Book Review: The Curse of Bigness

In the Curse of Bigness, economist Tim Wu takes the reader on a meticulous journey through anti-trust history, from the enactment of the Sherman Anti-trust Law through its role in the busting of Gilded-Age monopolies, on to its present (and fairly dormant) role in the American political conversation today. The discussion is framed as a series of movements and counter-movements, told through the perspective of of political and sometimes personal standoffs between the industrial capitalists and the regulators and politicians of our historical past and present.

Wu is a multi-dimensional storyteller, able to simultaneously present the rationale behind monopolization (and its proposed benefits to society) as well as its long term dangers and problems. In the 19th century, the Trust movement envisioned that ultimately every sector would run by a monopoly–a state of pure, economic autocracy, in which centralization would assure quality control and predictability. Rockefeller’s horizontal integration of the oil market and Carnegie’s vertical integration of the steel market are probably the best known, but Wu pegs J.P. Morgan as the greatest monopolizer of all time. Morgan had a finger in every pie, from the steel industry to rail roads to shipping, and with a special talent for banking.

Wu makes it clear that these men, much like the wealthy entrepreneurs of today, saw in their possession of wealth a moral imperative. As huge philanthropists, they contributed to substantial research endeavors and even social safety nets–Rockefeller invested heavily in vaccine research, for example, and Morgan once covered the payroll for the entire U.S. Army when Congress was gridlocked in 1871. On the other hand (a much bigger hand!) the Gilded Age robber-barrons were ruthless when it came to corporate conquest, willing to lie, cheat, style, manipulate the media, mislead investors, and take advantage of workers in pursuit of market share. Wu calls this focus on centralization and domination at all costs an ‘industrial eugenics campaign’ (fair enough, given that Rockefeller’s son later invested in actual sterilization programs). Wu argues that the popular philosophy of winner-take-all Social Darwinism allowed Gilded Age industrialists to justify their actions. They believed that a few well-positioned individuals could reprogram society to perform better. Those who were small and weak would be purged or eliminated, in pursuit of a society run by the industrial ubermensch.

Wu creates a tense contrast between the lofty moral aspirations of these Gilded Age bigwigs and their personal behavior. As Ida Tarbell (noted journalist and harasser of the Gilded Agers) herself confirmed, the more outwardly moralizing these characters were, the more nasty skeletons and deals gone dirty they had in their closet. Wu dwells on an antidote about how Morgan, a performative Christian and husband, spent a few weeks floating down the Nile with an archbishop and several prostitutes, showering both in food and gold jewelry. (I prefer the story about Morgan pushing a man down the stairs so he could shut him out of a meeting and swing a critical shareholders vote in his favor.) In either case, the point is fundamentally the same: The monopolists believed in a world where the ends justify the means, and where people (often, white people) want to be judged on their best intentions and aspirations, and not on the inhumane moral sludge they produce as an everyday performer in their industry of choice (For a fun contemporary representation of this type of liberalizing hypocrisy, check out the movie Gringo, in which a series of terrible white people act terrible, while repeatedly asking the individuals they are screwing over to ‘not take it personally’ and to understand that they ‘are in fact a really good person.’) All in all, Wu illustrates the ways in which highly prominent and wealthy individuals made moral exceptions for themselves, while the lives and fortunes of many millions hung in the balance.

If the 19th century gave us the trust-builders, it also produced a backlash in the form of a number of successful but historically rare trust-busters, such as Senator Sherman (sponsor of the Sherman Anti-Trust bill) Louis Brandeis, and Theodore Roosevelt. Their rationale for fighting the trusts, while varying period to period, was largely based in the concern that if corporate entities had grown large enough in size to rival the power and resources of the US government, they represented a challenge to that government, depriving citizens of their rights as workers, producers, and citizens. These giants, however well meaning in their motives, were neither elected nor appointed, and their endeavors could therefore only advance their own agenda, and not that of the American people. Philanthropy is not democracy.

Wu devotes an entire chapter to Brandeis, whose philosophy on monopolies clearly informs his own. Brandeis was a lawyer and small business owner, equally wary of both large government and large corporations. He perceived that economic autonomy and agency were an essential form of liberty that needed protection from both government overreach and private abuse (and, not inconsistently, he was a supporter of labor unions). In his very public fight with Carnegie over the centralization of the New Haven Railroad (which perhaps readers will recognize from the game of Monopoly) Brandeis challenged Carnegie’s consolidation, correctly arguing that not only was it underhanded (it involved many payoffs, back door deals, and pressure on the media for positive spin) but it was also financially irresponsible, as Carnegie was overpaying to purchase his competition, promising lavish returns to stockholders that had no basis in reality. Though Carnegie chastised Brandeis as a ‘yellow dog’ and an anti-progress reactionary, Brandeis was vindicated when the New Haven railroad saw poorer service, wrecks, and raised fees, and when Carnegie was indicted for misleading investors and cooking the books. Brandeis paves the way for later actors, including TR, the first American president to apply the ant-trust laws when he took on J.P. Morgan’s railroad monopoly and later, after the publication of a revelatory book on the inner works of Standard Oil, its founder John D. Rockefeller.

Wu argues that the last major anti-monopoly case in recent history, the attempted breakup of Microsoft in the 1990s, represents the end of federal oversight of mergers and acquisitions. Since that time, he argues, monopolies and hostile takeovers have bloomed, particularly in tech, and go largely unchallenged. Why is this? Wu points blame on Robert Bork, a judge and legal scholar prominent in the 1980s who made the case for a very narrow interpretation of anti-trust law, which stripped it of much of its teeth. Bork argues that anti-trust law is solely meant to protect consumers, and consumer prices. For the last 30 years, anti trust law, if it was implemented at all, was interpreted in this fashion–if it could not be proven that a merger or takeover would result in higher consumer prices beforehand, no government actors moved to challenge it. Wu argues that larger questions about governance, about money in politics, and about what it means to be too big to fail (an Occupy Wall Street slogan that specifically targeted centralized banking) haven’t really been on the regulatory agenda in a meaningful way since Bork’s time.

It is not surprising that America’s monopolizing corporations, hungrily eating up new competitors, shoring up extra cash overseas, and taking the greatest possible advantage of cheap labor in oppressive countries, have been able to monopolize without jacking up prices, thereby passing Bork’s test again and again. Perhaps if Americans bore the cost of this aggregation, rather than the laboring peoples outside our borders, we would have seen the writing on the wall a little faster. Tim Wu makes the argument that SCOTUS should reinvigorate anti-trust law, drawing from Gilded Age examples to justify the need to break up monopolies to support competition and redistribute power and resources. While this proposal is in some regard the most non-partisan suggestion at improving American governance that I’ve heard in a long time, will it fall on deaf ears?

We’ve come back around to the idea that cartels might not be so bad, after all. Venture capitalist Peter Thiel, co-creator of Paypal, published an essay in the Wall Street Journal entitled “Competition is for losers: If you want to create and capture lasting value, look to build a monopoly.” Thiel makes the argument that hyper-competitive environments are bad for business, citing for example the restaurant industry in Manhattan, because they have very low profit margins and very high risk of failure. In short, they are bad for capital accumulation. Google, by contrast, is capitalistic but not competitive–its product is both very profitable and low risk (monopoly delivers). Peter Thiel (who for me crowned his supervillian status when he was rumored to be interested in transfusions of teenage blood to make himself ageless) proves that the .001% crowd fundamentally misunderstands the role of work in a complete human life. While Thiel values capital accumulation over purpose, most humans do not (or don’t have the option). This is why Thiel misses the mark on why so many otherwise unprofitable seeming industries, such as the arts, attract such a substantial array of talent and human energy. Thiel argues, much like the industrialists of the past, that monopoly is a more elevated, evolved form of corporate being, and that monopolists are part of a progressive movement to better organize society. There’s that barely-concealed ubermensch argument again, brought back from Herbert Spencer’s time, reinvigorated by Thiel and Trump and a host of other unsavory characters that simultaneously worship market capitalism and seek protection from it’s Invisible Hand.

Tim Wu’s The Curse of Bigness is a rich look at the history of trust building and busting through the eyes and minds of capitalists and the public servants and citizens that opposed them. If the notion of trust-busting sounds antiquated and old timey, an ancient problem from a radically different era, it is because, Wu argues, we can’t see the parallels in our own age. It is in fact heartening that there may be something in the American legal toolkit that already exists to challenge the unwarranted power and influence of corporations in America. Let us hope our elected officials plan to use it. Let us go ahead and break the tech cartels, re-establish sensible tax laws, and soak the rich.

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