 2 and reinforced in this one, it would be equally problematic to put aside market relations—as classical Marxism of the type advocated by Fine and Murfin does—as if these could be examined separately from and without effect on production relations. 21. K. Marx, Capital: A Critique of Political Economy, volume 1 (Moscow: Progress, 1887 [1867]), chapter 24. Available at: http://www.marxists.org/ archive/marx/works/1867-c1/. 22. Cited in D. Hart, “Antitrust and technological innovation in the US: Ideas, institutions, decisions, and impacts, 1890–2000,” Research Policy 30 (2001): 923–936, at 924. 23. Although as Morton Kamien and Nancy Schwartz observe, there were in fact subtle but important differences in their arguments: Galbraith correlated innovation levels less with monopoly power than with firm size, which of course

Notes to Pages 90–94 is not necessarily the same thing. M. Kamien and N. Schwartz, Market Structure and Innovation (Cambridge: Cambridge University Press, 1982), 8–9. 24. Hart, “Antitrust and technological innovation,” 925. 25. Although they disagreed with his particular reading of monopoly capital, claiming (not altogether fairly, in this author’s view, for reasons already alluded to) that “for all his emphasis on monopoly, Hilferding did not treat it as a qualitatively new element in the capitalist economy; rather he saw it as effecting essentially quantitative modifications of the basic Marxian laws of capitalism” (Baran and Sweezy, Monopoly Capital, 5). 26. “Our thesis is that the idea of a self-adjusting market implied a stark utopia. Such an institution could not exist for any length of time without annihilating the human and natural substance of society; it would have physically destroyed man and transformed his surroundings into a wilderness. Inevitably, society took measures to protect itself, but whatever measures it took impaired the self-regulation of the market, disorganized industrial life, and thus endangered society in yet another way.” K. Polanyi, The Great Transformation: The Political and Economic Origins of Our Time (Boston: Beacon, 2001 [1944]), 3–4. 27. Smith, Inquiry, book 1, chapter 9. 28. This last feature helps begin to explain why there has been so much controversy about Smith’s “theory” of falling profits and about the role of competition therein. Both F. Verdera, “Adam Smith on the falling rate of profit: A reappraisal,” Scottish Journal of Political Economy 39 (1992): 100–110; and L. Tsoulfidis and D. Paitaridis, “Revisiting Adam Smith’s theory of the falling rate of profit,” International Journal of Social Economics 39 (2012): 304–313, for example, claim that Smith did not in fact see competition as the ultimate cause. Rather, increase in capital stock was. 29. See especially B. Fine, C. Lapavitsas, and D. Milonakis, “Addressing the world economy: Two steps back,” Capital & Class 23 (1999): 47–90, on Robert Brenner’s work. 30. Smith, Inquiry, book 2, chapter 4. 31. G. Arrighi, Adam Smith in Beijing: Lineages of the 21st Century (New York: Verso, 2009). 32. G. Arrighi, “Towards a theory of capitalist crisis,” New Left Review 111.3 (1978): 3–24, at 5; emphasis added. 33. B. Javits, Business and the Public Interest: Trade Associations, the Antitrust Laws and Industrial Planning (New York: Macmillan, 1932), 14, 17. 34. O. Knauth, “Capital and monopoly,” Political Science Quarterly 31 (1916): 244–259, at 245. 35. E. Jones, “Is competition in industry ruinous,” Quarterly Journal of Economics 34 (1920): 473–519, at 473.

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Notes to Pages 94–99 36. See especially the discussion in H. Hovenkamp, “Regulatory conflict in the gilded age: Federalism and the railroad problem,” Yale Law Journal 97 (1988): 1017–1072, at 1039–1040. 37. Jones, “Is competition in industry ruinous,” 475. E.g., B. Wyman, Control of the Market: A Legal Solution of the Trust Problem (New York: Moffat, Yard, 1911); Knauth, “Capital and monopoly.” 38. R. Brenner, The Economics of Global Turbulence (London: Verso, 2006). 39. M. Thomas, “The thesis of ‘ruinous competition,’” (2009). Available at: http://www.workersliberty.org/brenner. 40. Ibid.; emphasis added. 41. S. Waller and N. Byrne, “Changing view of intellectual property and competition law in the European Community and the United States of America,” Brooklyn Journal of International Law 20 (1993): 1–21, at 1. 42. For excellent introductions to the two legal systems’ relationships in strictly “legal” thought and practice, see S. Anderman, ed., The Interface Between Intellectual Property Rights and Competition Policy (Cambridge: Cambridge University Press, 2007); and S. Anderman and A. Ezrachi, eds., Intellectual Property and Competition Law: New Frontiers (Oxford: Oxford University Press, 2011). 43. D. McClure, “Trademarks and unfair competition: A critical history of legal thought,” Trademark Reporter 69 (1979): 305–356, at 306. 44. A. Katz, “Making sense of nonsense: Intellectual property, antitrust, and market power,” Arizona Law Review 49 (2007): 837–909, at 842. 45. H. Hovenkamp, Enterprise and American Law, 1836–1937 (Cambridge, MA: Harvard University Press, 1991), 64. 46. Ibid., 277. 47. Ibid. On the heterogeneity and complexity of the understandings of competition embedded in and mobilized by (U.S.) competition policy, see especially R. Peritz, Competition Policy in America: History, Rhetoric, Law (New York: Oxford University Press, 2001); and D. Crane and H. Hovenkamp, eds., The Making of Competition Policy: Legal and Economic Sources (New York: Oxford University Press, 2013). 48. Hovenkamp, Enterprise and American Law, 297. 49. M. Utton, “Fifty years of UK competition policy,” Review of Industrial Organization 16 (2000): 267–285, at 267. 50. Ibid., 268. 51. D. Crane and H. Hovenkamp, “Introduction,” in Crane and Hovenkamp, Making, 4. 52. F. Rowe, “New directions in competition and industrial organization law in the United States,” in F. Rowe, F. Jacobs, and M. Joelson, eds., Enterprise Law of the 80s: European and American Perspectives on Competition and Industrial Organization (Chicago: American Bar Association, 1980, 177–187),

Notes to Pages 99–105 181. Even more bluntly, J. Foster and R. McChesney, The Endless Crisis: How Monopoly-Finance Capital Produces Stagnation and Upheaval from the USA to China (New York: Monthly Review, 2012), 84, refer simply to “the abject abandonment of antitrust enforcement” under the influence of the Chicago School in the 1980s United States. 53. K. Elzinga, “The goals of antitrust: Other than competition and efficiency, what else counts?,” University of Pennsylvania Law Review 125 (1977): 1191– 1213, at 1191n1; emphasis added. 54. E. Fox, “The modernization of antitrust: A new equilibrium,” Cornell Law Review 66 (1981): 1140–1192, at 1152. 55. “Appendix E: United States Code.” Available at: http://www.justice.gov/ atr/public/hearings/ip/appendix_e.htm. 56. Fox, “Modernization,” 1150. 57. H. Hatfield, “The Chicago Trust Conference,” The Journal of Political Economy 8 (1899): 1–18, at 12. 58. Smith, Inquiry, book 1, chapter 7. 59. A. Marshall, Principles of Economics, 8th edition (London: Macmillan, 1920), 293–294. 60. The quotation is from Fox, “Modernization,” 1148. 61. Cited in ibid., 1147n32. 62. Respectively, Hatfield, “Chicago Trust Conference,” 12; Clayton Act, cited in Fox, “Modernization,” 1147n25. 63. Hovenkamp, “Classicism, neoclassicism and the Sherman Act: Introduction,” in Crane and Hovenkamp, Making, 73. 64. Ibid., 72. 65. Hatfield, “Chicago Trust Conference,” 12. 66. Representative Morgan, 51 Cong. Rec. 9265 (1914). 67. Fox, “Modernization,” 1153. 68. W. Landes and R. Posner, “Market power in antitrust cases,” Harvard Law Review 94 (1981): 937–996, at 937. 69. Competition Commission, Guidelines for Market Investigations: Their Role, Procedures, Assessment and Remedies (April 2013), 7. Available at: https://www.gov.uk/government/uploads/system/uploads/attachment_data/ file/284390/cc3_revised.pdf. 70. See R. Posner, Antitrust Law, 2nd edition (Chicago: University of Chicago Press, 2001), e.g., at 265, for his “misgivings”; on “market impact” supplanting “market power,” see, e.g., Fox, “Modernization,” 1152; on efficiency and market power, see, e.g., A. Berger and T. Hannan, “The efficiency cost of market power in the banking industry: A test of the ‘quiet life’ and related hypotheses,” Review of Economics and Statistics 80 (1998): 454–465. 71. B. Jessop, “The complexities of competition and competitiveness: Challenges for competition law and economic governance in variegated

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Notes to Pages 106–110 capitalism,” in M. Dowdle, J. Gillespie, and I. Maher, eds., Asian Capitalism and the Regulation of Competition: Towards a Regulatory Geography of Global Competition Law (Cambridge: Cambridge University Press, 2013, 96–120). 72. J. Hughes, “The Philosophy of Intellectual Property,” Georgetown Law Journal 77 (1988): 287–366, at 294. 73. D. Hunter, Intellectual Property (New York: Oxford University Press, 2012), 1–4. 74. Hughes, “Philosophy,” 292. 75. For an especially insightful, if somewhat abstract, account of the origins and early development of copyright and patents, see J. Commons, Legal Foundations of Capitalism (New York: Macmillan, 1924), 274–282. And on IP’s intellectual “pre-history”—i.e., the history of those ideas that predated patents, copyright, and such but that nonetheless foregrounded their ultimate materialization—see the excellent P. Long, “Invention, authorship, ‘intellectual property,’ and the origin of patents: Notes toward a conceptual history,” Technology and Culture 32 (1991): 846–884. 76. S. Besen and L. Raskind, “An introduction to the law and economics of intellectual property,” Journal of Economic Perspectives 5 (1991): 3–27, at 6. 77. May, “Thinking, buying, selling,” 68–69. 78. Besen and Raskind, “Introduction,” 6–7. 79. S. Sell and C. May, “Moments in law: Contestation and settlement in the history of intellectual property,” Review of International Political Economy 8 (2001): 467–500, at 475. On patents’ early history, see also P. David, “Intellectual property institutions and the panda’s thumb: Patents, copyrights, and trade secrets in economic theory and history,” in National Research Council, ed., Global Dimensions of Intellectual Property Rights in Science and Technology (Washington: National Academy Press, 1993, 19–61), 44–50. 80. Sell and May, “Moments,” 476. 81. Besen and Raskind, “Introduction,” 12. 82. Again, David, “Intellectual property institutions” is very informative on this early history; see 51–54. 83. Sell and May, “Moments,” 477. 84. Ibid. 85. Besen and Raskind, “Introduction,” 21. 86. E. Chamberlin, The Theory of Monopolistic Competition (Cambridge, MA: Harvard University Press, 1933), 206. 87. Sell and May, “Moments,” 475. 88. Besen and Raskind, “Introduction,” 21. 89. P. Bourdieu, Distinction: A Social Critique of the Judgement of Taste (Cambridge, MA: Harvard University Press, 1984). 90. Sell and May, “Moments,” 479.

Notes to Pages 110–114 91. See especially A. Ryan, Property and Political Theory (Oxford: Blackwell, 1986); Hughes, “Philosophy.” 92. Hunter, Intellectual Property, 24. 93. Ibid., 16–21. See also David, “Intellectual property institutions,” 24–28. 94. Indeed, the discourse surrounding trademark protection and its various justifications is a fascinating and important topic in its own right. See here the especially enlightening discussion in McClure, “Trademarks,” at 328–329. 95. K. Maskus, “Intellectual property rights and economic development,” Case Western Reserve Journal of International Law 32 (2000): 471–502, at 473–474. C.f. Besen and Raskind, “Introduction,” 5: “Private producers have an incentive to invest in innovation only if they receive an appropriate return. Whether producers will have the correct incentives depends on their ability to appropriate at least some of the value that users place on those works. If potential innovators are limited in their ability to capture this value, they may not have enough incentive to invest a socially optimal amount in innovative activity.” 96. Katz, “Making sense,” 841. Compare David, “Intellectual property institutions,” 36–42. 97. May, “Thinking, buying, selling,” 69–70. 98. D. Harvey, “The art of rent: Globalization, monopoly and the commodification of culture,” Socialist Register 38 (2002): 93–110, at 97. 99. McClure, “Trademarks,” 306. And hence also the traditional hostility to IP shown by the theoretical standard-bearers of this “competitive ideal”: “freemarket” economists. Both Friedrich Hayek and Milton Friedman, for example, were highly suspicious of the avowed need for IP-based monopoly. See, e.g., M. Perelman, “The weakness in strong intellectual property rights,” Challenge 46.6 (2003): 32–61, at 44–45. 100. C. Leslie, Antitrust Law and Intellectual Property Rights: Cases and Materials (New York: Oxford University Press, 2010). 101. Katz, “Making sense,” 840. 102. R. De Roover, “The concept of the just price: Theory and economic policy,” Journal of Economic History 18 (1958): 418–434, at 431. 103. Hunter, Intellectual Property, 1. 104. M. Boldrin and D. Levine, “The case against intellectual property,” American Economic Review 92 (2002): 209–212. 105. Chamberlin, Theory, 9. 106. Katz, “Making sense,” 840; emphasis added. 107. Waller and Byrne, “Changing view,” 13; emphasis added. 108. Katz, “Making sense,” 840. 109. Cited in D. Noble, America by Design: Science, Technology, and the Rise of Corporate Capitalism (Oxford: Oxford University Press, 1979), 89.

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Notes to Pages 114–126 110. McClure, “Trademarks,” 307. 111. Ibid., 313–318. 112. Chamberlin, Theory, 58–59. 113. Ibid., 207. 114. S. Timberg, “Trademarks, monopoly and the restraint of competition,” Law and Contemporary Problems 14 (1949): 323–361, at 323–324. 115. Chamberlin, Theory, 204. 116. T. Veblen, The Theory of Business Enterprise (New York: Charles Scribner’s, 1912), 55. Advertising, in David Harvey’s much more recent but comparable reading, represents “nothing more than an industry struggling to squeeze monopoly prices out of an otherwise competitive situation.” Seventeen Contradictions and the End of Capitalism (London: Profile, 2014), 141. 117. Chamberlin, Theory, 61. 118. Ibid., 62. 119. R. Towse, “The quest for evidence on the economic effects of copyright law,” Cambridge Journal of Economics 37 (2013): 1187–1202. 120. Chamberlin, Theory, 64. 121. Ibid., 205. 122. Ibid. 123. Ibid., 205; emphasis added; 208. 124. Timberg, “Trademarks,” 323. 125. J. Foster, “Monopoly capital and the new globalization,” Monthly Review 53.8 (2002): 1–16, at 4–5. 126. D. Harvey, A Companion to Marx’s Capital Volume 2 (London: Verso, 2013). 127. Baran and Sweezy, Monopoly Capital.

4. Designs on Monopoly 1. T. Freyer, Regulating Big Business: Antitrust in Great Britain and America, 1880–1990 (Cambridge: Cambridge University Press, 1992), 21. 2. A. Burns, The Decline of Competition: A Study of the Evolution of American Industry (New York: McGraw-Hill, 1936), 2. 3. N. Lamoreaux, The Great Merger Movement in American Business, 1895– 1904 (Cambridge: Cambridge University Press, 1988), 12, 98–99. 4. Ibid., 87. 5. C. Hoffmann, “The depression of the nineties,” Journal of Economic History 16 (1956): 137–164, at 151. 6. Lamoreaux, Great Merger Movement, 103. 7. G. Arrighi, “Towards a theory of capitalist crisis,” New Left Review 111.3 (1978): 3–24, at 5.

Notes to Pages 126–129 8. P. Kunzlik, “From local to global—the role of geographical isolation in shaping competition law,” in J. Holder and C. Harrison, eds., Law and Geography (Oxford: Oxford University Press, 483–519), 500. 9. E. Fox, “The modernization of antitrust: A new equilibrium,” Cornell Law Review 66 (1981): 1140–1192, at 1147. C.f. M. Sklar, who describes “the intensification of competition that had accompanied the extraordinary growth, during 1879–1893, in railways and industry, savings and investment, and industrial concentration.” The Corporate Reconstruction of American Capitalism, 1890– 1916: The Market, the Law, and Politics (Cambridge: Cambridge University Press, 1988), 44. 10. “Rail track mileage and number of Class I rail carriers, United States, 1830–2012.” Available at: http://people.hofstra.edu/geotrans/eng/ch3en/conc3en/ usrail18402003.html. 11. The same process occurring simultaneously north of the border, in Canada. “Businesses which previously had enjoyed some degree of local monopoly as a result of distance now found themselves facing competition” precisely because of the development of the railroad. C. Baggaley, “Tariffs, Combines and Politics: The Beginning of Canadian Competition Policy, 1880–1900,” in R. Khemani and W. Standbury, eds., Historical Perspectives on Canadian Competition Policy (Halifax: Institute for Research on Public Policy, 1991, 1–51), 8. 12. J. Nye, “The myth of free-trade Britain and fortress France: Tariffs and trade in the nineteenth century,” Journal of Economic History 51 (1991): 23–46. 13. Ibid., 26. 14. C. Harley and D. McCloskey, “Foreign trade, competition, and the expanding international economy,” in R. Floud and D. McCloskey, eds., The Economic History of Britain Since 1700, volume 2 (Cambridge: Cambridge University Press, 1981, 50–69). 15. Arrighi, “Towards a theory,” 5. 16. J. Livingston, “The social analysis of economic history and theory: Conjectures on late nineteenth-century American development,” American Historical Review 92 (1987): 69–95, at 70. 17. A. Burns and W. Mitchell, Measuring Business Cycles (New York: National Bureau of Economic Research, 1946), 79. 18. Hoffmann, “Depression,” 146. In Canada the downturn had begun earlier, Baggaley (“Tariffs,” 9) noting “generally depressed economic conditions” from 1882. 19. M. Perelman, “The weakness in strong intellectual property rights,” Challenge 46.6 (2003): 32–61, at 34. 20. C. MacLeod and G. Radick, “Claiming ownership in the technosciences: Patents, priority and productivity,” Studies in History and Philosophy of Science 44 (2013): 188–201, at 195.

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Notes to Pages 129–131 21. B. Sherman and L. Bently, The Making of Modern Intellectual Property Law (Cambridge: Cambridge University Press, 2004), 129. 22. MacLeod and Radick summarize in “Claiming ownership,” 195–197. For fuller treatments, see H. Dutton, The Patent System and Inventive Activity during the Industrial Revolution, 1750–1852 (Manchester: Manchester University Press, 1984); and C. MacLeod, Inventing the Industrial Revolution: The English Patent System, 1660–1800 (Cambridge: Cambridge University Press, 2002). 23. Sherman and Bently, Making, 166–168. 24. See S. Schwarzkopf, “Turning trade marks into brands: How advertising agencies created brands in the global market place, 1900–1930,” QMUL Centre for Globalization Research Working Paper 18, August 2008, at 26–27. 25. A. Johns, “Intellectual property and the nature of science,” Cultural Studies 20 (2006): 145–164, at 150–151. 26. Sherman and Bently, Making, 174–176. 27. Johns, “Intellectual property,” 148. See also F. Machlip and E. Penrose, “The patent controversy in the nineteenth century,” Journal of Economic History 10 (1950): 1–29. 28. M. Coulter, Property in Ideas: The Patent Question in Mid-Victorian Britain (Kirksville, MO: Thomas Jefferson University Press, 1991). 29. The quotes are from, respectively, MacLeod and Radick, “Claiming ownership,” 196; Sherman and Bently, Making, 131. 30. Sherman and Bently, Making, 134. 31. MacLeod and Radick, “Claiming ownership,” 196. 32. Ibid. Equally notable, the same acts played a significant role in the United Kingdom in democratizing a socioeconomic sphere—that of innovation and invention for profit—that had hitherto remained much more oligarchic in nature than in the United States, where The Democratization of Invention (subtitled Patents and Copyrights in American Economic Development, 1790–1920 [Cambridge: Cambridge University Press, 2005]), as Zorina Khan has shown, first occurred among North Atlantic capitalist nations. 33. J. Hopwood-Lewis and C. MacLeod, “Patents, publicity and priority: The Aeronautical Society of Great Britain, 1897–1919,” Studies in History and Philosophy of Science 44 (2013): 212–221; C. MacLeod, “Reluctant entrepreneurs: Patents and state patronage in New technosciences, circa 1870–1930,” Isis 103 (2012): 328–339, at 335–338. 34. K. Bruland, “The Management of Intellectual Property at Home and Abroad: Babcock & Wilcox, 1850–1910,” History of Technology 24 (2002): 151–170. 35. See, e.g., S. Pollard, The Development of the British Economy 1914– 1967, 2nd edition (London: St. Martin’s Press, 1969), 10–14. 36. S. Arapostathis and G. Gooday, Patently Contestable: Electrical Technologies and Inventor Identities on Trial in Britain (Cambridge, MA: MIT Press, 2013).

Notes to Pages 132–136 37. Ibid., 9, 14. 38. “An arrangement by which former competitors partake of the privileges conferred by one or more patents according to some pre-arranged basis designed to restrain trade.” F. Vaughan, Economics of Our Patent System (New York: Macmillan, 1925), 34. 39. Arapostathis and Gooday, Patently Contestable. The quotations are from 7, 13–14. 40. J. Hopwood-Lewis, “Griffith Brewer, ‘The Wright brothers’ Boswell’: Patent management and the British aviation industry, 1903–1914,” Studies in History and Philosophy of Science 44 (2013): 259–268. 41. S. Arapostathis, “Meters, patents and expertise(s): Knowledge networks in the electricity meters industry, 1880–1914,” Studies in History and Philosophy of Science 44 (2013): 234–246. 42. Schwarzkopf, “Turning trade marks,” 11n2. 43. Ibid., 8. 44. Ibid., 18–19. 45. MacLeod, “Reluctant entrepreneurs,” 332. 46. G. Gooday, “Combative patenting: Military entrepreneurship in First World War telecommunications,” Studies in History and Philosophy of Science 44 (2013): 247–258. 47. Hopwood-Lewis, “Griffith Brewer.” 48. E.g., W. Ashley, Gold and Prices (London: Longmans, Green, 1912). 49. Pollard, Development, 275. 50. Ibid., 278, 291. 51. N. Crafts, “British relative economic decline revisited: The role of competition,” Explorations in Economic History 49 (2012): 17–29, at 21. 52. K. Tribe, “Liberalism and neoliberalism in Britain, 1930–1980,” in P. Mirowski and D. Plehwe, eds., The Road from Mont Pèlerin: The Making of Neoliberal Thought Collective (Cambridge, MA: Harvard University Press, 2009, 69–98). 53. A. Plant, “The economic theory concerning patents for inventions,” Economica 1 (1934): 30–51; and “The economic aspects of copyright in books,” Economica 1 (1934): 167–195. 54. L. Robbins, The Economic Basis of Class Conflict and Other Essays in Political Economy (London: Macmillan, 1939), 74. 55. Johns, “Intellectual property,” 153–157. 56. B. Eichengreen and D. Irwin, “The slide to protectionism in the Great Depression: Who succumbed and why?,” Journal of Economic History 70 (2010): 871–897, at 878. 57. S. Sell and C. May, “Moments in law: Contestation and settlement in the history of intellectual property,” Review of International Political Economy 8 (2001): 467–500, at 482.

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Notes to Pages 136–141 58. Ibid., 485. 59. MacLeod, “Reluctant entrepreneurs” (331–332, 338–339) discusses the U.K. case of plant breeding in the early twentieth century. 60. Pollard, Development, provides very good overviews, for both the prewar (10–14) and interwar (165–169) periods. 61. Freyer, Regulating Big Business, 22. 62. Ibid., 161. 63. H. Mercer, “The evolution of British government policy towards competition in private industry, 1940–1956,” unpublished PhD thesis, London School of Economics (1989); cited in Crafts, “British relative economic decline,” 21; M. Utton, “Fifty years of UK competition policy,” Review of Industrial Organization 16 (2000): 267–285, at 269. 64. H. Macrosty, The Trust Movement in British Industry (London: Longmans, 1907). 65. Cited in J. Blicksilver, “The defenders and defense of big business in the United States, 1880–1900,” unpublished PhD thesis, Northwestern University (1955). 66. Freyer, Regulating Big Business, 21. 67. Crafts, “British relative economic decline,” 21. 68. Freyer, Regulating Big Business, 12, 35. 69. Pollard, Development, 169–173. 70. Freyer, Regulating Big Business, 170. 71. Ibid., 6; D. Gerber, Law and Competition in Twentieth Century Europe: Protecting Prometheus (Oxford: Oxford University Press, 1998), 211. 72. Crafts, “British relative economic decline,” 21. “Managed economy” is from A. Booth, “Britain in the 1930s: A managed economy?,” Economic History Review 40 (1987): 499–522. 73. Freyer, Regulating Big Business. 74. Ibid., 196. Compare L. Hannah, The Rise of the Corporate Economy (London: Methuen, 1983). 75. D. Aldcroft, “Economic growth in Britain in the inter-war years: A reassessment,” Economic History Review 20 (1967): 311–326, at 322. 76. Pollard, Development, 95, 101–102. 77. Gerber, Law and Competition, 26. 78. Hoffmann, “Depression.” 79. R. Nelson, Merger Movements in American Industry, 1895–1956 (Princeton, NJ: Princeton University Press, 1959), 135. 80. Gerber, Law and Competition, 208. 81. Freyer, Regulating Big Business, 15. 82. Ibid., 8. 83. A. Marshall, Industry and Trade (London: Macmillan, 1919), 653–656.

Notes to Pages 142–146 84. Freyer, Regulating Big Business, 69. See also G. Allen, Monopoly and Restrictive Practices (London: George Allen & Unwin, 1968), 53–54; Gerber, Law and Competition, 209. 85. Freyer, Regulating Big Business, 8–9. 86. H. Mercer, Constructing a Competitive Order: The Hidden History of British Antitrust Policies (Cambridge: Cambridge University Press, 1995). 87. Its report stated unequivocally that “there was at that time in every important branch of industry in the United Kingdom an increasing tendency to the formation of trade associations and combinations, having for their purpose the restriction of competition and the control of prices.” Cited in W. Notz, “Recent developments in foreign anti-trust legislation,” Yale Law Journal 34 (1924): 159–174, at 160. 88. Freyer, Regulating Big Business, 173–180. 89. Z. Khan and K. Sokoloff, “History lessons: The early development of intellectual property institutions in the United States,” Journal of Economic Perspectives 15 (2001): 233–246, at 235. 90. Ibid., 238–239. 91. Khan, Democratization. 92. W. Fisher, “The growth of intellectual property: A history of the ownership of ideas in the United States,” 7. Available at: http://cyber.law.harvard.edu/ people/tfisher/iphistory.pdf. Compare T. Hughes, American Genesis: A Century of Invention and Technological Enthusiasm, 1870–1970 (Chicago: University of Chicago Press, 2004). 93. F. Schechter, The Historical Foundations of the Law Relating To TradeMarks (New York: University of Columbia Press, 1925). 94. R. Merges, “One hundred years of solicitude: Intellectual property law, 1900–2000,” California Law Review 88 (2000): 2187–2240, at 2207–2210. 95. Schwarzkopf, “Turning trade marks,” 12–13. 96. Khan and Sokoloff, “History lessons,” 236. 97. Ibid. 98. Fisher, “Growth,” 11. 99. Khan and Sokoloff, “History lessons,” 244. See also Sell and May, “Moments,” 486. 100. Sell and May, “Moments.” 101. Merges, “One hundred years,” 2216. 102. The quotations are from, respectively, ibid.; and Khan and Sokoloff, “History lessons,” 241. See also J. Boyle, Shamans, Software, and Spleens: Law and the Construction of the Information Society (Cambridge, MA: Harvard University Press, 1996). 103. D. Noble, America by Design: Science, Technology, and the Rise of Corporate Capitalism (Oxford: Oxford University Press, 1979), xxiii.

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Notes to Pages 146–152 104. D. Lake, “The state and American trade strategy in the pre-hegemonic era,” International Organization 42 (1988): 33–58. 105. Burns, Decline, v. 106. Blicksilver, “Defenders and defense,” 26. 107. Ibid., 10. 108. Burns, Decline, 2. 109. Freyer, Regulating Big Business, 22. 110. Nelson, Merger Movements, 5. 111. Respectively, Lamoreaux, Great Merger Movement, 2; and Freyer, Regulating Big Business, 21. 112. Lamoreaux, Great Merger Movement, 6–8, provides a helpful overview of these various explanations. See also H. Hovenkamp, Enterprise and American Law, 1836–1937 (Cambridge, MA: Harvard University Press, 1991), 241–242. 113. Lamoreaux, Great Merger Movement, 12. 114. See especially Blicksilver, “Defenders.” 115. Freyer, Regulating Big Business, 15. 116. Fox, “Modernization,” 1147. 117. Freyer, Regulating Big Business, 9. 118. J. Hurst, Law and Markets in United States History (Madison, WI: University of Wisconsin Press, 1982), 73. 119. Freyer, Regulating Big Business, 119,188; Hovenkamp, Enterprise, 267. 120. Hurst, Law and Markets, 73. 121. Sklar, Corporate Reconstruction, 2. 122. Fox, “Modernization,” 1149. 123. Freyer, Regulating Big Business, 159. 124. Ibid., 220. 125. L. Galambos, “The monopoly enigma, the Reagan Administration’s antitrust experiment, and the global economy,” in K. Liparpito and D. Sicilia, eds., Constructing Corporate America: History, Politics, Culture (Oxford: Oxford University Press, 2004, 149–167), 153–154. 126. Hurst, Law and Markets, 74. 127. Burns, Decline, 20. 128. The most influential statement of this argument came from G. Tolko, The Triumph of Conservatism: A Reinterpretation of American History, 1900– 1916 (New York: The Free Press of Glencoe, 1963). 129. C. Steele, “A decade of the Celler-Kefauver Anti-Merger Act,” Vanderbilt Law Review 14 (1960): 1049–1083, at 1049. 130. Burns, Decline, 18; Freyer, Regulating Big Business, 28. 131. Freyer, Regulating Big Business, 29. 132. Hovenkamp, Enterprise, 243. 133. Lamoreaux, Great Merger Movement, 173–174. 134. Hurst, Law and Markets, 74.

Notes to Pages 152–160 135. Galambos, “Monopoly enigma,” 151. See also Freyer, Regulating Big Business, 117. 136. Lamoreaux, Great Merger Movement, chapter 6. 137. Hurst, Law and Markets, 75. 138. S. Waller and N. Byrne, “Changing view of intellectual property and competition law in the European Community and the United States of America,” Brooklyn Journal of International Law 20 (1993): 1–21, at 1. 139. S. Wilf, “The making of the post-war paradigm in American intellectual property law,” Columbia Journal of Law & the Arts 31 (2008): 139–207, at 150. 140. Waller and Byrne, “Changing view,” 2–3. 141. W. Tom and J. Newberg, “Antitrust and intellectual property: From separate spheres to unified field,” Antitrust Law Journal 66 (1997): 167–229. 142. S. Anthony, “Antitrust and intellectual property law: From adversaries to partners,” AIPLA Quarterly Journal 28 (2000): 1–38, at 6. 143. Ibid. 144. Cited in D. Serafino, “Survey of patent pools demonstrates variety of purposes and management structures,” KEI Research Note (2007). Available at: http://keionline.org/content/view/69/1. 145. F. Vaughan, “The relation of patents to industrial monopolies,” Annals of the American Academy of Political and Social Science 147 (1930): 40–50, at 40; emphasis added. See also his Economics: “Patents have been exploited in defeating the object of the anti-trust laws” (viii). 146. Perelman, “Weakness,” 48, 34–35. See also Noble, America, 89–90. 147. Wilf, “Making,” 141–142. 148. Ibid., 152. 149. S. Timberg, “Trademarks, monopoly and the restraint of competition,” Law and Contemporary Problems 14 (1949): 323–361. 150. Wilf, “Making,” 145. 151. Fisher, “Growth,” 7. 152. On which see Vaughan, Economics, 89–90. 153. Sell and May, “Moments,” 486–487. 154. Tom and Newberg, “Antitrust and intellectual property.” 155. Noble, America, 88; F. Vaughan, The United States Patent System (Norman: University of Oklahoma Press, 1956). 156. Noble, America, is an obvious and important exception. 157. Vaughan, Economics, 98–99. See also G. Winder, The American Reaper: Harvesting Networks and Technology, 1830–1910 (Farnham: Ashgate, 2012). 158. Vaughan, Economics, 99. 159. Noble, America. 160. Ibid., xxiv. 161. Ibid., 16.

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Notes to Pages 160–165 162. Ibid., 91–101. See also, on GE and Westinghouse, Vaughan, Economics, 99–100. 163. United States v. General Electric Co. 272 U.S. 476 (1926). 164. On American Can, where patent-based strategies similarly were deeply entangled with corporate consolidation, see especially Vaughan, Economics (88): “The control of can-making machinery covered by patents was . . . [American Can’s] chief source of strength. . . . The formation of this monopoly resulted in considerable advances in the prices of cans.” On United Aircraft, S. Oppenheim, “Patents and antitrust: Peaceful coexistence?,” Michigan Law Review 54 (1955): 199–218. And on Johns Manville, J. Borkin, “Patent abuses, compulsion to license and recent decisions,” Columbia Law Review 43 (1943): 720–730. 165. M. Kalecki, Selected Essays on the Dynamics of the Capitalist Economy, 1933–1970 (Cambridge: Cambridge University Press, 1971), 56. 166. Noble, America, 91–101. 167. Ibid., 16. 168. Vaughan, Economics, 90–97. 169. W. Kemnitzer, Rebirth of monopoly (New York: Harper & Brothers, 1938). On the importance of patents to the monopoly building of the original Standard Oil, see R. Hidy and M. Hidy, Pioneering in Big Business, 1882–1911 (New York: Harper, 1955). 170. Vaughan, Economics, 64. 171. A. Brandt, The Cigarette Century: The Rise, Fall, and Deadly Persistence of the Product that Defined America (New York: Basic, 2007), 41–42. Compare P. Porter, “Origins of the American Tobacco Company,” Business History Review 43 (1969): 59–76. 172. See especially G. Duménil and D. Lévy, The Economics of the Profit Rate: Competition, Crises and Historical Tendencies in Capitalism (Cheltenham: Edward Elgar, 1993). See also G. Duménil, M. Glick, and D. Lévy, “The rise of the rate of profit during World War II,” Review of Economics and Statistics 75 (1993): 315–320. 173. Blicksilver, “Defenders,” 50. 174. Lamoreaux, Great Merger Movement, 138. 175. D. Johnson, “The functional distribution of income in the United States, 1850–1952,” Review of Economics and Statistics 36 (1954): 175–182. 176. Blicksilver, “Defenders,” 127; emphasis added. 177. Kalecki, Selected Essays, 67. 178. E.g., R. Solow, “Technical change and the aggregate production function,” Review of Economics and Statistics 39 (1957): 312–320. See also C. Cobb and P. Douglas, “A theory of production,” American Economic Review 18 (1928): 139–165. 179. J. Keynes, “Relative movements of real wages and output,” Economic Journal 49 (1939): 34–51, at 48. Kalecki, in fact, had himself arrived at a

Notes to Pages 165–172 similar conclusion on first look at the pertinent data, declaring (in the same year as Keynes, whom he had met two years earlier) that—again, for both the United Kingdom and the United States—“the relative share of wages in the national income shows but small variations both in the long run and in the short period” (Essays in the Theory of Economic Fluctuations [London: George Allen & Unwin, 1939], 18). In subsequent revisions (published in 1954 and 1971) of the same essay, however, he revised his reading on the U.S. data to the abovementioned claim that a rise in the degree of monopoly had caused a substantive decline in labor’s share. See his Theory of Economic Dynamics (London: George Allen & Unwin, 1954), 32; and Selected Essays, 67. 180. J. Steindl, Maturity and Stagnation in American Capitalism (New York: Monthly Review, 1952), 69–70. 181. S. Kuznets, National Product Since 1869 (New York: National Bureau of Economic Research, 1946), 115. 182. M. Ezekiel, “Statistical investigations of saving, consumption, and investment,” American Economic Review 32 (1942): 272–307, at 275. 183. Freyer, Regulating Big Business, 21. 184. “Message to Congress on the Concentration of Economic Power” (29 April 1938). Available at: http://www.informationclearinghouse.info/article12058.htm.

5. The Revival of Competition 1. T. Freyer, Regulating Big Business: Antitrust in Great Britain and America, 1880–1990 (Cambridge: Cambridge University Press, 1992), 1–2. 2. R. Brenner, The Economics of Global Turbulence (London: Verso, 2006), 54. 3. J. Galbraith, American Capitalism: The Concept of Countervailing Power (Boston: Houghton-Mifflin, 1952); A. Berle, The 20th Century Capitalist Revolution (New York: Harcourt, Brace, 1954). 4. D. Gordon, T. Weisskopf, and S. Bowles, “Power, accumulation, and crisis: The rise and demise of the postwar social structure of accumulation,” in R. Cherry, C. D’Onofrio, C. Kurdas, T. Michl, F. Moseley, and M. Naples, eds., The Imperiled Economy, Book 1: Macroeconomics from a Left Perspective (New York: Union for Radical Political Economics, 1987, 43–57), 50. 5. D. O’Brien, W. Maunder, and W. Howe, Competition in British industry: Restrictive Practices Legislation in Theory and Practice (London: Allen & Unwin, 1974), 14, 197. 6. S. Broadberry and N. Crafts, “Competition and innovation in 1950s Britain,” Business History 43 (2001): 97–118, at 108. 7. On the nationalization program, see, e.g., K. Tribe, “Liberalism and neoliberalism in Britain, 1930–1980,” in P. Mirowski and D. Plehwe, eds., The Road

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Notes to Pages 172–177 from Mont Pèlerin: The Making of Neoliberal Thought Collective (Cambridge, MA: Harvard University Press, 2009, 69–98), 84–85. 8. Broadberry and Crafts, “Competition and innovation,” 113. 9. J. Steindl, Maturity and Stagnation in American capitalism (New York: Monthly Review, 1952), 131–132. 10. Brenner, Economics, 56. 11. Gordon et al., “Power, accumulation, and crisis,” 48–49. 12. L. Raffalovich, K. Leicht, and M. Wallace, “Macroeconomic structure and labor’s share of income: United States, 1950 to 1980,” American Sociological Review 57 (1992): 243–258, at 252. 13. S. Pollard, The Development of the British Economy 1914–1967, 2nd edition (London: St. Martin’s, 1969), 388–396. 14. “Structure of national income in the UK, 1855–2010: Capital & labor shares in national income” (2014). Available at: https://www.quandl.com/ data/PIKETTY/TUK_11A-Structure-of-national-income-in-the-UK-1855-2010capital-labor-shares-in-national-income. 15. A. Kliman, The Failure of Capitalist Production: Underlying Causes of the Great Recession (London: Pluto, 2011), 23; emphasis added. 16. This is how Gordon et al., “Power, accumulation, and crisis,” for example, set things up. 17. A. Hansen, The Postwar American Economy: Performance and Problems (New York: W. W. Norton, 1964), 5. 18. Steindl, Maturity and Stagnation. See especially 228–246; the quotation is from xiv. 19. Galbraith, American Capitalism, 2. 20. D. Hart, “Antitrust and technological innovation in the US: Ideas, institutions, decisions, and impacts, 1890–2000,” Research Policy 30 (2001): 923–936, at 927–928; see also Hart’s Forged Consensus: Science, Technology, and Economic Policy in the United States, 1921–1953 (Princeton, NJ: Princeton University Press, 1998). 21. P. Guénault and J. Jackson, The Control of Monopoly in the United Kingdom, 2nd edition (London: Longman, 1974), 3. 22. Freyer, Regulating Big Business, 207, 243. 23. Ibid., 253. 24. T. Sharpe, “British competition policy in perspective,” Oxford Review of Economic Policy 1.3 (1985): 80–94, at 82. 25. On this document and its importance, see especially Freyer, Regulating Big Business, 241–249. 26. Ibid., 9. 27. Ibid., 223. 28. J. Hurst, Law and Markets in United States History (Madison: University of Wisconsin Press, 1982), 74. 29. Hart, “Antitrust and technological innovation,” 928.

Notes to Pages 177–182 30. Freyer, Regulating Big Business, 223. 31. Hurst, Law and Markets, 74. 32. Freyer, Regulating Big Business, 230. 33. Ibid. 34. Ibid., 231–232. 35. Hurst, Law and Markets, 74. 36. C. Steele, “A decade of the Celler-Kefauver Anti-Merger Act,” Vanderbilt Law Review 14 (1960): 1049–1083, at 1049. 37. Ibid., 1051. 38. Freyer, Regulating Big Business, 303. 39. G. Minda, “Antitrust at century’s end,” SMU Law Review 48 (1994): 1749–1782, at 1754. 40. On this period, see, e.g., T. Kauper, “The ‘Warren Court’ and the antitrust laws: Of economics, populism, and cynicism,” Michigan Law Review 67 (1968): 325–342. 41. R. Posner, “The antitrust decisions of the Burger Court,” Antitrust Law Journal 47 (1978): 819–827, at 820. 42. E. Fox, “The modernization of antitrust: A new equilibrium,” Cornell Law Review 66 (1981): 1140–1192, at 1151–1152. 43. F. Rowe, “The decline of antitrust and the delusions of models: The Faustian pact of law and economics,” Georgetown Law Journal 72 (1984): 1511–1570, at 1514. 44. W. Davies, “Economics and the ‘nonsense’ of law: The case of the Chicago antitrust revolution,” Economy and Society 39 (2010): 64–83, at 65. 45. Rowe, “Decline.” 46. P. Carstensen, “How to assess the impact of antitrust on the American economy: Examining history or theorizing,” Iowa Law Review 74 (1989): 1175–1217, at 1203. 47. Fox, “Modernization,” 1150–1151. 48. Rowe, “Decline,” 1520. 49. Ibid., 1537. 50. H. Hovenkamp, The Antitrust Enterprise: Principle and Execution (Cambridge, MA: Harvard University Press, 2005), 208. 51. See especially G. Allen, Monopoly and Restrictive Practices (London: George Allen & Unwin, 1968), 61–2. 52. D. Gerber, Global Competition: Law, Markets, and Globalization (Oxford: Oxford University Press, 2010), 166–167. 53. Cited in Freyer, Regulating Big Business, 268. 54. Allen, Monopoly, 63. 55. D. Gerber, Law and Competition in Twentieth Century Europe: Protecting Prometheus (Oxford: Oxford University Press, 1998), 216. For more detail, see Allen, Monopoly, chapters 5 and 6. 56. Allen, Monopoly, 68.

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Notes to Pages 182–192 57. Gerber, Law and Competition, 216. 58. Ibid., 215. 59. D. Kilgour, “Restrictive trade practices,” Antitrust Bulletin 8 (1963): 101–112, at 104. Compare Freyer, Regulating Big Business, 310. 60. Sharpe, “British competition policy,” 83. 61. Freyer, Regulating Big Business, 1–2. 62. Kilgour, “Restrictive trade practices,” 105. See also Sharpe, “British competition policy,” 90–91. 63. Kilgour, “Restrictive trade practices,” 105. 64. Gerber, Law and Competition, 218. 65. The summary provided in the following paragraphs is indebted mainly to the following accounts: N. Leyland, “Competition in the Court,” Oxford Economic Papers 17 (1965): 461–467; Allen, Monopoly, chapters 7 and 8; L. Rhinelander, “British antitrust laws,” Antitrust Law Journal 40 (1970): 827– 840; M. Marshall, “Concept and practice of the British restrictive practices and monopoly law,” International Business Lawyer 8 (1980): 59–64; Sharpe, “British competition policy”; Gerber, Law and Competition. 66. Cited in Marshall, “Concept and practice,” 61. 67. Leyland, “Competition,” 465. 68. R. Sich, “The British approach to antitrust: Developments during the last fifteen years,” Antitrust Law Journal 40 (1971): 908–916, at 908. On “gentlemanly capitalism,” see P. Cain and A. Hopkins, British Imperialism: 1688–2000 (London: Longman, 1993). 69. Allen, Monopoly, 68–69. 70. C. Rowley, The British Monopolies Commission (London: George Allen & Unwin, 1966), 173. 71. M. Burnside, “Price fixing in Great Britain with some American parallels,” Patent, Trademark & Copyright Journal of Research & Education 6 (1962): 183–198. 72. W. Walker, “National innovation systems: Britain,” in R. Nelsen, ed., National Innovation Systems: A Comparative Analysis (Oxford: Oxford University Press, 1993, 158–191), 160. 73. C. Bean and N. Crafts, “British economic growth since 1945: Relative economic decline .  .  . and renaissance?,” in N. Crafts and G. Toniolo, eds., Economic Growth in Europe since 1945 (Cambridge: Cambridge University Press, 1996, 131–172), 144. 74. V. Muzaka, “Intellectual property protection and European ‘competitiveness,’” Review of International Political Economy 20 (2013): 819–847, at 826. 75. Walker, “National innovation systems: Britain,” 160. 76. Rowley, British Monopolies Commission, 178. 77. Burnside, “Price fixing,” 184. 78. E. Gunther, “The licensing of technology under common market and

Notes to Pages 192–198 continental antitrust systems,” Antitrust Law Journal 40 (1970): 917–930, at 919–920. 79. D. Reekie and N. Wells, “Pharmaceuticals,” in P. Johnson, ed., The Structure of British Industry, 2nd edition (London: Routledge, 1988, 94–118), 101. 80. Marshall, “Concept and practice,” 63. 81. S. Waller and N. Byrne, “Changing view of intellectual property and competition law in the European Community and the United States of America,” Brooklyn Journal of International Law 20 (1993): 1–21, at 5. 82. S. Timberg, “Trademarks, monopoly and the restraint of competition,” Law and Contemporary Problems 14 (1949): 323–361, at 323, 324. 83. Cited in S. Anthony, “Antitrust and intellectual property law: From adversaries to partners,” AIPLA Quarterly Journal 28 (2000): 1–38, at 5; emphasis added. 84. D. McClure, “Trademarks and competition: The recent history,” Law and Contemporary Problems 59.2 (1996): 13–43, at 16. 85. D. McClure, “Trademarks and unfair competition: A critical history of legal thought,” Trademark Reporter 69 (1979): 305–356, at 348–353. 86. McClure, “Trademarks and competition: The recent history,” 16. 87. Hart, “Antitrust and technological innovation,” 928. 88. Waller and Byrne, “Changing view,” 5. Anthony, “Antitrust and intellectual property law,” 6, lists the nine no-nos. 89. Cited in D. Silverstein, “Patents, science and innovation: Historical linkages and implications for global technological competitiveness,” Rutgers Computer & Technology Law Journal 17 (1991): 261–319, at 307. 90. Gordon et al., “Power, accumulation, and crisis,” 50. 91. W. Shepherd, “Causes of increased competition in the US economy, 1939–1980,” Review of Economics and Statistics 64 (1982): 613–626. The quotation is from 613. 92. For instance see, respectively, P. Clarke, E. Gardener, P. Feeney, and P. Molyneux, “The genesis of strategic marketing control in British retail banking,” International Journal of Bank Marketing 6.2 (1988): 5–19; R. Duke, “Structural changes in the UK grocery retail market,” British Food Journal 94.2 (1992): 18–23; R. Shaw and P. Simpson, “Synthetic fibres,” in Johnson, ed., Structure (119–39). 93. See especially D. Massey, “In what sense a regional problem?,” Regional Studies 13 (1979): 233–243; and the various chapters in Johnson, ed., Structure. 94. H. Milner, “Trading places: Industries for free trade,” World Politics 40 (1988): 350–376, at 350. 95. N. Crafts, “British relative economic decline revisited: The role of competition,” Explorations in Economic History 49 (2012): 17–29, at 23. 96. G. Stigler, “Economic effects of the antitrust laws,” Journal of Law and Economics 9 (1966): 225–258, at 225.

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Notes to Pages 198–205 97. Carstensen, “How to assess,” 1178–1179, 1192, 1195. 98. E.g., M. Lewis-Beck, “Maintaining economic competition: The causes and consequences of antitrust,” Journal of Politics 41 (1979): 169–191. 99. D. Swann, D. O’Brien, W. Maunder, and W. Howe, Competition in British industry: Restrictive practices legislation in theory and practice (London: Allen & Unwin, 1974), 196. 100. Ibid., 159. 101. E.g., J. Matsusaka, “Takeover motives during the conglomerate merger wave,” RAND Journal of Economics 24 (1993): 357–379. 102. On this point, see especially L. Goldberg, “The effect of conglomerate mergers on competition,” Journal of Law and Economics 16 (1973): 137–158. 103. On which point see especially the discussion in Swann et al., Competition, at 167–177. They conclude that although the new prohibition of restrictive agreements clearly stimulated some consolidation, it would be “naive to assume that all the mergers [of the 1960s] have sprung from the effects of the 1956 Act” (177). 104. Gerber, Law and Competition, 221. 105. See, e.g., C. Hill, “Diversified growth and competition: The experience of twelve large UK firms,” Applied Economics 17 (1985): 827–847. 106. Freyer, Regulating Big Business, 272. 107. A. Hughes and M. Kumar, “Recent trends in aggregate concentration in the United Kingdom economy,” Cambridge Journal of Economics 8 (1984): 235–250, at 235. 108. See especially M. Block, F. Nold, and J. Sidak, “The deterrent effect of antitrust enforcement,” Journal of Political Economy 89 (1981): 429–445. 109. Hurst, Law and Markets, 76. 110. Carstensen, “How to assess,” 1191. 111. S. Whitney, “The economic impact of antitrust: An overview,” Antitrust Bulletin 9 (1964): 509–534, at 510; emphasis added. 112. Carstensen, “How to assess,” 1215. 113. Shepherd, “Causes,” 613. 114. On this elision, see the coruscating critique by Carstensen, “How to assess.” 115. M. Utton, “Fifty years of UK competition policy,” Review of Industrial Organization 16 (2000): 267–285, at 274. 116. Marshall, “Concept and practice,” 62. 117. Sich, “British approach,” 911; compare Rhinelander, “British antitrust laws,” 830. 118. Marshall, “Concept and practice,” 61. 119. Ibid. 120. Sich, “British approach,” 912.

Notes to Pages 205–211 121. Marshall, “Concept and practice,” 61. 122. Utton, “Fifty years,” 282–283. 123. Swann et al., Competition. 124. Ibid., 14. 125. Ibid., 156–158, 193. 126. Utton, “Fifty years,” 273; Marshall, “Concept and practice,” 61. 127. Sharpe, “British competition policy,” 88n10. 128. On the latter point, see Utton, “Fifty years,” 276; and M. Williams, “The effectiveness of competition policy in the United Kingdom,” Oxford Review of Economic Policy 9 (1993): 94–112. 129. Swann et al., Competition, 159–161, 163, 166, 171, 197. 130. E.g., S. Marglin and J. Schor, eds., The Golden Age of Capitalism: Reinterpreting the Postwar Experience (Oxford: Oxford University Press, 1991). 131. E.g., A. Mintz and A. Hicks, “Military Keynesianism in the United States, 1949–1976: Disaggregating military expenditures and their determination,” American Journal of Sociology 90 (1984): 411–417; J. Treddenick, “The arms race and military Keynesianism,” Canadian Public Policy/Analyse de Politiques 11 (1985): 77–92; P. Dunne, “The political economy of military expenditure: an introduction,” Cambridge Journal of Economics 14 (1990): 395–404. 132. P. Baran and P. Sweezy, Monopoly Capital: An Essay on the American Economic and Social Order (New York: Monthly Review, 1966). 133. R. Walker, “The suburban solution: Capitalism and the construction of urban space in the United States,” unpublished PhD dissertation, Johns Hopkins University (1977). 134. See especially D. Harvey, The Urbanization of Capital: Studies in the History and Theory of Capitalist Urbanization (Oxford: Blackwell, 1985). 135. Compare Brenner, Economics, 54. 136. Crafts, “British relative economic decline,” 24. On the United States, comparably, see S. Jacoby, “Finance and labor: Perspectives on risk, inequality, and democracy,” Comparative Labor Law & Policy Journal 30 (2008): 17–65, at 41–42. 137. For evidence of the rise in labor’s share, see, for the United States, Raffalovich et al., “Macroeconomic structure,” 252; and for the United Kingdom, “The capital-labor split in the Britain, 1770–2010” (2014; available at: https://www.quandl.com/data/PIKETTY/TS6_1-The-capita-labor-split-inthe-Britain-1770-2010); or “Structure of national income in the UK, 1855– 2010: Capital & labor shares in national income” (2014; available at: https:// www.quandl.com/data/PIKETTY/TUK_11A-Structure-of-national-income-inthe-UK-1855-2010-capital-labor-shares-in-national-income). For evidence of the corresponding fall in capital’s share, see, for the United States, Figure I.1 of this book; and for the United Kingdom, the two aforementioned URLs.

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Notes to Pages 212–220 138. Swann et al., Competition, 193–194. 139. Crafts, “British relative economic decline,” 25, cites the relevant studies. 140. Carstensen, “How to assess,” 1212. 141. D. Mowery and N. Rosenberg, Paths of Innovation: Technological Change in 20th-Century America (Cambridge: Cambridge University Press, 1999), 59.

6. Remaking Monopoly for the Twenty-First Century 1. IP, of course, had long had its international Paris (for patents and trademarks) and Berne (for copyright) conventions, which theoretically required (and still require) states to provide the same protections to foreign as to domestic IP owners. Yet two caveats as to the specifically “globalizing” or integrative dimensions of these conventions, pre-TRIPS, are vital. First, there was no harmonization: States could, and did, provide widely varying levels of protection. And second, plenty of states did not sign up to one, the other, or both, or even if they were signatories, effected only partial implementation. Taking our two countries of interest, for example, the United States did not become a party to the Berne Convention until the late 1980s, whereas the United Kingdom, although a signatory from the convention’s beginning, failed to implement significant components until similarly late. 2. D. Geradin, “The perils of antitrust proliferation: The globalization of antitrust and the risks of overregulation of competitive behavior,” Chicago Journal of International Law 10 (2009): 189–212; S. Evenett, A. Lehmann, and B. Steil, eds., Antitrust Goes Global: What Future for Transatlantic Cooperation? (Washington, D.C.: Brookings Institution Press / Chatham House, 2000). 3. D. Gerber, Global Competition: Law, Markets, and Globalization (Oxford: Oxford University Press, 2010), chapter 4. 4. S. Sell, Private Power, Public Law: The Globalization of Intellectual Property Rights (Cambridge: Cambridge University Press, 2003). 5. F. Rowe, “The decline of antitrust and the delusions of models: The Faustian pact of law and economics,” Georgetown Law Journal 72 (1984): 1511–1570, at 1512. 6. R. Pitofsky, “Antitrust in the next 100 years,” California Law Review 75 (1987): 817–833, at 818. 7. S. Peltzman, “The decline of antitrust enforcement,” Review of Industrial Organization 19 (2001): 49–53, at 49–50. 8. For useful data on the tailing-off of antitrust intervention in the economy at large from the mid-1970s, see E. Fox and L. Sullivan, “Antitrust—retrospective and prospective: Where are we coming from—where are we going,” NYU Law Review 62 (1987): 936–988, at 947–951.

Notes to Pages 221–224 9. B. Shull, “The origins of antitrust in banking: An historical perspective,” Antitrust Bulletin 41 (1996): 255–288, at 284. 10. R. Kramer, “‘Mega-mergers’ in the banking industry,” address before the American Bar Association, Antitrust Section, Washington, D.C. (14 April 1999). Available at: http://www.justice.gov/atr/public/speeches/214845.htm. 11. D. Hart, “Antitrust and technological innovation in the US: Ideas, institutions, decisions, and impacts, 1890–2000,” Research Policy 30 (2001): 923–936, at 930. 12. L. Galambos, “The monopoly enigma, the Reagan Administration’s antitrust experiment, and the global economy,” in K. Liparpito and D. Sicilia, eds., Constructing Corporate America: History, Politics, Culture (Oxford: Oxford University Press, 2004, 149–167), 155–156. 13. E.g., D. Lange, “Copyright and the constitution in the age of intellectual property,” Journal of Intellectual Property Law 1 (1993): 119–134; K. McLeod, Freedom of expression®: Resistance and repression in the age of intellectual property (Minneapolis: University of Minnesota Press, 2005); G. Krikorian and A. Kapczynski, Access to Knowledge in the Age of Intellectual Property (New York: Zone, 2010). 14. R. Merges, “One hundred years of solicitude: Intellectual property law, 1900–2000,” California Law Review 88 (2000): 2187–2240, at 2234, 2239–2240. 15. Respectively, ibid., 2239–2240; S. Wilf, “The making of the post-war paradigm in American intellectual property law,” Columbia Journal of Law & the Arts 31 (2008): 139–207, at 140. On both widening and strengthening, see also M. Perelman, “The weakness in strong intellectual property rights,” Challenge 46.6 (2003): 32–61, at 42. 16. Respectively, S. Sell and C. May, “Moments in law: Contestation and settlement in the history of intellectual property,” Review of International Political Economy 8 (2001): 467–500, at 469; Wilf, “Making,” 141. 17. Prominent academic critics of modern copyright law on the grounds that it constitutes a form of latter-day enclosure include Y. Benkler, “Free as the air to common use: First Amendment constraints on enclosure of the public domain,” NYU Law Review 74 (1999): 354–446; and L. Lessig, Free Culture: How Big Media Uses Technology and the Law to Lock Down Culture and Control Creativity (New York: Penguin, 2004). 18. C. Gifford, “The Sonny Bono Copyright Term Extension Act,” University of Memphis Law Review 30 (1999): 363–408, at 364. 19. D. McClure, “Trademarks and competition: The recent history,” Law and Contemporary Problems 59.2 (1996): 13–43, at 13, 37–40. 20. Sell and May, “Moments,” 488. 21. G. Crovitz, “Jimmy Carter’s costly patent mistake,” Wall Street Journal, 15 December 2013.

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Notes to Pages 224–229 22. See especially the useful overview discussion in Sell, Private Power, Public Law, 67–72, which draws heavily on the two-part account provided by J. Lever in “The new Court of Appeals for the Federal Circuit (Part I),” Journal of the Patent and Trademark Office Society 64 (1982): 178–208; and “The new Court of Appeals for the Federal Circuit (Part II—Conclusion),” Journal of the Patent and Trademark Office Society 64 (1982): 243–265. 23. Merges, “One hundred years,” 2224. 24. Respectively, ibid.; Sell, Private Power, Public Law, 67, 69. 25. Merges, “One hundred years,” 2224. 26. In Illinois Tool Works Inc. v. Independent Ink, Inc., 547 U.S. 28 (2006); on which see, e.g., C. Jones, “Patent power and market power: Rethinking the relationship between intellectual property rights and market power in antitrust analysis,” in J. Drexl, ed., Research Handbook on Intellectual Property and Competition Law (Cheltenham: Edward Elgar, 2008, 239–257). 27. S. Anthony, “Antitrust and intellectual property law: From adversaries to partners,” AIPLA Quarterly Journal 28 (2000): 1–38, at 5. 28. A. Katz, “Making sense of nonsense: Intellectual property, antitrust, and market power,” Arizona Law Review 49 (2007): 837–909, at 848. Compare S. Waller and N. Byrne, “Changing view of intellectual property and competition law in the European Community and the United States of America,” Brooklyn Journal of International Law 20 (1993): 1–21, at 7. 29. A. Qureshi, “Antitrust ‘market power’ and intellectual property: Why FTC and DOJ action is necessary,” The Record 58.1 (2003): 11–22, at 11. 30. A. Gutterman, “inter-firm cooperation, competition law, and patent licensing: A US-EC comparison,” in S. Deakin and J. Michie, eds., Contracts, Cooperation and Competition: Studies in Economics, Management and Law (Oxford: Oxford University Press, 1997). 31. Katz, “Making sense,” 839. 32. For an excellent retrospective on the influence of the Chicago School on U.S. antitrust, see R. Pitofsky, ed., How the Chicago School Overshot the Mark: The Effect of Conservative Economic Analysis on U.S. Antitrust (New York: Oxford University Press, 2008). 33. Rowe, “Decline,” 1547. 34. Hart, “Antitrust and technological innovation,” 930. 35. E.g., Fox, “Modernization,” 1143; Pitofsky, “Antitrust,” 822. 36. R. Bork, The Antitrust Paradox (New York: Basic, 1978), 91,51. 37. Rowe, “Decline,” 1549. 38. R. Posner, Antitrust Law, 2nd edition (Chicago: University of Chicago Press, 2009), 2. 39. Continental Television v. GTE Sylvania, 433 U.S. 36 (1977); see Fox, “Modernization,” 1152. 40. Hart, “Antitrust and technological innovation,” 930.

Notes to Pages 229–233 41. E.g., H. Hovenkamp, “Post-Chicago antitrust: A review and critique,” Columbia Business Law Review (2001): 257–338; S. Cucinotta, R. Pardolesi and R. Van den Bergh, eds., Post-Chicago Developments in Antitrust Law (Cheltenham: Edward Elgar, 2002); D. Crane and H. Hovenkamp, eds., The Making of Competition Policy: Legal and Economic Sources (New York: Oxford University Press, 2013), chapter 12. 42. G. Niels and A. Ten Kate, “Introduction: Antitrust in the US and the EU— Converging or diverging paths,” Antitrust Bulletin 49 (2004): 1–28, at 10–11. 43. Hart, “Antitrust and technological innovation,” 929. 44. Bork, Antitrust Paradox, 314. 45. On which see, in particular, R. Van Horn, “Reinventing monopoly and the role of corporations: The roots of Chicago law and economics,” in P. Mirowski and D. Plehwe, eds., The Road from Mont Pèlerin: The Making of Neoliberal Thought Collective (Cambridge, MA: Harvard University Press, 2009, 204– 237); and W. Davies, “Economics and the ‘nonsense’ of law: The case of the Chicago antitrust revolution,” Economy and Society 39 (2010): 64–83; and W. Davies, The Limits of Neoliberalism: Authority, Sovereignty and the Logic of Competition (London: Sage, 2014). 46. Waller and Byrne, “Changing view,” 8–9; Katz, “Making sense,” 845. 47. McClure, “Trademarks and competition,” 21. 48. Katz, “Making sense,” 845–846. 49. Respectively, McClure, “Trademarks and competition,” 13; CAFC opinion cited in Anthony, “Antitrust and intellectual property law,” 5. 50. There have, however, been periods when the business community in certain territories has exerted a very powerful and direct influence on the evolution of competition policy, a good example being the United Kingdom prior to World War II, as examined in H. Mercer, Constructing a Competitive Order: The Hidden History of British Antitrust Policies (Cambridge: Cambridge University Press, 1995). 51. W. Adams and J. Brock, “The political economy of antitrust exemptions,” Washburn Law Journal 29 (1989): 215–237, at 223. 52. See especially Fox and Sullivan, “Antitrust—retrospective and prospective,” 951–954; and on Baldrige’s role, S. Waller, “Market talk: Competition policy in America,” Law & Social Inquiry 22 (1997): 435–457, at 447. 53. But not the only example. On the industry pressures historically brought to bear in reshaping the modern U.S. patent system, see especially P. Drahos and J. Braithwaite, “Intellectual property, corporate strategy, globalisation: TRIPS in context,” Wisconsin International Law Journal 20 (2001): 451–480. 54. Merges, “One hundred years,” 2236. 55. Ibid., 2235. See also Jessica Litman’s seminal account of the history of the role of vested interests in shaping U.S. copyright legislation, “Copyright legislation and technological change,” Oregon Law Review 68 (1989): 275–361.

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Notes to Pages 234–241 56. G. Arrighi, “Towards a theory of capitalist crisis,” New Left Review 111.3 (1978): 3–24; T. Weisskopf, S. Bowles, and D. Gordon, “Two views of capitalist stagnation: Underconsumption and challenges to capitalist control,” Science & Society 49 (1985): 259–286; R. Brenner, The Economics of Global Turbulence (London: Verso, 2006). 57. M. Thomas, “The thesis of ‘ruinous competition,’” (2009). Available at: http://www.workersliberty.org/brenner. 58. G. Stigler, Memoirs of an Unregulated Economist (New York: Basic, 1988), 165. 59. B. Abramson, The Secret Circuit: The Little-Known Court Where the Rules of the Information Age Unfold (Lanham, MD: Rowman & Littlefield, 2007), 6–9. 60. Cited in Crovitz, “Jimmy Carter’s costly patent mistake.” 61. Compare Perelman, “Weakness,” 46, 38, on the United States in the early 1970s: “The great post-war economic boom began to fizzle out, leading to the expansion of the scope of intellectual property. . . . Just as in the late nineteenth century, business saw property rights as a means of increasing profits when economic conditions began to sour.” 62. Brenner, Economics, 50. 63. Galambos, “Monopoly enigma,” 155. 64. Brenner, Economics, 54; original emphasis. 65. Stigler, Memoirs, 104. 66. Waller, “Market talk,” 447. 67. Pitofsky, “Antitrust,” 822. 68. Waller, “Market talk,” 447. 69. Galambos, “Monopoly enigma,” 156. 70. Waller, “Market talk,” 447. 71. Perelman, “Weakness,” 38. 72. Ibid. 73. A. Glyn and B. Sutcliffe, British Capitalism, Workers and the Profits Squeeze (Harmondsworth: Penguin, 1972). 74. Thomas, “The thesis of ‘ruinous competition.’” 75. R. Hine and P. Wright, “Trade with low wage economies, employment and productivity in UK manufacturing,” Economic Journal 108 (1998): 1500– 1510, at 1505. 76. D. Gerber, Law and Competition in Twentieth Century Europe: Protecting Prometheus (Oxford: Oxford University Press, 1998), 220–226. 77. M. Utton, “Fifty years of UK competition policy,” Review of Industrial Organization 16 (2000): 267–285, at 271. 78. Gerber, Law and Competition, 223–225. 79. Ibid., 226. 80. Utton, “Fifty years,” 272.

Notes to Pages 241–248 81. A. Scott, “The evolution of competition law and policy in the United Kingdom,” LSE Law, Society and Economy Working Paper (2009), 14. Available at: http://eprints.lse.ac.uk/24564/1/WPS2009–09_Scott.pdf. 82. “Screaming at the umpire (1),” The Economist, 21 May 1994. 83. On which see Scott, “Evolution,” 14–17. 84. “Screaming at the umpire (1),” The Economist, 21 May 1994. 85. “Screaming at the umpire (2),” The Economist, 1 April 1995. 86. “Screaming at the umpire (1),” The Economist, 21 May 1994. 87. Ibid. 88. “Screaming at the umpire (2),” The Economist, 1 April 1995; “Screaming at the umpire (1),” The Economist, 21 May 1994. 89. “Screaming at the umpire (2),” The Economist, 1 April 1995. 90. OECD, Competition Policy and Intellectual Property Rights, DAFFE/ CLP(98)18. Available at: http://www.oecd.org/competition/abuse/1920398.pdf. The U.K. submission is at 195–205. 91. Ibid., 197. 92. Ibid., 203, 197. 93. Ibid. 94. Ibid., 202 (emphasis added), 197, 203. 95. V. Muzaka, “Intellectual property protection and European ‘competitiveness,’” Review of International Political Economy 20 (2013): 819–847, at 820. 96. Sell, Private Power, Public Law, 1, 8–12. 97. H. Ullrich, “Expansionist intellectual property protection and reductionist competition rules: A TRIPS perspective,” Journal of International Economic Law 7 (2004): 401–430, at 415. 98. Sell, Private Power, Public Law, 8. 99. Sell and May, “Moments,” 494. 100. Muzaka, “Intellectual property,” 827. 101. Waller and Byrne, “Changing view,” 9. 102. Respectively, Muzaka, “Intellectual property,” 827; Waller and Byrne, “Changing view,” 9. 103. The seminal account is Sell’s, in Private Power, Public Law, chapter 4; the quotation is from 76. Compare P. David, “Intellectual property institutions and the panda’s thumb: Patents, copyrights, and trade secrets in economic theory and history,” in National Research Council, ed., Global Dimensions of Intellectual Property Rights in Science and Technology (Washington: National Academy Press, 1993, 19–61), especially 19–20. 104. See especially S. Sell, “Multinational corporations as agents of change: The globalization of intellectual property rights,” in A. Cutler, V. Haufler, and T. Porter, eds., Private Authority and International Affairs (Albany: SUNY Press, 1999, 169–197). 105. Muzaka, “Intellectual property,” 820, 828.

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Notes to Pages 248–255 106. Ibid., 828, 820. 107. See especially N. Garnham, “From cultural to creative industries: An analysis of the implications of the ‘creative industries’ approach to arts and media policy making in the United Kingdom,” International Journal of Cultural Policy 11 (2005): 15–29. 108. Ullrich, “Expansionist intellectual property protection,” 405. 109. Ibid., 410; emphasis added. 110. Niels and Ten Kate, “Introduction,” 7. 111. Utton, “Fifty years,” 280. 112. Gutterman, “Inter-Firm Cooperation,” 378–379. See also S. Anderman, EC Competition Law and Intellectual Property Rights: The Regulation of Innovation (Oxford: Oxford University Press, 1998). 113. Scott, “Evolution,” 17–18. Compare S. Eyre and M. Lodge, “National tunes and a European melody? Competition law reform in the UK and Germany,” Journal of European Public Policy 7 (2000): 63–79. 114. Gerber, Global Competition, 161. 115. Waller and Byrne, “Changing view,” 10. 116. Gerber, Global Competition, 193–194. 117. Niels and Ten Kate, “Introduction,” 17–18. 118. S. Anderman, “Commercial co-operation, international competitiveness, and EC competition policy,” in Deakin and Michie, Contracts, Cooperation and Competition. The Odin case is discussed at 402. Elsewhere, Anderman helpfully expands on the relevant fields of application of EU articles 101 and 102 (which, at the time of his writing, were articles 81 and 82) specifically in relation to IP rights. In the case of the former, he identifies the key relevant agreements as “vertical joint ventures, horizontal research and development joint ventures, technology transfers through licensing agreements and multiparty agreements involving cross-licensing”; in terms of the latter, he sees the primary “abuses of dominant market positions relevant to IPR owners . . . as tie ins, predatory and discriminatory pricing, refusals to supply and license.” S. Anderman, “EC competition law and intellectual property rights in the new economy,” Antitrust Bulletin 47 (2002): 285–308, at 288. 119. Muzaka, “Intellectual property,” 829, 834. 120. Anderman, “EC competition law,” 288–289; emphasis added. See also G. Ghidini, Intellectual Property and Competition Law: The Innovation Nexus (Cheltenham: Edward Elgar, 2006); S. Anderman and H. Schmidt, “EC competition policy and IPRs,” in S. Anderman, ed., The Interface between Intellectual Property Rights and Competition Policy (Cambridge: Cambridge University Press, 2007, 37–124); and S. Anderman and H. Schmidt, EU Competition Law and Intellectual Property Rights: The Regulation of Innovation, 2nd edition (Oxford: Oxford University Press, 2011). 121. Gerber, Global Competition, 159.

Notes to Pages 255–260 122. See especially U. Schwalbe and S. Zimmer, Law and Economics in European Merger Control (Oxford: Oxford University Press, 2009). 123. Posner, Antitrust Law, vii. 124. Gerber, Global Competition, 193. 125. Ibid. 126. Freyer, Regulating Big Business, 323. 127. Gerber, Global Competition, 200. 128. Galambos, “Monopoly enigma,” 158,149. 129. B. Abramson, “Blaming Jimmy Carter” (16 December 2013); original emphasis. Available at: http://www.theinformationist.com/intellectual_property_str/2013/12/blaming-jimmy-carter-1.html. See also Abramson, Secret Circuit. 130. E.g., H. Shulman, “Labor and the anti-trust laws,” Illinois Law Review 34 (1939): 769–787. 131. On the global fall in the share of income accruing to labor since the early 1980s, see L. Karabarbounis and B. Neiman, “The global decline of the labor share,” NBER Working Paper No. 19136 (June 2013). 132. D. Gould and W. Gruben, “The role of intellectual property rights in economic growth,” Journal of Development Economics 48 (1996): 323–350, at 323. 133. On protection of the U.S. steel industry see, e.g., M. Tansey, S. Raju, and M. Stellern, “Price controls, trade protectionism and political business cycles in the US steel industry,” Journal of Policy Modeling 27 (2005): 1097–1109. 134. D. Harvey, “The art of rent: Globalization, monopoly and the commodification of culture,” Socialist Register 38 (2002): 93–110, at 98. 135. R. Powell and A. Yawson, “Industry aspects of takeovers and divestitures: Evidence from the UK,” Journal of Banking & Finance 29 (2005): 3015– 3040, at 3016. 136. Although, even here there are signs of change. See especially M. Bader, “Managing intellectual property in the financial services industry sector: Learning from Swiss Re,” Technovation 28.4 (2008): 196–207. 137. Estimates are for 2010 in both cases. See, respectively, Office for Harmonization in the Internal Market, Intellectual Property Rights Intensive Industries: Contribution to Economic Performance and Employment in the European Union (September 2013), 83 (available at: http://ec.europa.eu/internal_market/intellectual-property/docs/joint-report-epo-ohim-final-version_ en.pdf); U.S. Department of Commerce, Intellectual Property and the U.S. Economy: Industries in Focus (March 2012), vii (available at: http://www.uspto.gov/news/publications/IP_Report_March_2012.pdf). 138. C. Crouch, The Strange Non-Death of Neo-Liberalism (London: Polity, 2011). 139. See, e.g., and in the order noted, V. Beattie, A. Goodacre, and S. Fearnley, “And then there were four: A study of UK audit market concentration-causes,

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Notes to Pages 261–263 consequences and the scope for market adjustment,” Journal of Financial Regulation and Compliance 11 (2003): 250–265; D. Llewellyn, “Competition and profitability in European banking: Why are British banks so profitable?,” Economic Notes by Banca Monte dei Paschi di Siena SpA 34 (2005): 279–311; M. Slade, “Market power and joint dominance in UK brewing,” Journal of Industrial Economics 52 (2004): 133–163; C. Woo, D. Lloyd, and A. Tishler, “Electricity market reform failures: UK, Norway, Alberta and California,” Energy Policy 31 (2003): 1103–1115; A. Hollingsworth, “Increasing retail concentration: Evidence from the UK food retail sector,” British Food Journal 106 (2004): 629–638; K. Cowling, F. Yusof, and G. Vernon, “Declining concentration in UK manufacturing? A problem of measurement,” International Review of Applied Economics 14 (2000): 45–54; G. Doyle, Media Ownership: The Economics and Politics of Convergence and Concentration in the UK and European Media (London: Sage, 2002). 140. S. Crawford, Captive Audience: The Telecom Industry and Monopoly Power in the New Gilded Age (New Haven, CT: Yale University Press, 2013). 141. J. Foster and R. McChesney, The Endless Crisis: How Monopoly-Finance Capital Produces Stagnation and Upheaval from the USA to China (New York: Monthly Review, 2012); B. Lynn, Cornered: The New Monopoly Capitalism and the Economics of Destruction (Hoboken, NJ: John Wiley & Sons, 2010). 142. B. Lynn, “Killing the competition: How the new monopolies are destroying open markets,” Harper’s Magazine (February 2012): 27–34, at 32. 143. Foster and McChesney, Endless Crisis, 68–70. 144. Ibid., 70–71. 145. On the scope of such cartels, see especially the indispensable work of John Connor, especially in successive editions of his Global Price Fixing, e.g., 2nd edition (Berlin: Springer, 2008). On attempts to prosecute, and the fact that these have achieved little success beyond those conducted by U.S. authorities, see J. Connor, “Global antitrust prosecutions of modern international cartels,” Journal of Industry, Competition and Trade 4 (2004): 239–267; and, most recently, M. Furse, The Criminal Law of Competition in the UK and in the US: Failure and Success (Cheltenham: Edward Elgar, 2012). 146. M. Koza and A. Lewin, “The co-evolution of strategic alliances,” Organization Science 9 (1998): 255–264. 147. B. Black, “The first international merger wave (and the fifth and last US wave),” University of Miami Law Review 54 (1999): 799–818, at 799. 148. S. Hymer, “The multinational corporation and the law of uneven development,” in J. Bhagwati, ed., Economics and the World Order (New York: Macmillan, 1972, 141–158). See also R. Barnet and R. Müller, Global Reach: The Power of the Multinational Corporations (New York: Touchstone, 1974). 149. A. Chandler, “The evolution of modern global competition,” in M. Porter, ed., Competition in Global Industries (Boston: Harvard Business School Press, 1986, 405–448).

Notes to Pages 263–274 150. Foster and McChesney, Endless Crisis, 75–77. 151. S. Vitali, J. Glattfelder, and S. Battiston, “The network of global corporate control,” PloS one 6.10 (2011): e25995. 152. See “Huge cash pile puts recovery in hands of the few,” Financial Times, 21 January 2014.

Coda 1. R. Merges, “One hundred years of solicitude: Intellectual property law, 1900–2000,” California Law Review 88 (2000): 2187–2240, at 2233. 2. M. Perelman, “The weakness in strong intellectual property rights,” Challenge 46.6 (2003): 32–61, at 41. 3. E. Phelps, Mass Flourishing: How Grassroots Innovation Created Jobs, Challenge, and Change (Princeton, NJ: Princeton University Press, 2013). The quotation is from 253. 4. “U.S. steps up scrutiny of patents as legal disputes increase,” International Herald Tribune, 18 July 2013. 5. “Obituary for software patents,” The Economist, 13 December 2013. 6. W. Gallagher, “Trademark and copyright enforcement in the shadow of IP law,” Santa Clara Computer & High Technology Law Journal 28 (2012): 453–497, at 454. 7. L. Khan and S. Vaheesan, “How America became uncompetitive and unequal,” Washington Post, 13 June 2014. 8. D. Harvey, The Enigma of Capital and the Crises of Capitalism (London: Profile, 2010). 9. Ibid., 118. 10. See also S. Gindin, “Underestimating capital, overestimating labor,” Jacobin (March 2014) (available at: https://www.jacobinmag.com/2014/03/ underestimating-capital-overestimating-labor/); and D. Harvey, Seventeen Contradictions and the End of Capitalism (London: Profile, 2014), chapter 7. 11. S. Johnson, “An antitrust investigation of the banks?,” New York Times, 21 January 2010. On this topic, see B. Christophers, “Banking and competition in exceptional times,” Seattle University Law Review 36 (2013): 563–576. 12. L. Zingales, A Capitalism for the People: Recapturing the Lost Genius of American Prosperity (Philadelphia: Basic, 2010), especially 36–39. 13. M. Ignatieff, “We need a new Bismarck to tame the machines,” Financial Times, 10 February 2014. 14. T. Harford, “Monopoly is a bureaucrat’s friend but a democrat’s foe,” Financial Times, 12 August 2014. 15. J. Boyle, Shamans, Software, and Spleens: Law and the Construction of the Information Society (Cambridge, MA: Harvard University Press, 1996), xiii; original emphasis. 16. Merges, “One hundred years,” 2240.

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Notes to Pages 274–279 17. Phelps, Mass Flourishing. 18. M. Heller, The Gridlock Economy: How Too Much Ownership Wrecks Markets, Stops Innovation, and Costs Lives (New York: Basic, 2008). 19. A. Tabarrok, Launching the Innovation Renaissance: A New Path to Bring Smart Ideas to Market Fast (New York: TED Books, 2011). 20. G. Crovitz, “Jimmy Carter’s costly patent mistake,” Wall Street Journal, 15 December 2013. 21. B. Abramson, “Blaming Jimmy Carter” (16 December 2013); original emphasis. Available at: http://www.theinformationist.com/intellectual_property_str/2013/12/blaming-jimmy-carter-1.html. 22. A. Johns, “Intellectual property and the nature of science,” Cultural Studies 20 (2006): 145–164. 23. An excellent summary of the case can be found in M. Ohlhausen, “Symposium: The End of the Microsoft Antitrust Case? Editor’s Note,” Antitrust Law Journal 75 (2008): 691–703. The papers in the symposium (at 705–995) to which Ohlhausen’s article represents the introduction, also offer a useful range of opinions on the case and its implications. 24. W. Page and J. Lopatka, The Microsoft Case: Antitrust, High Technology, and Consumer Welfare (Chicago: University of Chicago Press, 2007), 11. 25. D. Hart, “Antitrust and technological innovation in the US: ideas, institutions, decisions, and impacts, 1890–2000,” Research Policy 30 (2001): 923–936, at 931. 26. L. Galambos, “The Monopoly Enigma, the Reagan Administration’s Antitrust Experiment, and the Global Economy,” in K. Liparpito and D. Sicilia, eds., Constructing Corporate America: History, Politics, Culture (Oxford: Oxford University Press, 2004, 149–167), 158. 27. D. Spulber, “Competition Policy and the Incentive to Innovate: The Dynamic Effects of Microsoft v. Commission,” Yale Journal on Regulation 25 (2008): 247–302, at 247. See also S. Anderman and A. Ezrachi, eds., Intellectual Property and Competition Law: New Frontiers (Oxford: Oxford University Press, 2011). 28. Hart, “Antitrust and technological innovation,” 931–932. 29. “Obituary.” 30. P. Drahos and J. Braithwaite, “Intellectual property, corporate strategy, globalisation: TRIPS in context,” Wisconsin International Law Journal 20 (2001): 451–480, is a good introduction to such power, as exercised both nationally and internationally. 31. K. Cowling and P. Tomlinson, “Globalisation and corporate power,” Contributions to Political Economy 24 (2005): 33–54, at 34–35. 32. On the Google probe, see, e.g., “EU antitrust chief says Google case may be bigger than Microsoft,” Financial Times, 23 September 2014. 33. Cowling and Tomlinson, “Globalisation,” 36.

Notes to Pages 279–282 34. U. Pagano, “The crisis of intellectual monopoly capitalism,” Cambridge Journal of Economics 38 (2014): 1409–1429. 35. Compare D. Sokol, “Monopolists Without Borders: The Institutional Challenge of International Antitrust in a Global Gilded Age,” Berkeley Business Law Journal 4 (2007): 37–122. 36. Galambos, “Monopoly enigma,” 158. 37. A. Lipsky, “Managing antitrust compliance through the continuing surge in global enforcement,” Antitrust Law Journal 75 (2009): 965–995, at 994. 38. Ibid. 39. D. Harvey, The New Imperialism (New York: Oxford University Press, 2003).

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ACKNOWLEDGMENTS

Aside from small parts of Chapter 2, none of the material in this book has previously been published elsewhere. I am grateful to Elsevier for permission to incorporate short portions from my article “From Marx to market and back again: Performing the economy,” Geoforum 57 (2014): 12–20, © 2014 Elsevier Ltd., in the “Markets in Marx” and “From Marx to Market” sections of Chapter 2. All the team at Harvard University Press, including Kathi Drummy, has been great to work with. I particularly want to thank Mike Aronson for identifying potential in my original proposal and for remaining a steadfast supporter of the book ever since. Much of my most productive period of writing the manuscript coincided with an all-too-brief stint as a visiting scholar in Sydney in the early months of 2014. I am grateful to the School of Geosciences at the University of Sydney for providing an official home during this time, and to the Department of Political Economy for providing something of an unofficial one. At Uppsala University, I thank my colleagues at the Institute for Housing and Urban Research and the Department of Social and Economic Geography. Three people read the whole manuscript in its late stages and provided extremely helpful suggestions for its improvement. Given the pressures on academics’ time, I am grateful that there were as many as three. And, wow, what a triumvirate. Two were the press’s anonymous readers, subsequently revealed to me as Geoff Mann and Susan Sell. The third was Matt Sparke. I am hugely grateful to all three. All authors should be so lucky. My main debt is to my family. You are amazing. That’s where I am luckiest of all.

INDEX

Abramson, Bruce, 258, 275 accumulation: accumulation system, 60–62, 65–66, 268; concept of, 37–38, 44–45; regime of, 60–62, 65–66; stabilization of, 58 Adam Smith in Beijing, 41, 93 Adams, Walter, 232 Adobe, 5 Aglietta, Michel, 61, 64, 77 Agnew, Jean-Christophe, 69, 71 Aldcroft, Derek, 139 Allen, G. C., 176, 182, 189 America by Design, 145 American Capitalism, 171 American Inventors Protection Act, 232 Anderman, Steve, 253–254 Anthony, Sheila, 154, 226 anticompetitive agreements, 252, 288 anticompetitive markets, 16, 19, 106, 114 anticompetitive practices, 98, 102, 137–143, 188, 200–204 Antimerger Act, 178, 180 antitrust law. See competition law Antitrust Paradox, The, 228 Apple Inc., 1, 4–5, 10, 13–14, 271, 279 Arapostathis, Stathis, 131–132, 134 Arnold, Thurman, 151, 177–178, 194–195 Arrighi, Giovanni, 18, 41, 67, 93, 125–126, 234, 236 authorship, 108, 111. See also intellectual property (IP) law

Backhouse, Roger, 31, 32 Bain, Joe, 176, 230 Baldrige, Malcolm, 232, 237 Baran, Paul, 7–8, 12, 50–53, 64, 90, 119, 209, 236 Baxter, William, 229 Becher, Johan, 42 Bell, Alexander, 131–132 Bellamy Foster, John, 7–8, 12, 118, 261, 263 Benkler, Yochai, 274 Bently, Lionel, 129–130 Berle, Adolf, 41, 51, 171 Berman, Marshall, 61 Black, Bernard, 262 Blicksilver, J., 147, 164 Board of Trade, 142, 176, 183, 186–187, 242 Bork, Robert, 204, 228–229 Borrie, Gordon, 242 borrowing excesses, 272 Bourdieu, Pierre, 109 Boyer, Robert, 59, 61, 65, 76 Boyle, James, 274 Brandt, Allan, 163 Brenner, Robert, 9, 24, 64, 94–95, 171–173, 234, 236 Brewer, Griffith, 132, 134 Broadberry, Stephen, 171–172, 190 Brock, James, 232 Brush, Charles, 132 Burawoy, Michael, 52 Burch, Kurt, 47

340

Index

Bureau of Economic Analysis (BEA), 2 Burger, Warren, 181, 202 Burns, Arthur, 146 Burnside, Michael, 190, 191 Bush, George W., 71 Byrne, Noel, 95, 153–154, 193, 231 Cain, Peter, 187 capital: centralizing, 10–12, 45, 51–54; decentralizing, 10–11, 51–54; economy and, 2–3; labor versus, 5–6; monopoly capital, 12–13; overcentralizing, 11–12; reproduction of, 2, 51, 58; stabilizing profitability, 10, 57–58 Capital, 31, 34, 36, 38, 45, 54, 67–69, 72, 84, 101, 105 Capital in the Twenty-First Century, 10 capitalism: balance in, 10–12, 52–53, 83–90, 93–98, 106–107, 117–118; competition and, 1–3, 7–15, 29–56, 90, 147, 247; crisis tendencies of, 57–62, 77–78, 118; global capitalism, 15, 47; growth of, 38; imbalances in, 272; institutional fix for, 61–64, 76–81; monopoly capitalism, 7–15, 46, 52, 279; monopoly powers and, 12, 273, 279–282; new stage of, 281–282; political economy and, 272; reproduction of, 10, 14, 72, 143, 208–213; spatial fix for, 78–81, 210–212; stabilizing profitability, 10, 57–58; temporal fix for, 78–81, 210; value and, 85–86 Capitalism for the People, A, 273 capitalist class, 12 capitalist empowerment, 272 Carstensen, Peter, 13, 180, 198, 202–203, 212–213 cartelization: anticompetitive practices and, 137–143; market power and, 103–104; mergers and, 87–88, 103–104, 147–153, 202–203 Carter, Jimmy, 235–236, 257–258 Celler-Kefauver Act, 178, 180 centralization, 10–12, 40–46, 50–54, 58, 86–87

Chamberlin, Edward, 10, 30, 49–50, 105, 113, 115–118, 154, 156 Chandler, Alfred, 263 Chicago School of Economics, 98–103, 180, 198, 203, 227–240, 244, 253–256, 273, 277–278 Clark, Tom, 178, 199, 202 Clayton Antitrust Act, 102–103, 150–151, 178, 232 Clifton, James, 48 Clinton administration, 280 Cobb, Charles, 165 Comcast, 278 competition: avoiding, 5; balance in, 10–12, 25, 52–55, 83–96, 107, 117– 118, 124–128; capitalism and, 1–3, 7–15, 29–56, 90, 147, 247; conceptualization of, 29–56, 58, 279; excess of, 91–96, 102, 112, 141; “free” competition, 32–34, 39–44, 205, 224, 273; global competition, 216–217, 236, 257; imbalances in, 11–12, 24, 173–175, 201–202; imperfect competition, 48, 105, 118, 208; intellectual property law and, 1–3, 16–25,111–118; intensification of, 126, 196–213, 235–236, 256, 261–262; international dimensions of, 16; lack of, 271; laws regarding, 1–3, 6, 16–25, 196–207; monopoly and, 6–12, 16–25, 39–56, 86, 91–92, 168–169, 268–273; national dimensions of, 16; nature of, 31–33; oligopoly and, 8, 17, 205, 270–271; perfect competition, 48–49, 105, 112; price competition, 76, 125, 148–149, 167, 205; profitability and, 29–30, 33–34; “reversed in competition,” 35–36, 55–56; revival of, 168–215; rivalry competition, 31–32; transnational dimensions of, 16 Competition Act, 187–188, 240–241, 252 competition law: balance of, 268–269; changes in, 21–22, 169–170, 175– 180, 183, 219–222, 232–238, 267, 276–277; competition and, 16–25,

Index 196–207; competition rules, 187–188, 217–218, 240–243, 249–252; conceptualization of, 82–84, 96–105; contemporary law, 250–256; courts and, 153–157, 179–181, 200–207; effects, 196–207, 213–214; enforcing, 13–14, 23–24; geographical scale of, 19; in global context, 240–245; intellectual property laws and, 95–96; legal precedents for, 96–97; market power and, 104–105; market relations and, 6; mission of, 1–3, 11–12, 63–65, 82–84, 95–107; monopolization and, 4; monopoly powers and, 175–180, 276; political economy and, 20–21, 59–66, 82–83, 95–96, 208–213 competitive capitalism, 7, 14, 52, 90, 147. See also capitalism consumerism, 71, 272 Copyright Act, 129–130 copyrights, 4, 108–111, 114–115, 145, 246. See also intellectual property (IP) law Copyright Term Extension Act, 223 Cornered, 261 corporate powers, 44, 103, 279 corporate profits, 2–5, 10, 24, 93–95, 164–165, 258–262 Cournot, Augustin, 32 Cowling, Keith, 279 Crafts, Nicholas, 135, 171–172, 190, 198 Crane, Daniel, 99 Crawford, Susan, 261 Crouch, Colin, 260 Crovitz, Gordon, 275 Cutler, A. Claire, 3 David, Paul, 14 Davies, Will, 180 decentralization, 10–11, 51–54, 58, 81 DeLong, Brad, 5, 6 Douglas, Paul, 165 Duménil, Gérard, 10, 164 E. Bennett & Sons v. National Harrow Company, 154 Economic and Philosophic Manuscripts, 46

economic growth, 37–38 economic laws: conceptualization of, 9; neglect of, 65; prioritizing, 3, 76–77; role of, 3, 9–10, 50, 62–64, 140, 252–257 Economics of Global Turbulence, The, 234 Economics of Our Patent System, 159 Economist, The, 242–243, 278 economy: capital and, 2–3; evolution of, 1; global economy, 82, 216, 262; growth of, 37–38; new economy, 5, 13, 25, 61, 158, 276; underlying problem of, 272. See also political economy Edgeworth, Francis, 32 Edison, Thomas, 132 Edwards, Corwin, 177 Eichengreen, Barry, 136 Emmanuel, Arghiri, 74–75 Endless Crisis, The, 7, 12, 261 Engels, Friedrich, 54, 61, 101 Enigma of Capital, The, 271 Enterprise Act, 252 equilibrium, 32–33, 36–37, 49, 53–59 “expanded reproduction,” 2–3, 38, 44–45. See also reproduction Federal Trade Commission (FTC), 194, 219–223, 226, 229 Federal Trademark Dilution Act, 223–224 Finance Capital, 12, 86 financial crisis, 256, 271–272 Financial Times, 138, 141 Fisher, A. G. B., 176 Fisher, William, 144–145 Fordism, 53, 62, 64 Foucault, Michel, 40, 45 Fox, Eleanor, 99, 126, 179, 180, 229 “free” competition, 32–34, 39–44, 205, 224, 273. See also competition free trade, 18, 127, 135–136, 140, 279 Freyer, Tony, 125, 138, 141, 149, 166, 169, 176–177, 183–184, 201, 204, 256 Friedman, Milton, 49

341

342

Index

Gaitskell, Hugh, 176, 182 Galambos, Louis, 152, 221, 236, 238, 257–258, 277, 280 Galbraith, J. K., 31–32, 51, 90, 171, 175 Gallagher, William T., 13 Gates, Bill, 279 Gerber, David, 20, 140, 182, 184, 186, 240–241, 252, 255–256 Gifford, Christina, 223 Gill, Stephen, 3 GlaxoSmithKline, 278 Glick, Mark, 64 global capitalism, 15, 47 global competition, 216–217, 236, 257 global economy, 82, 216, 262 global financial crisis, 256, 271–272 global markets, 17–20 global oligopoly, 263, 280 Glyn, Andrew, 239 Gooday, Graeme, 131–132 Google, 1, 5, 279 Gordon, David, 10, 171, 173, 196, 198 Gould, David, 259 Great Depression, 125–128, 146, 150–151, 164–166, 173–174 Great Merger Movement in American Business, 1895–1904, 148 Gridlock Economy: How Too Much Ownership Wrecks Markets, Stops Innovation, and Costs Lives, 274 Gruben, William, 259 Guénault, Paul, 176 Gunther, Eberhard, 191 Gutterman, Alan, 251, 253 Hansen, Alvin, 174 Harford, Tim, 274 Hart, David, 90, 176, 177, 228, 277 Harvey, David, 8–12, 15, 41, 46, 52, 67–68, 71–80, 84–85, 118, 126, 210, 259, 271–272, 282 Hatfield, Henry Rand, 100, 101, 102 Hayek, Friedrich, 49 Hegelian justification, 110 Heilbroner, Robert, 37, 40 Heller, Michael, 274, 275

Henderson, George, 68 Henry v. A. B. Dick Company, 157 Heseltine, Michael, 242 Hilferding, Rudolf, 12, 51, 86–91, 94–95, 101, 137, 172, 212 Hine, Robert, 239 Hobsbawm, Eric, 123 Hobson, C. K., 176 Hopkins, Tony, 187 Hopwood-Lewis, Jonathan, 132, 134 housing markets, 272 Hovenkamp, Herbert, 97, 102, 152, 181 Hughes, Alan, 201 Hughes, Justin, 106 Hunter, Dan, 107, 110, 113 Hurst, James, 149, 177–178, 202 Hymer, Stephen, 263 IBM, 281 Ignatieff, Michael, 273 “imperfect competition,” 48, 105, 118, 208. See also competition Imperialism, 12 information technology (IT), 279 “institutional fix,” 61–64, 76–81 Intel, 1, 5 intellectual monopoly, 113, 143–153, 279. See also monopoly Intellectual Property Committee (IPC), 248 intellectual property (IP) industries, 278 intellectual property (IP) law: balance of, 268–269; changes in, 21–22, 193– 195, 222–227, 232–233, 243–258, 267, 276–277; competition and, 1–3, 16–25,111–118; competition law and, 95–96; conceptualization of, 82–84, 106–107; copyrights and, 4; courts and, 153–157; enforcing, 13–14, 23–24; geographical scale of, 19; in global context, 240–245; infringement of, 269; market relations and, 6; mission of, 63–65, 82–84, 106–110; political economy and, 20–21, 82–83, 95–96; protection of, 153, 188–198, 230, 246, 252–254,

Index 259–260, 268, 274–278; renaissance of, 221–222 intellectual property (IP) rights: exploitation of, 244; future of, 270–276; market power and, 63, 113–114; monopoly and, 134–136, 143–157, 222–225, 230–235, 243–253; ownership of, 244–246; protection of, 230, 250 international competition, 16. See also competition International Competition Network, 281 internationalism, 16–20, 256–265, 279–281 international monopoly, 16. See also monopoly international trade, 17–20, 136 international trade law, 17 inventions, protecting, 108–111, 114, 135, 140–146. See also intellectual property (IP) law Inventors Protection Act, 232 Irwin, Douglas, 136 Jackson, Joseph, 176 Jackson, Robert, 176 Javits, Benjamin, 94 Jessop, Bob, 2–3, 32, 49, 60, 65, 67, 78, 105 Jewkes, John, 176 Johns, Adrian, 135, 276 Johnson, Simon, 273 Jones, Eliot, 94 Kalecki, Michal, 10, 48–49, 51, 75, 88–89, 127, 161, 165, 172–173, 212, 258 Karatani, Kojin, 75 Kastriner, Lawrence, 224 Katz, Ariel, 96, 111, 113–115, 226, 231 Kemnitzer, William, 163 Keynes, John Maynard, 30, 37, 165, 209, 211 Keynesian economic policy, 37, 168, 208–211

Keynesianism, 5–6, 59, 208–212 Keywords, 54 Khan, Lina, 271 Khan, Zorina, 143 Kilgour, David, 183 Kincaid, Jim, 66 Kliman, Andrew, 173–174 Knauth, Oswald, 51, 94 Knight, Frank, 54 Kondratiev, Nikolai, 57 Korah, Valentine, 252, 256 Koza, Mitchell, 262 Krugman, Paul, 1–8, 26 Kumar, Manmohan, 201 Kunzlik, Peter, 126 Kuznets, Simon, 57, 166 labor: capital versus, 5–6; corporate profits and, 4; wages and, 1, 4, 10, 43–44 Lamoreaux, Naomi, 125, 148 Landes, William, 103 land monopoly, 47 Launching the Innovation Renaissance, 275 “laws of motion,” 70–71, 75, 84 Leaks, Hector, 176 Lefebvre, Henri, 210 Lenin, Vladimir, 12, 51, 282 Leslie, Christopher, 112 Lessig, Lawrence, 274 Lever trademarks, 133 Lévy, Dominique, 10, 164 Lewin, Arie, 262 Lewis, Arthur, 176 Leyland, N. H., 186 Limits to Capital, The, 77 Lipietz, Alain, 62, 71 Lipsky, Abbott, 281 Livingston, James, 128 Lockean justification, 110–111 London School of Economics, 135 Lopatka, John, 277 Lynn, Barry, 261 MacLeod, Christine, 129, 133 Maizels, Alfred, 176

343

344

Index

Making of Modern Intellectual Property Law, The, 129 Malthus, Thomas, 41 Marconi, Guglielmo, 132, 134 market power: competition law and, 104–105; intellectual property rights and, 63, 113–114; mergers and, 103–104; monopolization and, 6–7 market prices, 5, 32–35, 48, 55 market relations, 6, 69, 150 markets: exchanging production for, 57–81; global markets, 17–20; housing markets, 272; institutional fix for, 76–81; neglect of, 66–67; production and, 57–81; value and, 69–74 market share, 4, 181, 201 Marshall, Alfred, 101, 141 Marshall, Michael, 204–205 Marx, Karl, 5–12, 15, 20–22, 31–41, 44–60, 66–80, 84–85, 91–92, 96, 105, 113, 118, 126, 171, 209–210, 279 Maskus, Keith, 111 Maturity and Stagnation in American Capitalism, 172 May, Christopher, 82, 108, 112, 136–137, 157, 160, 223–224, 246 McChesney, Robert, 7–8, 12, 261, 263 McClure, Daniel, 96, 114–115, 194, 223–224, 231 McKinley Tariff, 146 McNulty, Paul, 43, 48, 50 media industries, 156, 222, 260, 279 Mercer, Helen, 142 mergers: acquisitions and, 220, 238, 262; banking mergers, 220–221; blocking, 280; cartelization and, 87–88, 147–153; conglomerate mergers, 199–201, 220; corporate mergers, 152, 157; horizontal mergers, 178–187, 201–204, 220; market power and, 103–104; monopolistic mergers, 86, 137, 186–187, 204 Merges, Robert, 144–145, 224–225, 232, 269, 274 Microsoft, 276–281 Mill, John Stuart, 30

Miller, James, 229 Minda, Gary, 179 “mode of production,” 30, 38–39, 46, 55–63, 66–76, 80, 164. See also production “mode of regulation,” 60–66, 77 Monopolies and Mergers Commission (MMC), 187, 191, 201, 241–245, 251, 256 Monopolies and Restrictive Practices Enquiry and Control Act, 98, 182 “monopolistic competition,” 10–11, 49–51, 55. See also competition monopolistic mergers, 86, 137, 186–187, 204 monopolization: antitrust law and, 4; in capitalist economy, 4–7; competition and, 18; excess of, 98; market power and, 6–7; views of, 43–45, 86–87 monopoly: balance in, 10–12, 25, 52–55, 83–95, 107, 117–118, 124–128; capitalism and, 7–15, 46, 52, 279; competition and, 6–12, 16–25, 39–56, 86, 91–92, 168–169, 268–273; conceptualization of, 279; designs on, 123–167; excess of, 84–90, 141; imbalances in, 11–12, 24, 173–175, 201–202; intellectual monopoly, 113, 143–153, 279; international dimensions of, 16; of land, 47; national dimensions of, 16; oligopoly and, 163; patent laws and, 114–115; remaking, 216–265; spatial monopolies, 126–127; transnational dimensions of, 16 Monopoly Capital, 7, 12, 51, 90, 119, 209 monopoly capitalism, 7–15, 46, 52, 279. See also capitalism monopoly powers: abuse of, 5; capitalism and, 12, 273, 279–282; competition law and, 175–180, 276; constraining, 9, 15; description of, 4–5; excess of, 89–90; internationalization of, 256–265, 279–281; lack of, 268–269; national-level powers, 17; reassertion of, 256–265; reemergence

Index of, 128–143; reinforcement of, 272; sources of, 14–16, 24, 143–153; views of, 44–49, 55 Morgan, Victor, 176 motion, laws of, 70–71, 75, 84 Mowery, David, 213 Muzaka, Valbona, 245, 247–248, 254 national competition, 16. See also competition national monopoly, 16. See also monopoly Nelson, Ralph, 147 neoclassical economics, 32–33, 49, 255 Net Book Agreement (NBA), 185–186, 205 “new constitutionalism,” 3 New Deal, 156, 194, 236 “new” economy, 5, 13, 25, 61, 158, 276 New Imperialism, The, 79, 282 Niels, Gunnar, 229, 253 Noble, David, 145, 160, 161 Odgers, Graeme, 242 Office of Fair Trading (OFT), 242–244, 256 oligopoly: competition and, 8, 17, 205, 270–271; global oligopoly, 263, 280; model of, 181; monopoly and, 163; perfect liberty and, 75; political economy and, 171–175 Organisation for Economic Cooperation and Development (OECD), 243–244 Page, William, 277 patent agents, 132–134 patent infringement, 4, 160, 195, 224, 270 Patent Law Amendment Act, 131 patent laws: intellectual property laws and, 188–195; inventions and, 108– 111, 114, 131–132, 135, 140–146; mission of, 4, 108–109; monopoly and, 114–115; relaxing, 274–275; violation of, 1 patent lawyers, 132–134, 275

Patents, Designs, and Trademarks Act, 129 patent trolls, 269–270, 278 Patents Act, 129, 143, 189, 191–192 Patents and Designs Act, 129 Patry, William, 233 Payne-Aldrich Act, 146 Peck, Jamie, 60, 62, 65–66 Peltzman, Sam, 220 Perelman, Michael, 128, 155, 238, 269, 274 “perfect competition,” 48–49, 105, 112. See also competition “perfect liberty,” 33–34, 39, 75, 97 Phelps, Edmund, 269, 274 Piketty, Thomas, 10, 271 Pitofsky, Robert, 219–220 Plant, Arnold, 135, 176, 230, 275 Polanyi, Karl, 91, 135–136 political economy: antitrust law and, 20–21, 82–83; capitalism and, 272; competition law and, 20–21, 59–66, 82–83; corporate profits and, 2–5, 24; current state of, 25; global economy, 82, 216, 262; laws and, 20–21, 82–83; oligopoly and, 171–175; prioritizing production, 66–67; rebalancing, 157–167 Pollard, Sidney, 139 Posner, Richard, 103, 179, 204, 228–229, 255 post-Fordism, 53, 62 Powell, Ronan, 260 price: determination of, 64–65; fixing, 7, 97, 104, 138, 151–152, 171–179, 184–186, 205–207, 219; market prices, 5, 32–35, 48, 55; of production, 34–36; setting, 32, 50, 205–207 price competition, 76, 125, 148–149, 167, 205 price wars, 125, 148, 207 Principles of Economics, 101 Prindle, Edwin, 114 production: cost of, 34; exchanging for markets, 57–81; mode of, 30, 38–39, 46, 55–63, 66–76, 80, 164; price of, 34–36; value from, 69–70

345

346

Index

Profiteering Act, 142 profits: competition and, 29–30, 33–34; corporate profits, 2–5, 10, 24, 93–95, 164–165, 258–262; permanent profits, 117; rate of, 34–36, 77–81, 92–94, 126, 164–165; stabilizing, 10, 57–58; wages and, 10, 43–44 Progressive Era, 150, 153, 155–156 protectionism: definition of, 17–19; of intellectual property, 153, 188–198, 230, 246, 252–254, 259–260, 268, 274–278; tariff protectionism, 136–139; trade protectionism, 136, 146, 259 Qureshi, Abid, 226 Radick, Gregory, 129 “rate of profit,” 34–36, 77–81, 92–94, 126, 164–165. See also profits Reagan, Ronald, 221, 229, 258 Reagan administration, 232, 237–238 Rebirth of Monopoly, 163 Reciprocal Trade Agreements Act, 197–198 regulation, mode of, 60–66, 77 regulation theory, 3, 6, 60–67, 76–77 Regulation Theory: The State of the Art, 65 reproduction: of capital, 2, 51, 58; of capitalism, 10, 14, 72, 143, 208–213; expansion of, 2–3, 38, 44–45; simple reproduction, 38 Resale Prices Act, 185 Restrictive Practices Court (RPC), 184– 186, 190, 199, 205–206, 240–241 restrictive trade practices, 183–189, 199 Restrictive Trade Practices Act, 183–184, 189 “reversed in competition,” 35–36, 55–56 Ricardo, David, 34, 35, 41, 92 rivalry competition, 31–32. See also competition Robbins, Lionel, 135, 176, 230, 275 Robinson, Joan, 105, 118, 208

Roosevelt, Franklin D., 151, 167, 171, 175–177, 258, 273 Roosevelt, Theodore, 150 Roover, Raymond de, 113 Rosenberg, Nathan, 213 Rowe, Frederick, 99, 180–181, 219, 227–228 Rowley, Charles, 191 Ruggie, John, 168 “ruinous-competition” theory, 94, 102, 111, 149, 234, 239 Saillard, Yves, 65 Samsung, 1, 4 Schumpeter, Joseph, 30, 39–40, 51, 89, 176 Schwarzkopf, Stefan, 144 Scott, Andrew, 241 Sell, Susan, 108, 136–137, 157, 160, 223–224, 245–246 Semiconductor Chip Protection Act, 269 Senior, Nassau, 48 Sharpe, Thomas, 176, 183, 206 Shepherd, William, 196–199, 203 Sheppard, Eric, 68 Sherman, Brad, 129–130 Sherman, James, 150 Sherman Act, 22, 54, 97–103, 125, 149–155, 180–183, 193–194 Shull, Bernard, 220 Sich, Rupert, 187, 205 “simple” reproduction, 38. See also reproduction Smith, Adam, 6, 31–39, 41–44, 55, 67–68, 75, 91–93, 100–101, 234 Smoot-Hawley Tariff, 146 Sonny Bono Copyright Term Extension Act, 223 “spatial fix,” 78–81, 210–212 “spatial monopolies,” 126–127 Spulber, Daniel, 277 stabilization, 10, 57–58 Steele, Charles, 178 Steindl, Josef, 165, 172, 175, 212 Steuart, James, 42 Stigler, George, 198, 235, 237

Index Stiglitz, Joseph, 5–7 stocks, 91, 158–163 Strange Non-Death of Neo-Liberalism, The, 260 “suburban solution,” 210–211 Sum, Ngai-Ling, 65, 67 supply and demand, 33, 37, 55, 210 surplus value, 38, 69, 73–74, 84, 174, 210 Sutcliffe, Bob, 239 Swann, Dennis, 171, 199, 207, 212 Sweezy, Paul, 7–8, 12, 50–53, 64, 90, 119, 209, 236 Tabarrok, Alex, 274, 275 Taft, William Howard, 150 tariffs, 17, 136–139, 142, 146, 171, 197–198 “temporal fixes,” 78–81, 210 Ten Kate, Adriaan, 229, 253 Thatcher, Margaret, 258 Theory of Business Enterprise, 48 Theory of Capitalist Regulation, A, 64 Theory of Monopolistic Competition, 113 Thomas, Martin, 95, 234, 239 Thompson, W. P., 133 Tickell, Adam, 60, 62, 65–66 Timberg, Sigmund, 115, 118, 156, 193 Tirole, Jean, 229 Tomlinson, Philip, 279 Towse, Ruth, 117 Trade Act, 247 trade law, 17, 97 Trademark Dilution Act, 223–224 Trademark Law Revision Act, 223 trademarks, 4, 108–111, 114–115, 223–224. See also intellectual property (IP) law Trade Marks Acts, 130 trade practices, restrictive, 183–189, 199 trade regulations, 17–19 Trade Related Aspects of Intellectual Property Rights (TRIPS), 217, 245–250, 253–254, 265, 278 transnational competition, 16. See also competition

transnational monopoly, 16. See also monopoly Treaty of Rome, 188, 250, 251 Tribe, Keith, 135 Truman, Harry, 178 20th Century Capitalist Revolution, The, 171 Ullrich, Hanns, 246, 249–250 Underwood Act, 146 United States v. Aluminum Can Co. of America, 180 United States v. Griffith, 180 United States v. International Harvester Co., 180 United States v. Line Material Co., 193 United States v. United States Steel Corp., 180 Utton, Michael, 204, 240, 251 Vaheesan, Sandeep, 271 value: capitalism and, 85–86; of commodities, 35, 37; creation of, 69–76; expansion of, 37; markets and, 69–74; from production, 69–70; realization of, 71–73; surplus value, 38, 69, 73–74, 84, 174, 210 value theory, 84–86, 118 Vaughan, Floyd, 155, 158, 159 Veblen, Thorstein, 42, 48, 116 Vest, George, 101 Vickers, John, 29, 32, 256 volatility, 57–58, 251 wages: determination of, 64–65; labor and, 1, 4, 10, 43–44; profit and, 10, 43–44; real wages, 85, 128, 134–135, 234 Walker, Dick, 210 Walker, William, 190 Walker Process Equipment, Inc. v. Food Machinery & Chemical Corp., 226 Waller, Spencer, 95, 153–154, 193, 231, 237–238, 252 Warren, Earl, 179, 181, 199, 202, 204, 228 Warshofsky, Fred, 239

347

348

Index

Watts, Michael, 66 Wealth of Nations, 43, 91–92 Webb-Pomerene Act, 237 Weisskopf, Thomas, 234, 236 Whitney, Simon, 202–203 Wilf, Steven, 153, 156, 222 Williams, Raymond, 54 Wilson, Woodrow, 150

World Trade Organization (WTO), 17–20, 216–217, 246, 254 Wright, Peter, 239 Wright brothers, 134 Yawson, Alfred, 260 Zingales, Luigi, 273