‘Goliath: The 100-Year War Between Monopoly Power and Democracy’ by Matt Stoller reviewed by Hans G Despain

Goliath: The 100-Year War Between Monopoly Power and Democracy

Simon & Schuster, New York, NY, 2019. 608pp., $29.99 hb
ISBN 9781501183089

Reviewed by Hans G Despain

About the reviewer

Hans G Despain is Professor of Economics and Department Chair at Nichols College, Massachusetts. He …


The American economy is dominated by monopoly power. Americans purchase soda made by Coca-Cola or Pepsi, 70 percent of all beer in America is made by Budweiser and Miller (Anheuser-Busch InBev). Nearly all phones are made by one of two companies. Four huge banks dominate banking, four airlines own the airways, Facebook is the platform used to connect with family and friends. The internet is searched using Google, Americans connect to the internet with Comcast or AT&T. Monopoly power constitutes every nook and cranny of the American economy. In several recent scholarly studies American industries are becoming more and more concentrated.

This is not happenstance, as Matt Stoller argues in Goliath: The 100-Year War Between Monopoly Power and Democracy. Americans made a political decision not to enforce antitrust laws, allowing private titan banks and massive corporations to organize our world. Stoller’s telling of the epic battle begins with the ‘trust buster’ Teddy Roosevelt (18).

Roosevelt believed himself to be confronting the ‘third crisis’ of United States, the first being the Revolutionary War, the second the civil war over slavery, and controlling corporate power the third. Corporate power corrupted the country’s economic capacities, workforce and methods of democratic government for the pursuit of profits (6).

Roosevelt fought corporate titans such as J. P. Morgan, but ultimately did not seek to prohibit ‘concentrations of power, but to have progressive experts use the power of trusts and monopolies to deliver a better world’ (22). Woodrow Wilson and Louis Brandeis would be far less tolerant of monopolies. They strengthened the Sherman Anti-Trust Act 1890 with the Clayton Act in 1914 to protect labor, control mergers and price discrimination (23). Roosevelt aimed to ‘co-opt’ corporate power, while Wilson and Brandeis aimed to smash it. Both philosophies became part of the political fabric, waxing and waning in popularity, and cascading in the economic development of United States.

Wilson and Brandeis lay the foundation for Stoller’s primary historical protagonist, Texas Congressman Wright Patman and his six-decade crusade to resist United States being controlled and ruled by monopoly power, financiers and banksters. Patman was a populist antimonopolist. Although ‘not a socialist’, he believed bankers were in practice ‘colonial’ toward farmers, small businesses and industry (65).

Patman followed the money trail in investigations. He passed the Robinson-Patman Act in 1936 to address price discrimination and practices that reduce economic competition (166-8). He led the charge to impeach US Treasury Secretary, and former industrialist and banker, Andrew Mellon (52ff) and reveal his unscrupulous and deceitful business practices, generating ‘revulsion’ and promoting ‘reform’ (116). As Hitler prepared for invasion of Europe, Patman also exposed American monopolists such as Alcoa aluminum company (owned by Mellon), as Hitler’s allies. Patman would directly take on the Walmart-before-Walmart, or the Great Atlantic and Pacific Tea Company, or the A&P (159-74).

However, Franklin Roosevelt was not entirely opposed to corporate power. In his administration were those ‘planners’ who believed the economy would be better controlled coopting corporations and their managers into the policy process. ‘Side by side’ the ‘planners’ were antimonopolists like Patman (124). While a ‘new generation of business leaders found planning and government spending eminently reasonable, and even accommodated unions, [for corporate business leaders] antimonopolism was a different matter’ (203). The tension between these factions would regularly flair up (125). Nonetheless, in Stoller’s telling, Patman’s efforts along with F.D.R.’s New Deal Policy (117-224) helped create ‘a worker democracy’ (188) post-WWII until the 1970s.

The New Deal consensus and antimonopoly efforts of Patman were under constant attack throughout the next several decades. The antimonopoly effort and the New Deal consensus would finally ‘collapse’ in the 1970s (312-31). Stoller identifies five primary forces of this collapse.

By 1975 a new generation of politicians had been elected to Congress, nicknamed the Watergate Babies. They were young, ‘idealistic, fierce, and aggressive.’ ‘They were going after the whole establishment,’ Republicans and Democrats alike (332-3). They wanted to throw out the ‘old New Deal claptrap’ (337). Watergates were preceded and fostered by an anti-antimonopoly intellectual movement and an effort to reestablish ‘free markets’ with the presence of monopoly power. This New Deal countermovement was inspired by Austrian economist Friedrich Hayek’s The Road to Serfdom (1946). However, whereas Hayek was clearly antimonopolist, the project which he inspired evolved to be radically opposed to antitrust laws (224-56). The countermovement argued that antitrust laws are paradoxical and incoherent. Robert Bork and Milton Friedman were the two most famous and influential thinkers arguing that antitrust laws were ineffective in stopping monopoly power and generated results that were even anticompetitive, constituting what Bork would dub the ‘antitrust paradox.’

The paradoxes and gaps of the antitrust laws led to financial innovations which birthed shadow banking and the ‘rebirth’ of Wall-Street (257-81) and what today is known as the financialization of capitalism. Business executives would get around the paradoxes of merger laws by conglomeration (277-314), whereby a corporation would invest in lines of production entirely unrelated to their current business model, for example Coca-Cola buying Columbia Pictures.

Watergate babies, Chicago School of Economics and law, financialization and conglomeration were the four elements of the counterrevolution against the New Deal consensus. According to Stoller, the fifth element had developed within the New Deal and its advocates themselves. New Dealers such as Gardiner Means and Adolf Berle, and intellectuals such C. Wright Mills were among a growing number of intellectuals who embraced bigness and monopoly and aimed to transform citizens into consumers. The two most important ‘promonopoly’ New Left intellectuals were historian Richard Hofstadter and economist John Kenneth Galbraith (201-6).

On the vows of pro-monopolism, Stoller forces a shotgun marriage between the New Left and Chicago-School-Right. This unhappy marriage is strange and reveals more about Stoller’s politics, and misleads us concerning the ideas of Mills, Hofstadter and Galbraith. To be sure, Stoller is historically correct that the ‘Chicago School began to influence the intellectual organs of the New Left’ (329). But he misleads his readers with rhetorical statements such as ‘[t]he corporatist on the right and the left, from the consumer rights movement to Robert Bork to John Kenneth Galbraith, stood ready to finally demolish the antimonopoly tradition in American life’ (362).

By the 1970s the Chicago School had taken over academia; by the 1980s they were the dominant force in politics, policy and law. The takeover was dramatic. The conventional wisdom of antitrust policy as a force to control monopoly power was transformed into the Chicago conventional wisdom whereby antitrust policy was understood to be usually ineffective and paradoxically anticompetitive in practice.

The Chicago School takeover led to the collapse of the New Deal consensus and the rise of neo-liberal ‘free trade’ policy and political attitudes that where anti-regulation and anti-government (364). This gave rise to a merger wave in the 1980s (379), the emergence of tech Goliaths like IBM and Microsoft; financial firms grew so colossal they had become ‘too big to fail’ (374) and the rise of a Techocracy where American political economy is dominated by the business practices of tech companies Apple and Microsoft, and tech platforms Google, Facebook and Amazon.

Stoller tells us: ‘We are in a bad spot’ (454). It is not just Big Tech. Concentration has increased in 70 percent of American industries. It can be argued the United States is facing its fourth crisis, corporatocracy. ‘Nothing about monopolization is inevitable’, declares Stoller (456). We can establish a neo-Patmanian and neo-Brandeisian antitrust policy to break down our massive monopoly problem into ‘person-sized chunks’ to help plain people fight against monopolies.

The greatest strength of the book is Stoller’s wonderful historical telling of the fight between monopoly power and democracy. Yet the book also has three primary weaknesses.

First, Stoller’s ad hominem attempts to disempower those whose arguments he disagrees with by countlessly calling right-wing and left-wing intellectuals ‘elitist,’ ‘smug,’ ‘eggheads,’ etc. takes away from Stoller’s historical story. The ad hominem rhetoric subtracts from Stoller’s accomplishment of revealing the historical activities of antimonopolists.

Second, and more important, the reason the Chicago School dominates antitrust thinking, and Bork’s Antitrust Paradox (1978), the most widely cited work on the subject, is because there is power in the argument. Antitrust policy is paradoxical because capitalism is contradictory. Stoller does not handle this well, but presents the Chicago School as corporate cranks.

Third, characterizing Mills, Hofstadter and Galbraith as procoporate and promonopoly is highly problematic. In addition, conflating the right and left on corporate power is very misleading, e.g. Stoller claims the ‘right-wing fantasy of corporate monopolies and bigness as a sign of progress,’ and the ‘left-wing fantasy of corporate monopolies as unstoppable feature of capitalism,’ ‘are, in the end, the same. They both are designed to sell you on the idea that you have no power’ (456).

Galbraith is an unambiguous critic of corporate power. In his The New Industrial State (1967) he argues that corporate planning and corporate control of supply chains had given more stability to the macroeconomy than fiscal and monetary policy measures. This is not an endorsement of corporate power but a critique of Keynesian policy to manage capitalism. Galbraith understood corporate dominance as a menace to the economy and noxious to the quality of life. To attribute Galbraith as towing to corporate power is historically misleading and a strategic blunder for the future fight against monopoly power. Galbraith argues corporate can be, and should be, resisted.

Marx of course theorized that the process of accumulation had dynamic tendencies toward concentration and centralization. Concentration is not necessarily material bigness but control over the process of valorization. Thus, an industry can get more concentrated and paradoxically the number of firms increases while prices fall and wages increase. Marx explains this tends to happen when the profit rate is rising or remains sufficiently high. The centralization process tends to occur after a long period of stagnation and/or when the rate of profit falls dangerously low for ‘expanded reproduction’ or economic growth. Then we can expect a wave of mergers. These mergers are often high-risk speculative ventures requiring massive amount of finance and credit.

But in concert with Stoller, this does not necessarily mean monopolization is inevitable. For Marx monopolization is not inevitable because the competition between capitalists is severe and brutal, as he explains in Vol. III of Capital, while nonetheless exhibiting tendencies towards bigness, waxing and waning from monopolization to democracy depending on the conditions of class struggle. Marx does not write about anti-trust policy, and it is arguably acceptable for a Marxian political economist to embrace anti-trust laws.

In general, the concentration and centralization tendencies of capital can tell us something important about antitrust laws. During the concentration phase, antitrust is most often seen as unnecessary, while during a moment of centralization antitrust is seen as draconian or obstructionist. This is exactly what Bork is able to exploit in The Antitrust Paradox, and the challenge for antitrust historically and in the future. In other, words Marx predicts there will be a historical battle between monopolization and democracy.

There are spectacular moments of anti-trust laws breaking up concentrated or centralized power. And we must address Big Tech in a similar way. However, the historical record of anti-trust laws, even during the eras of Brandeis and Patman, is that they are a minor annoyance to the giant corporation.

Economic power is the black box of economic theory. In the neo-classical tradition the solution is to argue power as benign to price adjustments, at least in the long-run. Anti-trust law recognizes this is false. Even when anti-trust law is implemented, paradoxically it underscores how power is often malignant. Galbraith and the Marxian tradition did not often agree, but both understood antitrust as necessary to push back against power, albeit insufficient. It is historically misleading and a strategic blunder to present radically prodemocracy thinkers such as Galbraith and Marx as enemies to an antimonopoly movement when they can be seen as its ally.

18 January 2021

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