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The Last Autonomist: Louis D. Brandeis and the Struggle for Antitrust

Adelstein, Richard

Journal of Contextual Economics – Schmollers Jahrbuch, Vol. 136 (2016), Iss. 3: pp. 285–302

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Department of Economics, Wesleyan University, PAC 123, 238 Church Street, Middletown, CT 06459, USA.

Abstract

Louis Brandeis was the greatest opponent of industrial “bigness,” but not the first. After a brief introduction to his life and intellectual commitment to small scale and decentralization of authority in both production and government, this essay considers Brandeis's ideas about policy toward large firms in the context of the controversy in the United States Supreme Court over the interpretation of the Sherman Antitrust Act between 1890 and 1911. Opponents of bigness (“autonomists”) on the Court believed that allowing the market to determine the size of firms made firms too large and supported direct controls on growth, and opposed the common law rule of reason as an obstacle to limiting the size of firms. In 1911, the Court definitively rejected both these propositions in favor of a policy of efficiency in production and indifference to large scale, interpreting the Sherman Antitrust Act to include the rule of reason and leaving the question of firm size to fair competition alone. Brandeis, surprisingly, supported the Court on both these issues. The essay discusses his reasons for doing so, based in a misreading of the implications of bounded rationality, a concept Brandeis clearly anticipated, his gradual recognition after 1911 of why bigness had succeeded in the United States, and the disappointment this caused him. It concludes with a short speculation on how Brandeis might approach the contemporary problem of climate change.

JEL Codes: A13, B31, K21, L4