Cato Institute, Washington, D.C. • 1986 • 78 pp. • $7.95 paperback
Dr. Petro is the author of The Labor Policy of the Free Society and numerous other scholarly books and articles.
This little book covers a lot of ground, thinly, of course, for there is only so much you can do in 78 pages, but well enough to kill most of the weeds parading under the name “antitrust theory.” Professor Armentano takes up one by one the main contentions of the “trustbusters” and shows them all to be mythic and wrongheaded. Since the antitrust laws thus serve no useful purpose, but on the contrary have done considerable economic and ideological harm, he concludes that they all should be repealed.
Armentano places the antitrust idea among the other accusations of “market failure” which have premised virtually all the noxious interventionist legislation of the last hundred years, beginning with the Interstate Commerce Act. This is an important perception, but it is too bad that he has not rounded out the analysis. He might have gone on, if only briefly, to spell out the deeper truth that ultimately dooms the “market failure” idea: Human nature and the structure of the universe are such that free markets and personal freedom, properly understood, are optimizing institutions.
Values being subjective in origin and character, however widely shared, there is no way that limiting personal freedom, as all interventionist legislation seeks to do, can avoid reducing human welfare. Policies designed to correct alleged “market failures” thus are themselves bound to fail—from the point of view of the general welfare. Armentano more than likely shares these convictions, for he says that “because individual costs and benefits are ultimately subjective and personal, they cannot be added up or subtracted to calculate net social efficiency or welfare.” (p. 71)
However, his demonstrations of the errors of antitrust policy are loaded with the language and the overtones of the positivist “empiricism” of the so-called “Chicago School,” which seems to have replaced Keynesianism as the obligatory dress length in that most fashion conscious of all occupations, university teaching. Armentano is better than some. He does cite Hayek, Kirzner, and even Rothbard once or twice, But there is no citation to Mises, a serious omission, since the monopoly analysis in Human Action is the most seminal critique of “antitrust theory” in the literature. And for Armentano, judging from his references, the “Chicagoans,” Bork, Posner, Stigler, and Demsetz, are the authorities to reckon with. Surely they are worthy writers and thinkers, but it is unsound scholarship and poor form to grant them precedence over Mises. We certainly agree with Armentano that the antitrust policies are noxious and that they should be abandoned. But it is important to the future of liberty that the grounds be established as clearly as possible. And this can be done only in the manner advanced by Mises, the Austrian a priori.
Antitrust theory holds with Karl Marx that an unhampered economy produces monopoly con centrations of “economic power” which destroy competition, exploit labor and consumers, and thus certainly also fail to allocate resources optimally. Mises has shown that there is no way to prove or disprove this proposition empirically. Even though the historical evidence has suggested time and again that the Marxian predictions are wrong, socialism springs up anew time and again, and it does so because people continue to believe that the liberty of entrepreneurs is not only dispensable, but even dangerous and noxious. It is the same with such interventionism as the antitrust policies embody. Until freedom of economic ac-tion-human action—is regarded as the essential human liberty, the optimal method of social organization, there never will be an end of efforts to correct “market failures.” But only logical deduction from self-evident premises, together with a steady barrage of uncompromising exposition of the truths thus derived, can hope to achieve and to spread the necessary understanding. Statistics are inadequate, both epistemologically and rhetorically. Some day, perhaps, students of freedom will count the title of Mises’ great work, Human Action, as the ultimate excellence of this; in the current idiom, it says it all.
Armentano’s refutation of antitrust theory is at bottom logical. For example, he says that “by definition, a free market is always competitive and tends to eliminate inefficiency” (p. 59). But he is given to the funny “empiricist” jargon of such statements as “the only objective ex post test of the correctness of entrepreneurial decisions is the market process itself.” I suppose that if one wants to belong to the club of current academic economists one must talk like that, but such expressions as “ex post” and “ex ante” are not helpful. They also grate on the nerves. Finally, they really do not convince anyone of anything important. . . . For all that, this is a good book, with sound and good ideas on every page, and readable for the most part, too.