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Special Edition Magazine, Spring 2020: Beyond the Techlash

The Digital Gilded Age’s Natural Allies

With major tech companies having disrupted labor markets and amassed overwhelming market power, a growing chorus is calling for both stronger antitrust enforcement and new protections for workers. And while such demands may have been in tension with each other in the past, they now represent two sides of the same reformist coin.

DETROIT – More than at any time in decades, reforms to both antitrust and labor law are being debated in law and policy circles. In the United States, a surge of worker organizing and collective action across a range of sectors – education, media, tech – has coincided with a wave of anti-monopoly initiatives. The emerging left wing of the Democratic Party champions both labor and anti-monopoly politics.

These two tendencies have arisen in response to the same decades-long trends: increasing economic inequality, the disempowerment of ordinary working people, and the unchecked concentration of power in the hands of a few individuals and corporations who are now making decisions on behalf of society as a whole. One key question, then, is to what extent the two reformist tendencies are compatible.

Some would argue that labor politics and anti-monopoly politics are at odds, or that labor law and antitrust law are opposed in principle. These claims are frequently rooted in memories of the mid-twentieth-century era of coordinated, oligopolistic industries with high union density. Antitrust skeptics’ implicit contention is that large firms in concentrated markets are more conducive to robust workers’ organizations.

But that is not necessarily true. For one thing, market concentration, by many measures, is greater now than it was then, while union density is obviously down. Moreover, the crucial unstated assumption behind the skeptical contention is that coordination through ownership is the only option for stabilizing markets. Questioning this assumption, however, is critical to antitrust reform. Looser coordination within decentralized, rather than oligopolistic, markets would likely ultimately be betterfor workers’ organizations, because it would avoid the twin ills of destructive zero-sum competition and concentrated employer power.

At its core, the claim that an antitrust revival is incompatible with a labor revival presupposes that the primary purpose of antitrust law is to maximize economic competition, to encourage lower consumer prices, or both. But this is incorrect. While antitrust law ought to value healthy business rivalry as one policy goal among others, its original goal was not to maximize competition as such, nor even to reduce consumer prices. Rather, the point of antitrust law is to disperse the legal right to engage in economic coordination in such a way as to counteract the economic domination of less powerful actors by more powerful ones.

Such domination, often engineered through oppressive contracts, naturally tends to increase disparities of economic power further over time. To the legislators who deliberated over the US Sherman Antitrust Act of 1890, the key problem to be remedied was the concentration of economic coordination rights within the emerging corporate boardrooms of the late nineteenth century. Citing the example of Standard Oil, Senator John Sherman of Ohio argued that the company posed a danger to the entire country because it caused production, transportation, and other economic sectors “to depend on the will of a few men sitting at their council board.”

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More competition and lower consumer prices might at times be desirable consequences of dispersing concentrated economic coordination rights, but legislators during the Gilded Age also singled out the massive trusts’ tendency to depress supplier prices as one of the ill effects of their concentrated power. Moreover, in the mid-twentieth century (when judges and regulators took the original statutory goals somewhat seriously) antitrust law not only policed corporate mergers and acquisitions in earnest, but also sought to prevent the contractual domination of small firms by more powerful downstream or upstream entities.

But things changed with the revolution that took place within antitrust law starting in the 1970s. US antitrust law has become extremely permissive of mergers and acquisitions, on the theory that they promote economic efficiency, thus benefiting consumers. Yet there is little empirical evidence to support this, and it is increasingly apparent that the resulting permissiveness allows more powerful firms to coordinate activities in adjacent markets without bearing much responsibility for those activities under labor law, public safety regulation, or general torts.

Labor law, for its part, has struggled to account for the proliferation of work beyond the bounds of traditional employment. Contemporary antitrust law has an insufficiently recognized role in helping platform-technology companies create and perpetuate what David Weil of Brandeis University calls the “fissured workplace.” Not only does current antitrust law prefer economic coordination through vertical restraints, upon which dominant platforms rely to control the smaller players in their orbits; it is also intolerant of horizontal coordination such as cooperation among workers and smaller firms. This imbalance is visible in franchising and in the tech platforms’ supposedly new business models.

Today’s antitrust reformers want to reverse this legal preference, which permits Big Tech companies and others to engage in far-reaching economic coordination for their own benefit, while simultaneously wielding antitrust law as a weapon against coordination by workers and smaller actors. By reallocating economic-coordination rights from more powerful “lead firms” to workers – and, where applicable, to smaller firms – the reform movement could immediately empower workers across the gig economy and in a wide range of service sectors such as fast food.

Addressing the problem of employee misclassification under labor regulation does not obviate the need for antitrust reform. Not only would this do nothing to remove the power of dominant players to control smaller sub-contracted or franchised entities (a major source of bad jobs), but the recalcitrant political opposition to such reform efforts precisely illustrates the effects of unchecked corporate power. Notably, the same powerful tech companies that have benefited from the antitrust establishment are now waging an unprecedented campaign against California Assembly Bill 5 and other measures to reclassify platform workers as employees (thus bringing them within the reach of labor regulation).

The campaign against AB5 is a perfect (and brazen) example of how concentrated corporate power is regularly used to influence politics in a way that undermines working people. By reallocating some of that power to workers, reformers can simultaneously fulfill the original purpose of antitrust law and restore balance to the digital economy.

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