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November 16, 2016


A century or more ago we were confronted with much the same problems we have today, but Republican progressives such as Teddy Roosevelt did something about it. The big areas of corporate concentration in the first Gilded Age were oil and railroads and finance and men such as John D. Rockefeller, J.P. Morgan, Andrew Carnegie and Cornelius Vanderbilt had centralized control of these core industries, as pointed out in an article by K. Sabeel Rahman in the Fall 2016 Edition of The American Prospect, my favorite political magazine.

We are in a second Gilded Age today but are doing little to nothing about it, unlike a century ago. Enforcement of our anti-trust laws are at an all-time low as the corporate culture has captured the political culture with political contributions and promises of post-political employment. Bigness gets bigger, and at an accelerated rate. What can this mean in terms of our democracy that we fought and died for?

The reformers in the first Gilded Age gave us the Sherman Anti-Trust and Clayton Acts, and even as modern day reformers have been beat up on by big business, such legislation is still a formidable obstacle to collusion, anti-competitive practices such as fixing prices etc. However, having good laws means nothing if they are unenforced, which is where we are today.

A bit of history is helpful in this connection. Anti-trust laws to break up dominant corporations are the best known, but in many states and localities the reformers defined and regulated public utilities, and some even created public entities (like municipal water and power plants, for instance). Those days carried over into New Deal thinking, but lately we are seeing the return of abusive concentration from too-big-to-fail banks to concentration of power among the likes of internet giants like Amazon and Goggle. Bigness is back upon us in this second Gilded Age and though new in form in this post-industrial society are dominating today’s economy. Good or bad?

Well, on balance it is bad, and why? Because such huge entities can crush competition and thereafter charge monopolistic prices to consumers (the rest of us) and we have nowhere else to go. In achieving such status, these huge entities with their armies of lawyers and lobbyists armed with checkbooks for political contributions resist every kind of public regulation and amendment to law which they feel would invade their right to conduct private enterprise as they see fit free of “big government” control though they are the “big” ones in the corral that cries out for regulation to fit the public interest.

A key adviser to Woodrow Wilson both before and after he was elected and who was later picked by Wilson to serve on the Supreme Court was Louis Brandeis, who famously called the problem of private power “the curse of bigness.” Brandeis rightly saw the problem as more than economic efficiency or consumer welfare, correctly adding that the curse of bigness raised fundamental issues of economic and political liberty. How so? Here’s how he arrived at such a conclusion. Huge corporations accumulated a kind of semi-sovereign power, but without any of the checks and balances we expect of political authorities. He argued that the result was that “there developed within the State a state so powerful that the ordinary social and industrial forces existing are insufficient to cope with it.”

He was right then and right now long after he has left the scene, but just how does this anti-trust and public utility definition work out in practice today in a world of obscene size and profitability of huge corporations becoming bigger through almost unrestrained merger and acquisition in an era of unenforced anti-trust laws by a weakened and/or bought political establishment who are more interested in their political futures than the impact of these “states within states?”

Brandeis rightly argued that a vibrant, dynamic and free economy depended on robust competition, but paradoxically, that competition and liberty alike could only be protected through extensive regulation against concentration. Thus by breaking up large firms into smaller entities, anti-trust law would prevent exploitative monopolies and ensure a truly free and competitive market for businesses and consumers alike. He was and is right, but big business PR people today say that Brandeis spoke to an old pre- industrial society that doesn’t exist anymore and that his ideas sprung from a naïve yearning for a return to that age. This is, of course, propaganda, because neither Brandeis nor his fellow reformers were  against bigness per se; rather they wanted to develop policies that would hold corporate power accountable in order to insure that bigness served the public good, a desirable and noble outcome indeed.

I will briefly discuss the Standard Oil and Ma Bell breakups and the rationale for the TVA in (literally) giving power to the people in Part II, along with some more history in what reformers of the first Gilded Age and following did to rein in corporate concentration which threatened citizens’ rights to live in a democracy as well as their pocketbooks. Stay tuned.     GERALD     E


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