Be Afraid of Economic ‘Bigness’

After the Second World War, an urgent question presented itself: How can we prevent the rise of fascism from happening again? If over the years that question became one of mostly historical interest, it has again become pressing, with the growing success of populist, nationalist and even neofascist movements all around the world.

Common answers stress the importance of a free press, the rule of law, stable government, robust civic institutions and common decency. But as undoubtedly important as these factors are, we too often overlook the threat to democracy posed by monopoly and excessive corporate concentration — what the American Supreme Court justice Louis Brandeis called the “curse of bigness.” We must not forget the economic origins of fascism, lest we risk repeating the most calamitous error of the 20th century.

Postwar observers like Senator Harley M. Kilgore of West Virginia argued that the German economic structure, dominated by monopolies and cartels, was essential to Hitler’s consolidation of power. Germany at the time, Mr. Kilgore explained, “built up a great series of industrial monopolies in steel, rubber, coal and other materials. The monopolies soon got control of Germany, brought Hitler to power and forced virtually the whole world into war.”

No one cause accounted for the rise of fascism. But as writers like Diarmuid Jeffreys and Daniel Crane have said, economic concentration creates conditions ripe for dictatorship.

It is a story that should sound familiar: An economic crisis yields widespread economic suffering, feeding an appetite for a nationalistic and extremist leader. The leader rides to power promising a return to national greatness, deliverance from economic suffering and the defeat of enemies foreign and domestic (including big business). Yet in reality, the leader seeks alliances with large enterprises and the great monopolies, for each has something the other wants: He gets their loyalty, and they avoid democratic accountability.

There are many differences between the situation in the 1930s and our predicament today. But given what we know, it is hard to avoid the conclusion that we are conducting a dangerous economic and political experiment: We have chosen to weaken the laws — the antitrust laws — that are meant to resist the concentration of economic power in the United States and around the world.

From a political perspective, we have recklessly chosen to tolerate global monopolies and oligopolies in finance, media, airlines and telecom- munications, to say nothing of the major technology platforms. In doing so, we have rejected the safeguards that were supposed to protect democracy from a dangerous marriage of private and public power.

Unfortunately, there are abundant signs that we are suffering the consequences, both in the United States and elsewhere. There is a reason that extremist, populist leaders like Jair Bolsonaro of Brazil, Xi Jinping of China and Viktor Orban of Hungary have taken center stage, all following some version of the same script. And in the United States, we have witnessed the anger borne of ordinary citizens who have lost influence over economic policy — and by extension, their lives. The middle class has no influence over their stagnant wages, tax policy, the price of essential goods or health care. This powerlessness is brewing a feeling of outrage.

After the fall of the Third Reich, the Allies broke up the major Nazi monopolies specifically so that they could not be “used by Germany as instruments of political or economic aggression,” in the words of the law used to do so. America took its medicine, too: In 1950, Congress passed the Anti-Merger Act of 1950 to curb politically and economically dangerous concentrations. It allowed the blocking of mergers when the effect was “substantially to lessen competi- tion or to tend to create a monopoly.”

It would be understandable if you assumed that the Anti-Merger Act had been repealed. But it remains on the books. It has merely been evaded, eroded and enfeebled. Consequently, over the last two decades we have allowed waves of mergers that have concentrated economic power.

In recent years, we have allowed unhealthy consolidations of hospitals and the pharmaceutical industry; accepted a concentrated banking industry, despite its repeated misfeasance; failed to prevent firms like Facebook from buying up their most effective rivals; allowed AT&T to reconsolidate after a well- deserved breakup in the 1980s; and the list goes on. In the last two decades, over 75 percent of American industries have had an increase in concentration, while public markets have lost almost 50 percent of their publicly traded firms.

There is a direct link between concentration and the distortion of democratic process. The more concentrated an industry — the fewer members it has — the easier it is to cooperate to achieve its political goals. A group like the middle class is hopelessly disorganized and has limited influence in Congress. But concentrated industries find it easy to organize to take from the public for their own benefit.

We need to figure out how the classic antidote to bigness — the antitrust and antimonopoly laws — might be updated. Congress should pass a new Anti-Merger Act reasserting that it meant what it said in 1950, and create new levels of scrutiny for mega-mergers.

But we also need judges who better understand the political as well as economic goals of antitrust. We need prosecutors willing to bring big cases with the courage of trustbusters like Theodore Roosevelt, who brought to heel the empires of J.P. Morgan and John D. Rockefeller, and with the economic sophistication of those who challenged AT&T and Microsoft in the 1980s and 1990s. Europe needs to block more mergers, too, especially those like Bayer’s recent acquisition of Monsanto that threaten to put entire global industries in just a few hands.

America pioneered a kind of law — antitrust — that in the words of Roosevelt would “teach the masters of the biggest corporations in the land that they were not, and would not be permitted to regard themselves as, above the law.” Antitrust law had more than an economic goal: It was meant as a constitutional safeguard, a check against the political dangers of unaccountable private power.

As the lawyer and consumer advocate Robert Pitofsky warned in 1979, we must not forget the economic origins of totalitarianism, that “massively concentrated economic power, or state intervention induced by that level of concentration, is incompatible with liberal, constitutional democracy.”