Customer Reviews

Antitrust and Monopoly: Anatomy of a Policy Failure (Independent Studies in Political Economy)

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First, I will provide context of my reading level. As an armchair intellectual, I enjoy reading books on economic philosophy for pleasure. I have read several books by Milton Friedman (i.e., Free to Choose, Capitalism and Freedom, Money Mischief) a few Mark Skousen Books (e.g., the Big Three in Economics, Vienna and Chicago: Friends or Foes?), a few Thomas Sowell books (e.g., On Classical Economics, Marxism: Philosophy and Economics), Henry Hazlitt's book Economics in One Lesson, Brian Simpson's Markets Do Not Fail!, the collection of essays on the Austrian Trade Cycle and many more. However, despite my established interests, I found this book to be informative but very boring and a chore to read.

However, my criticism of the enjoyability of the book does not extend to the value of the author's scholarship. Armentano makes a compelling case that anti-trust laws are arbitrary, are unjust, do not lead their intended results and *never* were moral or practical. The last point is especially important since many anti-trust critics still concede that it was worth busting trusts such as Standard Oil back in the day. In addition to moral and economics arguments, Armentano presents a extensive history of anti-trust cases as he analyzes over 30 cases up until the time of this books publication (late 1970s).

For the reasons stated above, I recommend this book as a reference but I do not recommend it for recreational reading for laymen. Overall, The Abolition of Antitrust, which is edited by Gary Hull, is a far superior book at articulating why anti-trust laws are both immoral and impractical.

I remember reading this book in an advanced micro economics course at the University of Maine. It struck a chord and helped me turn the page to start questioning the standard fare served up by my professors. The Austrian analysis continues to make the most sense with respect all economic situations and it is books like this that need to be distributed to serious students of economics and philosophy.

This book cuts through the confusion, fallacies and ignorance surrounding antitrust policy. With scholarship and rigor, it analyzes classic antitrust cases to argue convincingly that antitrust law is wrong in theory and disastrous in practice. Its argument is nothing less than that antitrust laws should be repealed.

A summary of its contents may be helpful to prospective buyers: Its first fifty pages are concerned with theory, first discussing the rationale, legality and legitimacy of antitrust policy; then presenting and critiquing neoclassical competition theory, offering alternative theories, based in Austrian economics, in the process. The next 220 pages (including endnotes) are taken up with studies of more than 35 classic antitrust cases, organized into six topical chapters: monopoly under the Sherman Act; monopoly in busines history; price conspiracy and antitrust law; price discrimination and the competitive process; tying agreements and public policy; mergers, competition and antitrust policy. In each chapter, subsections explain the theory behind the analysis that follows and restate the chapter's conclusions at the end. The last chapter (ten pages) reviews the book's major findings, critiques both antitrust's enthusiasts and conventional critics and arrives at a radical conclusion from its examination of theory and history: "Nothing less than an extreme opposition in principle to all antitrust laws appears justified by the facts." An appendix (three pages) excerpts relevant sections of the Sherman Act, the Clayton Act and the Federal Trade Commission Act.

One observation made in its concluding chapter is that many antitrust critics do not reject antitrust law entirely, believing that there was at one time a "golden age" of antitrust when it was needed to curb monopoly and that today antitrust policy is often simply misguided. For those of you of this view: You are mistaken. Antitrust has never been justifiable, has never worked. Ever. And this book goes a long way toward proving it. This is why this book is important. It should be read by economists, students and anyone who would dare assert the realistic possibility of monopoly's arising in a free market: if you would assert this, you don't know as much as you think you do.

Dr. Armentano has written another book, *Antitrust: the Case for Repeal*; it is shorter and analyzes more recent antitrust cases (the most recent case in the book under review is from 1977), such as the one against Microsoft. I have not read it yet, but I expect it to be of comparable quality to *Antitrust and Monopoly*. For a philosophical and moral case for capitalism in general, see Ayn Rand's *Capitalism: the Unknown Ideal*, especially chapters 1 ("What is Capitalism?") and 3 ("America's Persecuted Minority: Big Business").

In this book, Armentano presents a stellar case against antitrust. Using air-tight Austrian theory, he first refutes common fallacies inherent in the relevant aspects of today's popular economic theory. Afterwards, he goes through the history of antitrust prosecution, dispelling myth after myth. As a whole, this book proves without a doubt that antitrust is, and has always been, a dangerous and unnecessary set of laws.

The product description for this book states: "Is antitrust law a necessary defense against the predatory business practices of wealthy, entrenched corporations that dominate a market? Or does antitrust law actually work to restrain and restrict the competitive process, injuring the public it is supposed to protect? In this breakthrough study, Professor Armentano thoroughly researches the classic cases in antitrust law and demonstrates a surprising gap between the stated aims of antitrust law and what it actually accomplishes in the real world. Instead of protecting competition, Professor Armentano finds, antitrust law actually protects certain politically-favored competitors."

I think Armentano makes this case and I ultimately concluded from reading this book and others (and studying this subject in school), that antitrust law is more of a political weapon (that is wielded very arbitrarily) than anything else. I'm perhaps a little more open than Armentano to the possible use of antitrust law in very limited circumtances (certain monopoly situations, complete control of a critical natural resource, etc.), though again, I think Armentano does make the case for repeal with respect to most of it. And even in the rare cases where it might make sense to "take down" an egregious monopoly situation, antitrust law really isn't the right vehicle to do it.