The continuing trial of Google, along with lawsuits against Amazon and Meta, have brought antitrust back into the public eye. These suits recall the 1969 case against IBM and the 1998 case against Microsoft, the great antitrust battles of the latter half of the 20th century.

Supporters of aggressive antitrust enforcement think that only antitrust suits prevented IBM from commandeering the personal-computer market and Microsoft from taking over the internet. But that’s an urban legend.

Read the full piece here.

Abstract

This paper is an excerpt from a larger book project called The Corporation and the Twentieth Century, which chronicles and interprets the institutional and economic history – the life and times, if you will – of American business in the twentieth century. One integrating theme of the book is that the signal calamities of the Great Depression and World War II, as well as the policy responses to those calamities, are crucial in understanding the structure of American industry in the post-war world. This excerpt examines the role of research and development in the corporation before and during the Depression. It argues that, although corporate R&D labs did generate many important new technologies, innovations also flowed importantly from a large variety of other sources, both within the corporation (but outside of the research lab) and elsewhere in the economy. Even though corporate research did sometimes lead to new products for the corporation to exploit, a narrative in which internal R&D systematized innovation widely in the service of corporate diversification is on the whole a fable. Nonetheless, by destroying market-supporting institutions (including, importantly, sources of external finance) and by reducing the information content of price signals, the Depression did help solidify the nexus between R&D and the large corporation. Coupled with New Deal price and entry regulation in many sectors, and followed by the far greater extent of non-market controls during World War II, the Depression set the stage for the emergence of the large Chandlerian corporation of the post-war period.

Abstract

Voices along the whole of the political spectrum are calling for heightened scrutiny of American information-technology companies, especially the Big Five of Amazon, Apple, Facebook, Google, and Microsoft. One of the principal themes of this uprising is that present-day antitrust policy, forged in the rusty era of steel, oil, and cars, is now obsolete. We are in the age of information, which ipso facto calls for new rules. A second animating theme is that the antitrust thinking of the Chicago School, which came to prominence in the last quarter of the last century, must be completely overthrown. Proponents of this new antitrust ground their arguments by returning to the historical roots of American antitrust policy. My contention, however, is that the new antitrust gets this history wrong. It both misconceives the nature of the competitive process and deliberately refuses to confront the political economy of antitrust. In so doing, it adopts some of the worst traits of the Chicago School it criticizes while manifesting few of that school’s many virtues.

Abstract

This paper is a draft chapter from an ongoing book project I am calling The Corporation and the Twentieth Century. In The Visible Hand, Alfred Chandler explained the rise of the large vertically integrated corporation in the United States mostly in terms of forces of technology and economic geography. Institutions, including government policy, played a quite minor role. In my own attempt to explain the decline of the vertically integrated form in the late twentieth century, I stayed true to Chandler’s largely institution-free approach. This book will be an exercise in bringing institutions back in. It will argue that institutions, notably various forms of non-market controls imposed by the federal government, are a critical piece of the explanation of the rise and decline of the multi-unit enterprise in the U. S. Indeed, non-market controls, including those imposed in response to the dramatic events of the century, account in significant measure for the dominance of the Chandlerian corporation in the middle of the twentieth century. One important form of non-market control – though by no means the only form – has been antitrust policy. This chapter traces the history of antitrust and argues that, far from being a coherent attempt to address an actual economic problem of monopoly, the Sherman Antitrust Act emerged from the distributional political economy of the nineteenth century. More importantly, the chapter argues that the form in which antitrust emerged would prove significant for the corporation, as the Sherman Act and its successors outlawed virtually all types of inter-firm coordinating mechanisms, thus effectively evacuating the space between anonymous market transactions and full integration.