For anyone who has studied the work and influence of the late Aaron Director – especially as that work and influence helped to successfully bulldoze off of antitrust economics and policy the heavy, thick layers of truly awful ‘economics’ that had encrusted it for much of the 20th century – encountering Matt Stoller’s post on Director is surreal.
David is too kind to Stoller. Stoller is correct that what by the mid-1970s had come to be known as the “New Learning” about antitrust was very much a product of Aaron Director’s influence. But Stoller – unable to understand that bit of economics, and also apparently in the grip of the juvenile notion that “big” business means “monopoly” business – resorts to telling a childish and economically ignorant tale.
I’ve not now the time to offer a more comprehensive criticism of Stoller’s error- and myth-ridden ‘analysis.” David does a good job.
But I will here make two points.
First, the market-process understanding of competition that was championed by Director – and that was polished and explained by the many scholars whom he influenced – has a long and honored pedigree. I believe, for example, much of it can be traced to Adam Smith. Some of the other notable scholars who had this market-process understanding include (in no particular order):
– Joseph Schumpeter
– Ludwig von Mises
– F.A. Hayek
– Israel Kirzner
– Mario Rizzo
– Ronald Coase
– Harold Demsetz
– Armen Alchian
– Kenneth Elzinga
– Yale Brozen
– Thomas Sowell
– Donald Dewey
– Fred McChesney
– Thomas Hazlett
– George Bittlingmayer
– Dom Armentano
– Vernon Smith
– Jim Liebeler
– Bob Higgs
Perhaps Stoller thinks that all of these scholars were and are in the pockets of oligarchs.
Also, Stoller’s portrayal of H.L. Mencken is comically wrong. Here’s a comment that I left on David’s post at EconLog:
Not only is Stoller’s understanding of Aaron Director’s economics utterly misbegotten, his reading of H.L. Mencken can be described only as – well, I have no words to convey just how mistaken that reading is.
Mencken argued for individual liberty – for keeping each individual as free as possible from what Thomas Sowell calls “the rampaging presumptions of their betters.” It’s nothing short of astonishing that Stoller accuses Mencken of believing that some people are fit to rule others.
From where might such a deeply erroneous interpretation come? One possibility is that Stoller never actually read more than a few out-of-context snippets of Mencken’s writings and judges Mencken either exclusively from those snippets or from some extant popular caricature of Mencken – a caricature itself the bastard child of such out-of-context snippets.
Another possibility is that something is going on along these lines: Mencken warned of the many dangers of majoritarian democracy and, hence, is believed by people such as Stoller to support, therefore, some sort of rule by aristocracy. One of the sad realities of popular understanding is that to oppose majoritarian democracy is necessarily to endorse rule by some over others.
In reality, of course, Mencken feared unlimited majoritarian democracy for the same reasons that unlimited majoritarian democracy was feared by the likes of James Madison and America’s other founders – namely, not because unlimited majoritarian democracy prevents rule by an aristocracy but, rather, because it poses a threat to the freedom of each individual to rule himself and herself.
To describe the ‘analysis’ offered by Stoller as juvenile and shallow is to treat it too kindly.