In the 1970s, a new wave of post-Watergate liberals stopped fighting monopoly power. The result is an increasingly dangerous political system.
One of their first targets was an old man from Texarkana: a former cotton tenant farmer named Wright Patman who had served in Congress since 1929. He was also the chairman of the U.S. House Committee on Banking and Currency and had been for more than a decade. Antiwar liberal reformers realized that the key to power in Congress was through the committee system; being the chairman of a powerful committee meant having control over the flow of legislation. The problem was: Chairmen were selected based on their length of service. So liberal reformers already in office, buttressed by the Watergate Babies’ votes, demanded that the committee chairmen be picked by a full Democratic-caucus vote instead.
Ironically, as chairman of the Banking Committee, Patman had been the first Democrat to investigate the Watergate scandal. But he was vulnerable to the new crowd he had helped usher in. He was old; they were young. He had supported segregation in the past and the war in Vietnam; they were vehemently against both. Patman had never gone to college and had been a crusading economic populist during the Great Depression; the Watergate Babies were weaned on campus politics, television, and affluence.
Indeed, a revolution had occurred. But the contours of that revolution would not be clear for decades. In 1974, young liberals did not perceive financial power as a threat, having grown up in a world where banks and big business were largely kept under control. It was the government—through Vietnam, Nixon, and executive power—that organized the political spectrum. By 1975, liberalism meant, as Carr put it, “where you were on issues like civil rights and the war in Vietnam.” With the exception of a few new members, like Miller and Waxman, suspicion of finance as a part of liberalism had vanished.
Patman was also the beneficiary of the acumen of one of the most influential American lawyers of the 20th century, Supreme Court Justice Louis Brandeis. In the 1930s, when Patman first arrived in Washington, he and Brandeis became friends. While on the Court, Brandeis even secretly wrote legislation about chain stores for Patman. Chain stores, like most attempts at monopoly, could concentrate wealth and power, block equality of opportunity, destroy smaller cities and towns, and turn “independent tradesmen into clerks.” In 1933, Brandeis wrote that Americans should use their democracy to keep that power in check. Patman was the workers’ and farmers’ legislative hero; Brandeis, their judicial champion.
Competition policy was also a powerful political strategy. Democrats lost the U.S. House of Representatives just twice between 1930 and 1994. To get a sense of how rural Democrats used to relate to voters, one need only pick up an old flyer from the Patman archives in Texas: “Here Is What Our Democratic Party Has Given Us” was the title. There were no fancy slogans or focus-grouped logos. Each item listed is a solid thing that was relevant to the lives of conservative white Southern voters in rural Texas: Electricity. Telephone. Roads. Social Security. Soil conservation. Price supports. Foreclosure prevention.
Meanwhile, by 1970, both civil society and large American institutions seemed out of control. The National Guard shot antiwar protesters at Kent State, showing that the fissures over Vietnam were only getting worse. The Penn Central railroad had collapsed in the largest bankruptcy in U.S. history. Corrupt corporate executives mismanaged the nation’s train system under an outdated regulatory system. Inflation was spiraling upward, and the ongoing corporate problems of important institutions—such as Pan Am and Chrysler—were becoming more and more evident. Plus, Japanese imports began displacing American jobs.
And the most important architect of this intellectual counterrevolution, the one who engaged in a direct assault on traditional anti-monopoly policy, was the libertarian legal scholar Robert Bork. His book The Antitrust Paradox undermined the idea of competition as the purpose of the antitrust laws. Monopolies, Bork believed, were generally good, as long as they delivered low prices. A monopoly would only persist if it were more efficient than its competitors. If there were a company making super-charged monopoly profits, bankers would naturally invest in a competitor, thus addressing the monopoly problem without government intervention. Government intervention, in fact, could only hurt, damaging efficient monopolies with pointless competition and redundancy. In an era of high prices, a theory focused on price seemed reasonable.
Regulatory experts organized key elements of social justice—like environmental rules, consumer protection, stability mandates, product design, and diversity directives—in this progressive framework. Faith in technocrats, the revolving door, and privatization all flowed from a belief in this basic structure to deliver social justice.
At the end of his presidency, Clinton explained his success. He praised Greenspan’s stewardship of the Federal Reserve. He said that the key to noninflationary growth was ensuring that workers did not demand raises beyond the rate of productivity, while unleashing businesses to pursue the most profitable lines of investment through deregulation and globalization. He implicitly touted the theory of capital shortage: Inflation resulted from overregulation and deficits, which took money out of the hands of businesses. Putting money and power back into the hands of businesses with deregulation and a balanced budget led to low interest rates, massive corporate profits, productivity growth, and broad prosperity. Bork and Thurow, in other words, were right.
But what intellectuals like Thurow, Galbraith, Greenspan, Bork, and so forth didn’t foresee was political disillusionment on a vast scale. In 2014, for example, voting rates in some states dropped to levels unseen since the 1820s (when property-franchise laws were in force). Meanwhile, American soldiers once again find themselves in a quagmire; this time, in the Middle East. Despite their best efforts, U.S. institutions seem as out-of-control and ungovernable as they did when the 1975 class came into office.
For most Americans, the institutions that touch their lives are unreachable. Americans get broadband through Comcast, their internet through Google, their seeds and chemicals through Monsanto. They sell their grain through Cargill and buy everything from books to lawnmowers through Amazon. Open markets are gone, replaced by a handful of corporate giants. Political groups associated with Koch Industries have a larger budget than either political party, and there is no faith in what was once the most democratically responsive part of government: Congress. Steeped in centralized power and mistrust, Americans must now confront Donald Trump, the loudest and most grotesque symbol of authoritarianism in politics today.
“This,” wrote Robert Kagan in The Washington Post, “is how fascism comes to America.” The nation is awash in commentary and fear over the current cultural moment. “America is a breeding ground for tyranny,” wrote Andrew Sullivan in New York magazine. Yet, Trump’s emergence would not be a surprise to someone like Patman, or to most New Dealers. They would note that the real-estate mogul’s authoritarianism is not new in American culture; it is ubiquitous. It is consistent with how the commercial sphere has developed since the 1970s. Americans feel a lack of control: They are at the mercy of distant forces, their livelihoods dependent on the arbitrary whims of power. Patman once attacked chain stores as un-American, saying, “We, the American people, want no part of monopolistic dictatorship in … American business.” Having yielded to monopolies in business, the nation must now face the un-American threat to democracy Patman warned they would sow.
Americans have forgotten about the centuries-old anti-monopoly tradition that was designed to promote self-governing communities and political independence. The Watergate Babies got rid of Patman’s populism for a lot of reasons. But there was wisdom there. In the 1930s, Patman said that restricting chain stores would prevent “Hitler’s methods of government and business in Europe” from coming to the United States. For decades after World War II, preventing economic concentration was understood as a bulwark against tyranny. But since the 1970s, this rhetoric has seemed ridiculous. Now, the destabilization of political institutions suggests that it may not have been. Financial crises are a regular feature of the U.S. banking system, and prices for essential goods and services reflect monopoly power rather than free citizens buying and selling to each other. Americans, sullen and unmoored from community structures, are turning to rage, apathy, protest, and tribalism, like white supremacy.
Ending the threat of authoritarianism is not a left-wing or right-wing problem, and the solution does not reside in building a bigger or a smaller government. Restoring political stability means structuring society’s public and corporate institutions so they can be governed by human beings and communities. It means protecting the property rights of citizens and not confusing property with arbitrary tollbooths erected by tech billionaires. And it means understanding that protecting competitive markets and preventing concentrations of power are essential components of democracy.
Fortunately, Americans are beginning to remember what was once lost. Senator Elizabeth Warren often sounds like she’s channeling Wright Patman. Senator Bernie Sanders stirred enormous enthusiasm in a younger generation more in touch with their populist souls. Republicans even debated putting antitrust back in their party platform. President Obama has begun talking about the problem of monopolies. Renata Hesse, the head of the government’s antitrust division, recently gave a blistering speech repudiating Bork’s corporatist ideas. And none other than Hillary Clinton, in an October 3, 2016, speech on renewing antitrust vigor, noted that Trump, while a unique figure, also represents the “broader trends” of big business picking on the little guy.
Restoring America’s anti-monopoly traditions does not mean rejecting what the Watergate Babies accomplished. It means merging their understanding of a multicultural democratic society with Brandeis’s vision of an “industrial democracy.” The United States must place democracy at the heart of its commercial sphere once again. That means competition policy, in force, all the time, at every level. The prevailing culture must be re-geared, so that the republic may be born anew.