Monday, November 1, 2004

Essay on Thurman Arnold

Spencer Waller's essay, The Antitrust Legacy of Thurman Arnold, published at 78 St. John's Law Review 569 (2004) provides some nice insights into the background of Arnold as head of the Antitrust Division during the New Deal and into the politics of the New Deal itself. Here's a sample:

"Just as the Supreme Court destroyed the legal underpinning for the corporate collectivism underlying the NRA Codes, Arnold destroyed the moral and economic basis for the culture of cartels in America and abroad. He upped the criminal and civil consequences for such business behavior, forced it underground, de-legitimized it by making it both anti-consumer and un-American, created a stable mandate for antitrust as part of an expanded role of the federal government in policing a healthy national economy, and made it impossible for antitrust to be repealed in the future or completely undermined by changes in the prevailing political winds."

Particularly interesting to me were Professor Waller's discussions of the patent cases and Arnold's views of law and economics:

"What Arnold meant by efficiency, however, is very different from the sole focus of the current emaciated form of antitrust on allocative efficiency and wealth maximization. At a minimum, Arnold believed that powerful organizations had to show that they were both efficient and serving the consumer in order to escape antitrust scrutiny. For Arnold, most economists and the law and economics movement of his day were the priests of the old order, preaching that the government was powerless to take action to solve the ills of the day, lest it contravene the natural laws of markets. To him, the newer economics of his day were a source of action, not inaction. More importantly, '[a]ntitrust enforcement must come down from the blue sky of economic and legal theory and concern itself with these family budget items, one at a time.' Inefficiency in the Great Depression meant an economy that produced much but could not distribute those goods and services to consumers. Even where distribution worked reasonably well, consumers frequently lacked the purchasing power to buy the goods and services being produced. The failure of the Great Depression was 'a dangerous kind of waste' that created the situation where those in need saw 'the spectacle of goods withheld from them for no understandable reason.'" [citations omitted]

Let's hope that Professor Waller is planning a book length treatment on the worthy subject. Also worth looking at is Professor Waller's article on Thurman Arnold in the Wyoming Law Review.

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