Hostname: page-component-cd9895bd7-gbm5v Total loading time: 0 Render date: 2024-12-27T11:37:08.095Z Has data issue: false hasContentIssue false
  • English
  • Français

Theory in closer contact with industrial life: American institutional economists on competition theory and policy

Published online by Cambridge University Press:  14 May 2021

Matthew T. Panhans Open the ORCID record for Matthew T. Panhans [Opens in a new window]  and
Reinhard Schumacher Open the ORCID record for Reinhard Schumacher [Opens in a new window]
Matthew T. Panhans*
Affiliation:
Federal Trade Commission, Washington, DC, USA
Reinhard Schumacher
Affiliation:
University of Potsdam, Potsdam, Germany
*
*Corresponding author. Email: [email protected]
Get access Rights & Permissions [Opens in a new window]

Abstract

This paper investigates the views on competition theory and policy of the American institutional economists during the first half of the 20th century. These perspectives contrasted with those of contemporary neoclassical and later mainstream economic approaches. We identify three distinct dimensions to an institutionalist perspective on competition. First, institutionalist approaches focused on describing industry details, so as to bring theory into closer contact with reality. Second, institutionalists emphasized that while competition was sometimes beneficial, it could also be disruptive. Third, institutionalists had a broad view of the objectives of competition policy that extended beyond effects on consumer welfare. Consequently, institutionalists advocated for a wide range of policies to enhance competition, including industrial self-regulation, broad stakeholder representation within corporations, and direct governmental regulations. Their experimental attitude implied that policy would always be evolving, and antitrust enforcement might be only one stage in the development toward a regime of industrial regulation.

Keywords

Competitioneconomic thoughtindustrial organizationinstitutional economicsinstitutionalismpublic policyB15B25L40
Type
Research Article
Information
Journal of Institutional Economics , Volume 17 , Issue 5 , October 2021 , pp. 781 - 798
Copyright
Copyright © The Author(s), 2021. Published by Cambridge University Press on behalf of Millennium Economics Ltd.

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Almeida, F. and Cavalieri, M. (2020), ‘Understanding Clarence Ayres's Criticism of an Emerging Mainstream and Birthing Institutionalism Through the 1930s Ayers-Knight Debate’, Journal of the History of Economic Thought, 42(3): 401–416.CrossRefGoogle Scholar
American Economic Association (1930), ‘Henry Rogers Seager’, The American Economic Review, 20(4): 794–797.Google Scholar
American Economic Association (1976), ‘In Memoriam: George W. Stocking 1892–1975’, American Economic Review, 66(3): 453–454.Google Scholar
Atikins, W., McConnell, D. W., Edwards, C. D., Raushenbush, C., Friedrich, A. D. and Reed, L. S. (1931), Economic Behavior (Vol. 1), Boston: Houghton Mifflin Company.Google Scholar
Backhouse, R. E. and Forder, J. (2020), ‘Recent Developments in the History of Economics’, Oxford Economic Papers, 72(4): 915–922.CrossRefGoogle Scholar
Bateman, B. W. (1998), ‘Clearing the Ground: The Demise of the Social Gospel Movement and the Rise of Neoclassicism in American Economics’, in Morgan, M. S. and Rutherford, M. (eds.), From Interwar Pluralism to Postwar Neoclassicism, Annual Supplement to Volume 30 of History of Political Economy, Durham, NC: Duke University Press, pp. 29–52.Google Scholar
Berk, G. (2009), Louis D. Brandeis and the Making of Regulated Competition, 1900–1932, Cambridge: Cambridge University Press.CrossRefGoogle Scholar
Burns, A. R. (1936), The Decline of Competition: A Study of the Evolution of American Industry, Westport, CT: Greenwood Press.Google Scholar
Camic, C. (1992), ‘Reputation and Predecessor Selection: Parsons and the Institutionalists’, American Sociological Review, 57(4): 421–445.CrossRefGoogle Scholar
Clark, J. M. (1924), ‘The Socializing of Theoretical Economics’, in Tugwell, R. (ed.), The Trend of Economics, New York: Alfred A. Knopf, pp. 71–102.Google Scholar
Clark, John M. (1939), The Social Control of Business (2nd edn), Chicago: University of Chicago Press.Google Scholar
Clark, J. M. (1940), ‘Towards a Concept of Workable Competition’, American Economic Review, 30(June): 241–256.Google Scholar
Clark, J. M. (1955), ‘Competition: Static Models and Dynamic Aspects’, American Economic Review Papers & Proceedings, 45(2): 450–462.Google Scholar
Clark, J. M. (1961), Competition as A Dynamic Process, Washington, DC: Brookings.Google Scholar
Copeland, M. ([1934] 1973), ‘The Theory of Monopolistic Competition’, in Copeland, M. A. (ed), Fact and Theory in Economics, Westport, CT: Greenwood Press, pp. 247–251.Google Scholar
Copeland, M. ([1940] 1973), ‘Competing Products and Monopolistic Competition’, in Copeland, M. A. (ed), Fact and Theory in Economics, Westport, CT: Greenwood Press, pp. 251–300.Google Scholar
Crane, D. A. (2015), ‘All I Really Need to Know About Antitrust I Learned in 1912’, Iowa Law Review, 100(5): 2025–2038.Google Scholar
Dennis, K. G. (1975), Competition in the History of Economic Thought. PhD thesis, University of Oxford.Google Scholar
Edwards, C. D. (1955), ‘Conglomerate Bigness as a Source of Power’, in Business Concentration and Public Policy, A Report of the National Bureau of Economic Research, Princeton: Princeton University Press.Google Scholar
Edwards, C. D. (1970), ‘The Changing Dimensions of Business Power’, St. John's Law Review, 44(5): 416–438.Google Scholar
Fiorito, L. (2010), ‘The Institutionalists’ Reaction to Chamberlin's Theory of Monopolistic Competition’, Mimeo.CrossRefGoogle Scholar
Giocoli, N. (2020), ‘Rejected! Antitrust Economists as Expert Witnesses in the Post-Daubert World’, Journal of the History of Economic Thought, 42(2): 203–228.Google Scholar
Glick, M. (2018), ‘The Unsound Theory Behind the Consumer (and Total) Welfare Goal in Antitrust’, The Antitrust Bulletin, 63(4): 455–493.Google Scholar
Goodwin, C. D. W. (2019), ‘Interpreters of Economic Ideas: Thurman Arnold (1891–1969)’, History of Political Economy, 51(1): 23–69.CrossRefGoogle Scholar
Hamilton, W. H. (1932a), ‘The Problem of Anti-Trust Reform’, Columbia Law Review, 32(February): 173–178.CrossRefGoogle Scholar
Hamilton, W. H. (1932b), ‘The Control of Big Business’, The Nation, 134(May 25): 591–593.Google Scholar
Hamilton, W. H. (1932c), ‘The Anti-Trust Laws and the Social Control of Business’, In Milton Handler, ed., The Federal Anti-Trust Laws: A Symposium Conducted at Columbia University.Google Scholar
Hamilton, W. H. (1940), The Pattern of Competition, New York: Columbia University Press.Google Scholar
Hamilton, W. H. and Till, I. (1940), Antitrust in Action. Temporary National Economic Committee, Monograph No. 16. Washington, DC: Government Printing Office.Google Scholar
Hodgson, G. M. (2014), ‘On Fuzzy Frontiers and Fragmented Foundations: Some Reflections on the Original and New Institutional Economics’, Journal of Institutional Economics, 10(4): 591–611.CrossRefGoogle Scholar
Hovenkamp, H. (1990), ‘The First Great Law & Economics Movement’, Stanford Law Review, 42(4): 993–1058.CrossRefGoogle Scholar
Hovenkamp, H. and Scott Morton, F. M. (2020), ‘Framing the Chicago School of Antitrust Analysis’, University of Pennsylvania Law Review, 168(7): 1843–1878.Google Scholar
Keezer, D. M. and May, S. (1930), The Public Control of Business, New York: Harper & Bros.Google Scholar
Leonard, T. C. (2017), Illiberal Reformers: Race, Eugenics, and American Economics in the Progressive Era (Reprinted edition), Princeton, NJ: Princeton University Press.Google Scholar
Mayhew, A. (1998), ‘How American Economists Came to Love the Sherman Antitrust Act’, in Morgan, M. S. and Rutherford, M. (eds.), From Interwar Pluralism to Postwar Neoclassicism, Annual Supplement to Volume 30, History of Political Economy, Durham, NC: Duke University Press, pp. 179–201.Google Scholar
McCaffrey, M. (2018), ‘Pure Theory and Progressive Liberalism: Frank Fetter and the Austrian Economists’, Journal of Institutional Economics, 15(3): 469–486.CrossRefGoogle Scholar
Medema, S. (2011), ‘Price Theory and Chicago Law and Economics’, in Van Horn, R., Mirowski, P. and Stapleford, T. (eds), Building Chicago Economics, New York, NY: Cambridge University Press, pp. 151–179.CrossRefGoogle Scholar
Morgan, M. S. (1993), ‘Competing Notions of ‘Competition’ in Late Nineteenth-Century American Economics’, History of Political Economy, 25(4): 563–604.CrossRefGoogle Scholar
Morse, C. (1958), ‘Introduction: The Meaning of the Institutionalist Approach’, in Morse, C. (ed), Fact and Theory in Economics: The Testament of an Institutionalist. Collected Papers of Morris A. Copeland, Ithica, NY: Cornell University Press, pp. v–xiv.Google Scholar
Newman, P. (2019), ‘Personnel is Policy: Regulatory Capture at the Federal Trade Commission, 1914–1929’, Journal of Institutional Economics, 15(6): 1037–1053.CrossRefGoogle Scholar
Robbins, L. (1932), An Essay on the Nature and Significance of Economic Science, London: MacMillan.Google Scholar
Rutherford, M. (2011), The Institutionalist Movement in American Economics, 1918–1947: Science and Social Control, Cambridge: Cambridge University Press.CrossRefGoogle Scholar
Rutherford, M. (2015), ‘Institutionalism and the Social Control of Business’, History of Political Economy, 47(annual supplement): 77–98.CrossRefGoogle Scholar
Sallet, J. (2018), ‘Louis Brandeis: A Man for This Season’, Colorado Technology Law Journal, 16(2): 365–398.Google Scholar
Seager, H. R. (1914), ‘Proposed Antitrust Legislation, Speech of Prof. Henry R. Seager before the Second Annual Meeting of the Chamber of Commerce of the United States’, Washington, D.C., February 12 & 13, 1914.Google Scholar
Seager, H. R. and Gulick, C. A. (1929), Trusts and Corporation Problems, New York: Harper.Google Scholar
Simons, H. C. (1934), A Positive Program for Laissez Faire: Some Proposals for A Liberal Economic Policy. Public Policy Pamphlet No. 15, Chicago: University of Chicago Press.Google Scholar
Smith, R. E. (1979), ‘The Veblen-Commons Award: Corwin D. Edwards’, Journal of Economic Issues, 13(2): 279–284.Google Scholar
Stigler, G. J. (1957), ‘Perfect Competition, Historically Contemplated’, Journal of Political Economy, 65(1): 1–17.CrossRefGoogle Scholar
Stocking, G. W. (1953), ‘Saving Free Enterprise From its Friends’, Southern Economic Journal, 19(4): 431–444.CrossRefGoogle Scholar
Stocking, G. W. (1955), ‘The Rule of Reason, Workable Competition, and Monopoly’, Yale Law Journal, 64(8): 1107–1162.CrossRefGoogle Scholar
Stocking, G. W. (1959), ‘Institutional Factors in Economic Thinking’, American Economic Review, 49(1): 2–21.Google Scholar
Stocking, G. W. (1961), Workable Competition and Antitrust Policy, Nashville: Vanderbilt University Press.Google Scholar
Stocking, G. W. and Watkins, M. W. (1946), Cartels in Action, New York: Twentieth Century Fund.Google Scholar
Stocking, G. W. and Watkins, M. W. (1948), Cartels or Competition, New York: Twentieth Century Fund.Google Scholar
Stocking, G. W. and Watkins, M. W. (1951), Monopoly and Free Enterprise, New York: Twentieth Century Fund.Google Scholar
Van Horn, R. (2011), ‘Chicago's Shifting Attitude Toward Concentrations of Business Power (1934–1962)’, Seattle University Law Review, 34(4): 1527–1544.Google Scholar
Van Horn, R. (2018), ‘Corporations and the Rise of Chicago Law and Economics’, Economy and Society, 47(3): 477–499.CrossRefGoogle Scholar
Waller, S. W. (2004), ‘The Antitrust Legacy of Thurman Arnold’, St. John's Law Review, 78(3): 569–613.Google Scholar
Yonay, Y. P. (1998), The Struggle Over the Soul of Economics: Institutionalist and Neoclassical Economists in America Between the Wars, Princeton: Princeton University Press.CrossRefGoogle Scholar