Combing through the many materials stirred up by GMU Econ’s recent move from one office space (in Enterprise Hall) to another (in Mason Hall), I uncovered today a book review that I wrote in 1998 but had since completely forgotten about. The review is of a book that I now remember is utterly forgettable. I link below to the review only in order for me to have readier access to it in the future should such access come in handy.
The review is of Rudolph Peritz’s 1996 volume, Competition Policy in America, 1888-1992 . Here are the opening paragraphs of my review:
Economics is not mentioned in the title of this book about the history of American competition policy. Score one for truth in advertising. From time to time Rudolph Peritz, a professor at the New York Law School, mentions some economic theory or doctrine. But Peritz is to economics what Al Gore is to environmental science: an immense chasm separates what the man thinks he knows from what he actually knows.
For example, Peritz declares that “there were no free markets, given the enormous inequality of bargaining power between natural persons who labored and corporate ‘persons’ who hired and fired them” (p. 95). Evidently, Peritz regards “inequality of bargaining power” as a self-defining concept. He seems to think that a corporation whose assets exceed the personal wealth of a worker has greater bargaining power than the worker.
Any B student in an introductory microeconomics class could tell Peritz that a worker possessing only the most modest wealth has quite a lot of bargaining power if two or more employers are interested in acquiring that worker’s services. If Kmart offers Homer Simpson only $9 per hour while Sears stands ready to pay him $10 per hour for the same kind of effort, no firm has undue bargaining power over Simpson. Indeed, it is only because several massive conglomerations of assets exist that Simpson enjoys as much bargaining power as he does. Bargaining power comes from options, and options come from workers’ freedom to choose where to work, employers’ freedom to choose whom to hire and fire, and firms’ freedom to use their properties in any peaceful way they believe will maximize asset values.