Adam Smith Meets George Orwell: Markets, Antitrust, and the Politics of Language

• In Event: Competition and Antitrust Policy in International Relations

Abstract

Globalization, the removal of tariff barriers, and the liberalization of sectoral, labor, and financial regulations worldwide, is often understood as a shift away from the state towards the market, with increased cross-border market competition as both the intended and actual outcome. Yet over time such policies have instead led to less competition, evidenced in part by the rise of a few high-technology “superstar” firms that dominate the most rapidly-expanding industries. This article provides an alternative understanding and interpretation of these shifts that questions the links between openness, integration, and competition. Focusing on changes to American antitrust policies and law from the 1970s to today, I emphasize that many of these supposedly “liberalizing” changes were in fact market-closing. They actually restricted access to new markets, growth, and income for all but the most technologically-advanced firms, domestically and internationally. The United States has led the way in changing the legal architecture of domestic and transnational markets to prevent its own lead firms from being subject to market forces, even as direct barriers to trade have been progressively removed. The United States has eliminated antitrust restraints on economic concentration, antitrust rules on interfirm coordination, and dramatically strengthened property rights for lead firms internationally, preempting prior antitrust rules over intellectual property rights. Why this has not been as obvious as one might think lies in the language used in these legal and policy reforms. Just as George Orwell wrote in 1984, where “freedom is slavery,” in this case “protect our firms on the technological frontier” became translated into doublespeak language about “market opening.” This argument is supported by original archival evidence from American presidential administrations in the 1970s and 1980s, showing how the overtly protectionist and market-closing motivations of policymakers in executive agencies were translated into liberalizing language and arguments from legal and economic scholarship. This language has become normalized across the ideological spectrum, reframing opposing political attempts to expose lead firms to market pressures as protectionist and anti-market.

Author

• Erik Peinert, Brown University