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The Late Emerging Consensus Among American Economists on Antitrust Laws in the Second New Deal (1935-1941) (Revised Version)

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  • Thierry Kirat
  • Frédéric Marty

Abstract

This paper presents the late convergence process from American economists that led them to support a strong antitrust enforcement in the Second New Deal despite their long-standing distrust toward this legislation. The paper presents the path from which institutionalist economists, on one side, and members of the First Chicago School, on the other one, have converged on supporting the President F.D. Roosevelt administration towards reinvigorating antitrust law enforcement as of 1938, putting aside their initial preferences for a regulated competition model or for a classical liberalism. The appointment of Thurman Arnold at the head of the Antitrust Division in 1938 gave the impetus to a vigorous antitrust enforcement. The 1945 Alcoa decision crafted by Judge Hand embodied the results of this convergence: in this perspective, the purpose of antitrust law enforcement does consist in preventing improper uses of economic power. Read the first version of this publication

Suggested Citation

  • Thierry Kirat & Frédéric Marty, 2020. "The Late Emerging Consensus Among American Economists on Antitrust Laws in the Second New Deal (1935-1941) (Revised Version)," CIRANO Working Papers 2020s-46, CIRANO.
    • Handle: RePEc:cir:cirwor:2020s-46
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    File URL: https://cirano.qc.ca/files/publications/2020s-46.pdf
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    References listed on IDEAS

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    1. Allyn A. Young, 1915. "The Sherman Act and the New Anti-Trust Legislation: III," Journal of Political Economy, University of Chicago Press, vol. 23, pages 417-417.
    2. Allyn A. Young, 1915. "The Sherman Act and the New Anti-Trust Legislation: I," Journal of Political Economy, University of Chicago Press, vol. 23, pages 201-201.
    3. Bougette, Patrice & Deschamps, Marc & Marty, Frã‰Dã‰Ric, 2015. "When Economics Met Antitrust: The Second Chicago School and the Economization of Antitrust Law," Enterprise & Society, Cambridge University Press, vol. 16(2), pages 313-353, June.
    4. Jason E. Taylor, 2002. "The Output Effects of Government Sponsored Cartels During the New Deal," Journal of Industrial Economics, Wiley Blackwell, vol. 50(1), pages 1-10, March.
    5. Timur Ergen & Sebastian Kohl, 2019. "Varieties of economization in competition policy: institutional change in German and American antitrust, 1960–2000," Review of International Political Economy, Taylor & Francis Journals, vol. 26(2), pages 256-286, March.
    6. Miscamble, Wilson D., 1982. "Thurman Arnold Goes to Washington: A Look at Antitrust Policy in the Later New Deal," Business History Review, Cambridge University Press, vol. 56(1), pages 1-15, April.
    7. Robert Van Horn & Ross B. Emmett, 2015. "Two trajectories of democratic capitalism in the post-war Chicago school: Frank Knight versus Aaron Director," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 39(5), pages 1443-1455.
    8. Lamoreaux, N., 2019. "The Problem of Bigness: From Standard Oil to Google," Cambridge Working Papers in Economics 1963, Faculty of Economics, University of Cambridge.
    9. William E. Kovacic & Carl Shapiro, 2000. "Antitrust Policy: A Century of Economic and Legal Thinking," Journal of Economic Perspectives, American Economic Association, vol. 14(1), pages 43-60, Winter.
    10. Naomi R. Lamoreaux, 2019. "The Problem of Bigness: From Standard Oil to Google," Journal of Economic Perspectives, American Economic Association, vol. 33(3), pages 94-117, Summer.
    11. Frank H. Knight, 1932. "The Newer Economics and the Control of Economic Activity," Journal of Political Economy, University of Chicago Press, vol. 40, pages 433-433.
    12. Allyn A. Young, 1915. "The Sherman Act and the New Anti-Trust Legislation: II," Journal of Political Economy, University of Chicago Press, vol. 23, pages 305-305.
    13. repec:hal:spmain:info:hdl:2441/1op860fg2l8f4p3acvk2hj0tmn is not listed on IDEAS
    14. Luca Fiorito, 2013. "When Economics Faces the Economy: John Bates Clark and the 1914 Antitrust Legislation," Review of Political Economy, Taylor & Francis Journals, vol. 25(1), pages 139-163, January.
    15. Patrice Bougette & Marc Deschamps & Frédéric Marty, 2015. "When Economics Met Antitrust: The Second Chicago School and the Economization of Antitrust Law," Post-Print halshs-01090048, HAL.
    16. Frédéric Marty & Thierry Kirat, 2018. "Les mutations du néolibéralisme américain quant à l’articulation des libertés économiques et de la démocratie," Revue internationale de droit économique, De Boeck Université, vol. 0(4), pages 471-498.
    17. Myron W. Watkins, 1928. "The Sherman ActIts Design and Its Effects," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 43(1), pages 1-43.
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    Cited by:

    1. Thierry Kirat & Frédéric Marty, 2020. "From the First World War to the National Recovery Administration (1917-1935) - The Case for Regulated Competition in the United States during the Interwar Period," CIRANO Working Papers 2020s-66, CIRANO.
    2. Thierry Kirat & Frédéric Marty, 2021. "De la Grande Guerre à la National Recovery Administration (1917-1935). Les arguments en faveur d’une concurrence régulée dans les États-Unis de l’entre-deux-guerres," Revue de l'OFCE, Presses de Sciences-Po, vol. 0(1), pages 239-275.

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    More about this item

    Keywords

    Antitrust; Efficiency; Economic Power; Institutional Economics; Chicago School; New Deal;
    All these keywords.

    JEL classification:

    • B25 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Historical; Institutional; Evolutionary; Austrian; Stockholm School
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • N42 - Economic History - - Government, War, Law, International Relations, and Regulation - - - U.S.; Canada: 1913-

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