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How to Break Up Corporate Giants

Strong antitrust enforcement is politically more complex than Matt Stoller’s new book allows.

Ian Waldie/Getty Images

Anyone who lived in New York City in the 1970s and ’80s is likely familiar with the discount electronics store chain Crazy Eddie. By 1987, there were over 40 stores spread across four states, which brought in $353 million in revenue. Most memorably, Crazy Eddie ran thousands of radio and television commercials. The television spots often featured a fast-talking, excited radio announcer named Jerry Carroll, whose arms would flail and spray like sparks from his chest as he sprinted through the great deals waiting for customers. Some commercials promised that Crazy Eddie would “not be undersold.” In a stroke of only minor overstatement, Carroll ended every spot by pushing his arms together toward the camera as if surrendering to handcuffs, tightening his face in an electrocuted rictus, and screaming that Crazy Eddie’s prices were “insane.”

GOLIATH: THE 100-YEAR WAR BETWEEN MONOPOLY POWER AND DEMOCRACY by Matt Stoller
Simon & Schuster, 605 pp., $29.99

Carroll was right, of course: Crazy Eddie’s prices were insane. They were so low they would have driven a normal business into bankruptcy. The prices were also, when founder Eddie Antar began in the 1970s, illegal. Fair trade laws barred retailers like Crazy Eddie from selling, say, stereos, below a certain price. These laws were intended to keep Crazy Eddie from cornering the market on stereos by offering a price others could not compete with. Being the sole retailer for stereos would give Crazy Eddie undue power over stereo makers, which the store could use to extract concessions or negotiate deals that other stores didn’t have the leverage to make. But the Consumer Goods Pricing Act of 1975 trashed fair trade laws and put Crazy Eddie in the clear. Business boomed. The chain went public in 1984. Nasdaq assigned them the symbol CRZY.

As most people familiar with Crazy Eddie know, the business was also predicated on fraud. They pocketed cash transactions, inflated inventories and earnings, and shredded receipts. What the owners of Crazy Eddie realized was that if a business could somehow maintain a loss for long enough, it could drive its competitors out of business. Today, Amazon famously operates without generating a profit. Like Crazy Eddie, it offers insanely low prices that crush competitors (though unlike Crazy Eddie, Amazon covers its losses with cheap debt). Crazy Eddie is also important because it is one of many stories that Matt Stoller uses to illustrate his new book, Goliath, a timely history of antitrust law.

Supreme Court Justice Louis Brandeis, the antitrust crusader who coined the phrase the “curse of bigness,” once remarked that deep discounts are “the most potent weapon of monopoly—a means of killing the small rival to which the great trusts have resorted most frequently.” Fair trade laws were crucial to twentieth-century U.S. antitrust law. “The entire edifice of the twentieth-century [antitrust law],” writes Stoller, “stood on the foundation of fair trade and other laws designed to keep the capitalists—and the trading companies they controlled—from interfering in the process of pricing a good.” As soon as concentrated financial interest could wrest concessions from other actors in the economy, things quickly got out of hand.

Goliath erupts out of Stoller’s popular, pugnacious 2016 article in The Atlantic titled “How the Democrats Killed Their Populist Soul.” In it, he chronicles how the wave of freshman Democratic congresspeople in the 1970s known as the Watergate Babies pushed their noble, Depression-era, trust-busting forebears from their committee chairs, deregulated banking, and excitedly embraced an elite-run technocracy. They also agreed with Republican lawmakers that one of the best ways out of the economic doldrums was to allow corporate consolidation. Stoller saw lax antitrust enforcement as an abandonment of the working class, because it prioritized corporations’ welfare over people’s, consumers over small-business owners. Stoller is now a fellow at the Open Markets Institute, an organization that recently advocated for the breakup of the major tech firms. Goliath expands the history and scope of argumentation, producing the broader, unwieldy thesis that monopoly and bigness itself is, categorically, an elitist project that subverts the democratic process.


The danger of concentrated corporate power was as true in the 1880s, when railroad and financial barons were first consolidating power, as it was in the 1980s and is today. The railroad barons, operating in a largely unregulated market, would underbid each other on price in a deleterious downward spiral that caused wages to be slashed and critical maintenance to be forgone. Strikes, deadly crashes, and bankruptcies were routine. Large financial trusts orchestrated by J.P. Morgan squeezed independent farmers everywhere. Populist anger flooded the country. In 1890, the Sherman Antitrust Act was passed.


The Sherman Act primarily prevented price-fixing among competitors and market monopolies. While the Supreme Court broke up Standard Oil in 1911, President Theodore Roosevelt was generally uninterested in enforcing antitrust law, hoping instead to encourage the growth of giant corporations and use other means to harness them for the common good. It wasn’t until Woodrow Wilson was elected president that antitrust enforcement began in earnest. Wilson extended antitrust protections with the Clayton Act and created the Federal Trade Commission to monitor trust activity. In 1916, he nominated a crusading antitrust lawyer and architect of the FTC, Louis Brandeis, to the Supreme Court. Brandeis, during his time on the bench, secretly counseled a young Representative Wright Patman of Texas, one of the antitrust heroes in Stoller’s story.

The market crash in 1929 sparked a major uptick in antitrust enforcement. Until then, many believed that ultrawealthy plutocrats such as Treasury Secretary Andrew Mellon could manage the economy by allowing other plutocrats to run wild. In 1936, the Robinson-Patman Act (brought forth, in part, by Wright Patman) welded fair trade laws to antitrust, which gave the law teeth and led to 30 years of high activity in its federal use. This period saw a landmark antitrust action against Mellon’s Alcoa aluminum trust. The company had refused to ramp up production and had endangered the U.S. war effort by making aluminum, necessary for planes, scarce. As Stoller notes, at the time, the Department of Justice also prosecuted light bulb makers, optical goods companies, and chemical and pharmaceutical companies, among many others. Although a number of incredibly large corporations, such as General Motors, remained, Stoller sees this period as a golden age for antitrust enforcement and, by extension, democracy.

But in the 1960s, a counterrevolution was simmering. In 1966, Robert Bork, a corporate lawyer associated with the neoliberal economists at the University of Chicago, authored a bizarre argument. He claimed that the original intent of the Sherman Act wasn’t to protect producers with fair trade laws; that interfered with the workings of the free markets. It was actually to protect “consumer welfare,” which, as Stoller notes, Bork thought would be achieved by solely encouraging “efficient production.” Antitrust, in Bork’s world, wasn’t applicable as long as production was efficient and prices were low for customers. It was a legal theory that spread smiles across the faces of corporations who had been, for decades, yoked by labor unions and a strong federal regulatory apparatus. When stagflation struck in the 1970s, both Democrats and Republicans panicked and embraced Bork’s deregulatory ideas. Chain stores like Crazy Eddie were now free to underprice competitors and ooze across the land. (It was also a perfect theory for a world slowly being retooled to service consumer spending: Stoller shows how consumer rights advocates like Ralph Nader cheered on the denigration of fair trade laws, which Nader felt protected producers at the expense of consumers.)

William Baxter, who headed Ronald Reagan’s antitrust division at the Justice Department, said, at the beginning of the 1980s, that he would “be structuring antitrust and merger law to prioritize economic efficiency, and no longer enforce the law consistent with the congressional purpose of restraining corporate size and power.” Baxter was explicitly in favor of corporate consolidation and had a religious faith that capital would flow to whichever sector of the economy it would be most efficiently used in. This gave the business world a green light for an orgy of mergers. Baxter’s philosophy has gone unchallenged through every Democratic and Republican government for almost 40 years now, leaving us with record-low antitrust enforcement and record-high corporate concentration.

Stoller points out the incredible degree of corporate concentration that our government has allowed, in almost every sector: four major banks, four major airlines, two phone makers, five big tech companies, Amazon and Walmart, Experian and Equifax, meat processing, vitamin C producers, voting machine companies, pharmaceuticals—the list does not stop. This concentration, Stoller argues, endangers democracy because it crushes small businesses, wrests concessions from workers, and allows corporations to amass uncountable fortunes that they can then throw into the electoral process. It also alienates workers and consumers from their communities by making local ownership difficult. The solution, for Stoller, is to use antitrust law to reinstate truly competitive markets, which he hopes will reinvigorate the democratic process.


But while Goliath is replete with well-researched stories, the book is argumentatively incomplete and oversimplified. As Professor Daniel Crane notes in a recent article for the Cato Institute, it is absurd to assume that the Sherman Antitrust Act was earnestly passed to break up trusts. It was passed—explicitly—as a bulwark against populist sentiment. “Speaking on the Senate floor in 1890,” Crane writes,

Sen. John Sherman warned his brethren—many of whom were controlled by the trusts—that Congress “must heed [the public’s] appeal or be ready for the socialist, the communist, and the nihilist.” Sherman thus conceived of his eponymous antitrust statute ... as a sort of Band-Aid on capitalism.

At the end of Crane’s article, he admonishes his fellow libertarians that the time might be right for them to do the same: “If popular dissatisfaction with the economic status quo grows, demand might grow to pull either the regulatory or antitrust lever. Those ideologically committed to a light governmental hand on the market might prefer the antitrust alternative.” Crane’s sentiment illuminates the complexity of antitrust; that it can be (and has been) a tool to avoid more extensive, egalitarian reform.

Conversely, libertarian and neoliberal economic thinkers—some of whose ideas fueled lax antitrust enforcement—agree with Stoller that competition is paramount. Friedrich Hayek, a founding father of Crane’s libertarian thought, was worried about corporate concentration and its effects on liberty, something Stoller mentions. Of course, Hayek feared any large institution, public or private. The solution was decentralized, competitive markets. This is where libertarians intersect with neoliberals like Milton Friedman. In an interview about his philosophy, Friedman said, “The essence of an effective television industry, an effective telephone industry, an effective computer industry, or an effective mail delivery industry—you name it—is competition. That’s what we need to get in schools.” In a neoliberal vision, there is little that can’t benefit from being introduced to a competitive market. Teachers’ unions be damned. For neoliberals, competitive markets are equivalent to democracy, without all the messiness of government.

To a casual observer, it might be a surprise that some of the greatest support for monopoly power has come from socialists. Crane finds Eugene Debs in the early twentieth century saying, “Monopoly is certain and sure. It is merely a question of whether they will be collectively owned monopolies, for the good of the race, or whether they will be privately owned for the power, pleasure and glory of the Morgans, Rockefellers, Guggenheims, and Carnegies.” The question for Debs is one of private versus public power. Today, agitations for universal health care, basic income, and childcare, and Sarah Jaffe’s call to nationalize Amazon bring these important questions about monopoly to the fore.

This is all to say that, politically, antitrust is a bag of cats. It sprawls and flops across the political spectrum, and because it deals with law, its existence and use is nuanced. The issue is complex, made more so by our current moment. Stoller spends little time addressing libertarian antitrust supporters, neoliberal competition fiends, or socialist detractors. Stoller’s antitrust world is simple, divided into good antitrust crusaders, such as Senator Wright Patman, and bad “corporatists” like New Deal architect Adolf Berle and economist John Kenneth Galbraith. And while he is right to spend a great deal of time criticizing Democrats, liberals, and technocrats for abandoning the working class, Stoller spends too much time straining to throw different lefty theorists like Galbraith under the bus for supporting the three-part marriage of big institutions: labor unions, corporations, and government.

Stoller’s roving enthusiasm for Jeffersonian “yeomanry,” or Brandeis’s “system of regulated competition,” or an “egalitarian system of free enterprise,” or “fair competition” makes the reader wonder how Stoller’s world is different from Friedman’s or Hayek’s. Surely it is, but it is crucial to know precisely how, so as not to repeat the last 50 years of regressive economic policy. Stoller assumes that antitrust enforcement is implicitly populist policy, but it’s not: As historian Louis Hyman has pointed out in his book Temp, the Sherman Act’s initial, primary use was to prevent workers from forming labor unions, and to this day it prevents freelancers from organizing to negotiate their fees, something Uber has used to sue it drivers.

It’s impossible to know where Stoller stands because he never paints a picture of the antitrust world he aspires to. Is all concentration and centralization bad? What about Social Security, which is centralized retirement benefits? Is there a difference between public and private monopoly? What about nationalization? How do we know when concentration is too high? How do we update Jefferson or Brandeis for an economy that is 70 percent consumer spending? If “corporatism“ is truly the slur worthy of constant hurling, what does a world without large institutions and their advocates look like?

Another important development that goes unaddressed is that we live in a time of “bigness,” yes, but also, confusingly, debilitating smallness. Lean management theory of the 1980s fractured massive corporations into a myriad of tiny, just-in-time producers. The use of temps, freelancers, and contractors continues to proliferate. As a freelancer, and thus de facto small-business owner, I can attest: I hate it! It’s possible that solutions to big, slow-moving corporate bureaucracies could be the same as, or worse than, the problem.


Tellingly, Stoller saddles his prose with tone-deaf subordinate clauses when he uses odious events and characters as positive reinforcements of his thesis. Here are three examples. On the horrors of World War I: “And yet the war, while awful for the millions who died, would become a boon for the United States economy.” Or the violent appropriation of American Indian land after the Civil War: “The Homestead Act was the New Deal of that era, a bounty and economic independence awarded to citizens (with the definition of citizens hewing to white supremacy).” Or Woodrow Wilson: “Wilson had illustrated strong anticorruption progressive instincts, as well as the toxic racism of the Jim Crow Era. He ... transformed Princeton from a provincial college for the wealthy into a world-class university, while still ensuring it would remain an all-white institution.” After the caveat, he quickly moves on.

War, destruction, and racism put real limits on the democratic process. Wilson’s (or maybe more importantly, Thomas Jefferson’s) racism is not a side note: It is the story. In a book ostensibly about the reinvigoration of populist democracy, you cannot ignore the way that economic wins have so often required already marginalized groups to lose. How do we enact antitrust today in a way that addresses recalcitrant inequities? If we democratize property ownership, who will lose, and what will we do for them? A system of regulated competition or free enterprise is a limited lens through which to view populism; it’s populism primarily for small-business owners and individuals with access to capital. Competitive markets are no stand-in for justice.

Breaking up corporate power is, of course, an excellent first step toward populist democracy. The question that needs answering is not why, but for whom? How do we use antitrust to re-enfranchise citizens and make our political system responsive to the electorate? How do we permanently curtail private power in service of the public? Part of that is breaking up the tech giants, but without a consideration of what else it would entail, we could easily remain yoked with still-undealt-with historical inequality. The abandonment of fair trade laws for economic efficiency has not served the public well, but is competition the answer to efficiency? What if this causes prices to rise? The political implications of ideas like competition or efficiency are complicated but exceedingly important to consider.

For Stoller, it is imperative to democratize private property and free markets. Without them, “prices for essential goods and services reflect monopoly power rather than free citizens buying and selling to each other. People worldwide, sullen and unmoored from community structures, are turning to rage, apathy, protest, and angry tribalism.” It is a dark and contradictory assessment of the world, which assumes that progress is pushed forward through pure civility. But will corporations go quietly? Given the sheer physical violence they inflicted on the labor movement for almost a hundred years and the legal violence they waged after that, it is doubtful. Maybe a little rage is necessary.