When I was a boy in Miami, we didn’t eat strawberries. Every morning I’d stare at the images on the box of Cheerios and wonder why there were no little red fruits in my own bowl. It was only later that my dad told me of his childhood. Starting at age six—after my grandparents lost their land to the bank—he’d spend 14-hour days picking berries on a sharecrop farm in Plant City, Florida. “I know how much blood,” he said, “is in each basket.” 

For most of my time at home, my dad sold insurance and my mom worked as a secretary. We lived paycheck to paycheck. But my parents saved enough for clean clothes, two-week vacations, even a new car once. Then my mom got sick and my dad lost his job and we were pretty poor. 

Still, I felt lucky. My parents were loving and supportive. Many of my friends at school had it a lot harder. Our district ran along the Snake Creek drainage canal from Norland to Carol City, then down 27th Avenue to Liberty City. Our curriculum included studying the effects of quaaludes, motorcycle crashes, drive-bys, and various forms of child abuse. 

Then there were the lessons I learned working in a factory and an industrial bakery and on the sandwich line at Burger King. All of which—as long as the boss wasn’t too much in my face—seemed preferable to helping my dad earn cash by mowing lawns and replacing tarpaper roofs. Of all my tutors, none was ever sterner than the Miami sun at midday in July. 

In the factory towns of Michigan and farms of Iowa, in the warehouses of Harrisburg and hospitals of Fresno, along the borderlands of Texas and floodplains of Missouri, most folks think about power every day. It’s not that any of us regular folk imagines having any real power. What we do think about is freedom from power. In communities like ours, economics is simple. There’s no escape from hard work. But there’s also no reason ever to be bullied and belittled by any petty foreman or distant corporate board. And that means working together to find ways to live free from any form of capricious control.

It’s in these conversations about liberty that we hear the original political economic language of America, dating to long before the founding. Most immediately, it might be the simple solidarity of letting someone sleep on the sofa so they can quit their bad job. Over time it evolves into the language of mutual protection. Sometimes the bottom-up protection of the union and guild and trade association. Sometimes the top-down protection of using the public government to limit the power of corporations and capitalists. 

Material well-being is not the only or even main subject of this language. It’s also a language of sharing out opportunity. Of breaking the barriers to making a larger human community. Of inclusion—even eccentricity and weirdness—in its inherent intent to disrupt the homogenization of uniform and cubicle. It’s a language of human dignity. Of finding one’s own purpose. Of freeing ourselves to dream. 

When I was in school, this language was largely still the language of America. We heard it in the music of Sly Stone and Johnny Cash and, a few years later, the L.A. punk band X. We also heard it in almost every utterance of Lyndon B. Johnson and Barbara Jordan and Walkin’ Lawton Chiles. And for the most part, the Democrats of that day delivered, in support for the right to organize, in protection from the chain store and the Wall Street bank, in affordable mortgages for the family home. In an entire political economy geared to empower the worker, independent business owner, and farmer—as well as the entrepreneur, innovator, engineer, scientist.

In the 1980s, the Reagan administration began to promote a new political economic language. They said the old fight for liberty from power made the economy inefficient. They said if we let corporations concentrate control over production and retail, they could build more things and sell them more cheaply. Their new language was technocratic, mathematical. It was designed, they said, to help illuminate the mechanical operations of the “market forces” that drove efficiency. 

Soon, Democrats began to follow. A new generation of leaders spoke less of sharing out power and responsibility and more of how to “deregulate” business to make—and in theory, share out—more stuff. They also embraced the idea that economics was metaphysical in nature, and lectured us on the new forces—“globalization,” digital technologies—that restricted our ability to shape our own lives.

Today we face the gravest set of threats to American democracy, and our most fundamental liberties, since the Civil War. We see this threat in the rise of a new class of oligarchs, who increasingly have the power to determine how we work, what we read and watch, how we make community, how we do business with one another, what technologies we must use and which are crushed. We see it even more clearly in President Donald Trump’s harnessing of the powers of these oligarchs for his own private purposes. 

These threats are a straight-line result of the Democratic Party’s abandonment of America’s original system of liberty. If we are honest, we will admit that Trump sits in the White House thanks largely to the rage of citizens Democrats betrayed. He raises mobs using systems of communications Democrats led the way in corrupting. He leverages the power of private autocrats that Democrats led the way in empowering. 

The task ahead for Democrats is not merely to resist and slow the predations and destructions of President Trump. It is not merely to knock the Republicans out of power in 2026 and 2028. It is to establish a new political economic regime which ensures that our liberty and prosperity are never again threatened by any homegrown oligarch or autocrat. And Democrats must do so in a world filled with great enemies, eager to exploit the chaos sown here in America by Trump and the oligarchs, to topple us.

None of this will be possible until Democrats first fully recover America’s original language of liberty. Doing so is the only way to relearn the wisdom about power and political economic structure baked into this language. It’s the only way for Democrats to convince the American people they actually understand how to make their lives better, and have the courage to act. And the only way Democratic elites can prove they understand their own responsibility for today’s crisis, and fully grasp the threats to their own lives and the lives of their own children.

The origins of what we understand today as liberalism trace to the early 17th century. It is both a set of assumptions about the nature of the individual—that every person has an equal capacity to do good in this world, and to earn entry to the next—and a set of political and economic rules designed to protect all the forms of liberty such an individual might desire, be they political, commercial, or spiritual. People first began to establish and formalize these rules in fights against the absolute monarchs of that time, especially Charles I in Britain. Liberalism, in short, is a system of political and economic rules designed to defend and expand individual liberty.

Technically, much of this new rule of law focused on protecting the properties of the individual. People understood that if the king could seize one’s land or business at will, then that person would tend to do whatever the king demanded. In practice, these efforts largely played out in the establishment of anti-monopoly laws—to prevent the king from concentrating power through either the granting of monopoly to a particular favorite or arbitrary threats to take an opponent’s property away. Not that this system of liberty served mainly the interests of the wealthy. Early liberals made sure also to protect the rights of tradespeople to use their skills, and of farmers to bring produce to market, and of authors and dramatists to copyright their work.

Further, people without any real wealth or other forms of social power forced their way into the debates about both the nature and structure of human liberty. A main path for such early democratic liberalism were the vibrant discussions in the Protestant Churches in Britain. In contrast to the hierarchies and mysteries of the established Church, Puritans preached an equality of all souls before God, which in turn led to visions of greater equality in this world. As the historian William Haller put it, “This spiritual equalitarianism, implicit in every word the preachers spoke … became the central force of revolutionary Puritanism.” 

The English Revolution was the first truly modern war for individual liberty. The victory was achieved largely by the New Model Army, a professional force led by the Puritan Oliver Cromwell and composed largely of Protestant dissenters. We remember the revolution today mainly because it culminated in the beheading of Charles I in 1649 and a period of brutal oppression in Ireland. But its importance for us lies in the fact that while in the field, various groups of soldiers—animated by the “democratic rhetoric of the spirit”—formulated visions of popular democracy that profoundly shaped thinking in America a century later. What they invented, the historian Edmund Morgan wrote, was nothing less than a new conception of a “sovereign people” whose authority rests on “the rights of men.” 

In the end, the Commonwealth of England could not hold. After the death of Cromwell, Parliament and the army disintegrated, and in 1660 a new parliament arranged for Charles I’s son to be crowned king.

But in America, memories of the people’s commonwealth lived on. A key actor was Samuel Adams, born to an ardent Puritan family that later went bankrupt. At Harvard, Adams studied the writings of John Locke. But it was on the streets of Boston in 1747 that he first witnessed the power of direct democratic action, as he watched African, English, Dutch, and American sailors lead a fight against impressment. Adams responded by founding a newspaper and expressing a new vision of democratic liberty, based on a belief in universal equality. “All Men are by Nature on a Level; born with an equal Share of Freedom, and endow’d with Capacities nearly alike,” he wrote. Thomas Jefferson later recognized Adams as “the earliest, most active, and persevering man of the Revolution” and the “patriarch of liberty.” 

In any discussion of the founding, it is vital to fully recognize the repugnant nature of the compromises made to the slaveholders. But if we focus only on the snakes who extorted a Big House in the sun, we miss the work of all the regular folks who first plotted out that garden, then cut the trees and tilled the land. This includes in 1789, when Adams and Patrick Henry helped lead efforts to force the Framers of the Constitution to append a clear statement of common equal liberty in the form of a bill of rights simple enough for every person to understand. 

Over the next 70 years, the belief in human equality provided the moral leverage necessary to make good on the promises of the Declaration of Independence, first through abolitionism and then civil war.

The political leverage came from the anti-monopoly systems Americans had built into the Constitution, and the anti-monopoly provisions of the common law inherited from Britain. The idea that the early United States was an unregulated libertarian utopia is a modern, dangerous myth. In fact, Americans from the first used their local, state, and federal governments both to protect themselves from private corporate power and to work collectively to create and distribute new forms of wealth. They established simple bright-line market structure rules to protect the independence of the individual and the family, and to limit the size, structure, and behavior of the corporation, usually through direct legislative charter. And they aggressively used government power to distribute land and education to those with little or nothing.

They also carefully updated these rules to apply to the railroad, telegraph, telephone, and other powerful new network technologies. They focused less on limiting the size and more on regulating the behavior of these powerful new network technologies. They aimed to prevent the people who controlled these corporations from extorting wealth and power from users, by requiring the corporations to provide the same service at the same price to all individuals and businesses.

One result was a political economy designed to promote the dignity of the individual, as well as the constructive engagement of the citizen within the political economy. Another was a fantastic explosion of material prosperity that made the average American much richer than their peers in almost any other nation.

Over these past 250 years, private autocrats twice overturned this American system of liberty. The first time came in 1877 when the “corrupt bargain” that made Rutherford B. Hayes president not only ended Reconstruction but also helped clear the way for lifting almost all traditional regulation on the corporation. This led to the rise of the vast all-powerful private monopolies of the plutocratic age and resulted, in the words of W. E. B. Du Bois, in an “Empire of Industry” that “assumed [a] monarchical power such as enthroned the Caesars.” 

Although Congress passed many vital anti-monopoly laws during this period—such as the Interstate Commerce and Sherman Antitrust Acts—it was not until the election of 1912 that Congress managed to reestablish a regulatory system fully able to protect liberal democracy from oligarchy, with passage of the Clayton Act, Federal Trade Commission Act, Federal Reserve Act, and a constitutional amendment enshrining the progressive income tax. This system, named the “New Freedom” by Woodrow Wilson, provided the foundation for the Second New Deal.

The second reaction against the democratic republic was launched in 1981 with Ronald Reagan’s suspension of anti-monopoly law. In 1993, President Bill Clinton then carried this anti-democratic libertarian philosophy to regulation of banking, finance, energy, media, telecommunications, trade, and the internet. 

In the years since, the consolidation of power and control has taken place in two broad stages. During the first, which we might call the age of Walmart, we saw the consolidation and offshoring of factories, the mass destruction of small businesses and family farms, the concentration of control in finance, the rise of Big Pharma and Big Hospital, and a slow-motion takeover of America’s housing and rental markets.

During the second, which we might call the age of Google, we saw a few vast information platforms consolidate control over online communications, commerce, debate, publishing, entertainment, and computing power, to a point where they have power to manipulate the thinking and actions both of the individual and society as a whole.

The result of these twin blows against America’s traditional system of liberty has been a collapse of the rule of law not merely in the political realm, but especially in the economic. Today in America, the chain of command is simple. The oligarchs boss us. And Trump bosses the oligarchs, including sometimes by instructing them how to direct us. In short, the restoration of monarchical autocracy, but this time amplified by surveillance tools vastly more powerful than even Joseph Stalin dared imagine.

It was not until college that I first realized the language I’d learned in Miami was not universal. At Columbia on scholarship I found a society of young people who’d never been forced to bend themselves to some job just to pay the rent. Their language was of fraternities and business mixers and parents with friends on Wall Street or in Washington or “the arts.” At graduation, they went to entry-level gigs at Salomon Brothers or Time Inc. or the State Department, or unpaid internships in film and theater.

I had long wanted to see the world. But this took money, and so I went back to the work I knew. I drove trucks across the country and dug ditches, pushed on construction sites and hauled office furniture. I learned what it’s like to not be able to scrub the smell of work off your body, how slowly a clock moves when you stand 10 hours on a line, how hard it is to sleep after you’ve picked hard rock all day. 

In time I learned how to pay for my travels through journalism, which led to six years as a correspondent in South America and the Caribbean. In addition to Maoist guerrilla war, cholera, and violent elections, I also had the opportunity to study up close two of the most brutal austerity “shock” programs of the Washington Consensus era of cartelized capital. The first, in Venezuela, led to a weeklong insurrection in Caracas, the death of more than 1,000 people, and ultimately the collapse of Latin America’s strongest democracy. The second, in Peru, did cure hyperinflation, but also left millions hungry.

Eventually I took a job running a Washington-based magazine named Global Business. Here again my timing—in terms of getting to learn how America’s new monopoly capitalism actually worked—was perfect. I started just as the Clinton administration was implementing NAFTA and finishing negotiations to create the World Trade Organization, and our circulation soon rocketed as C-suite executives at thousands of manufacturers scrambled to adapt their businesses to this radically new environment of law. We spent our days writing articles that helped corporations decide what to outsource, where to offshore, how to engineer a supply chain. I traveled to China, Singapore, South Korea, Russia, Hong Kong, and across Europe and the Middle East reporting on the revolutionary restructuring of every major industrial system in the world. 

It was thanks to this work that I immediately understood the implications of a massive earthquake in Taiwan in September 1999. That event, in turn, is how I came to understand that the American elite’s obtuseness toward the threats posed by concentrated power actually matters in the real world.

The problem triggered by the quake was easy to understand. A few years before, almost every type of industrial capacity was broadly distributed across many countries. Many factories, for instance, made wiper blades and alternators. Much the same was true for high-end items like semiconductors, as more than a dozen vertically integrated manufacturers in the United States, Europe, Japan, and South Korea competed to make roughly interchangeable products. But the radical changes in policy by Reagan and Clinton had undone this balance, first by clearing the way for corporations to concentrate control and capacity in the U.S., then by clearing the way to concentrate control and capacity at some single point in the world.

What the earthquake taught was that over the previous few years Taiwan had managed to lock up a huge portion of the capacity to make high-end semiconductors. When the quake then disrupted the ability to make and transport these chips, the result was a cascading worldwide industrial crash that within a few days shuttered factories in California, Texas, Germany, Japan, and elsewhere.

As it proved, we were lucky. The quake had not damaged the foundries, but simply disrupted just-in-time shipment of the chips. Within two weeks most factories were back online. But the quake also made clear that concentration of industrial capacity had reached a point where it was easy to imagine a far more devastating shutdown, triggered for instance by slippage of a fault line closer to the foundries. Or war, blockade, embargo, or some other disruptive political act. Or, say, a pandemic.

Over the next few years, I was among the first to describe the extreme concentration of capacity the quake had revealed, and to detail some of the potentially existential threats posed by such chokepointing of vital production. My work was anything but theoretical. It was based on conversations with hundreds of CEOs, vice presidents of manufacturing and logistics, engineers, reinsurers, and others—almost all of whom were eager to confirm my reporting. 

These managers and engineers also made clear that the problem was easy enough to fix. Unlike a pool of oil or vein of metal, we can locate machines almost anywhere. We can take all of a certain type of machine and put them in one place, or divide them among four or 40 places. What executives needed, they said, was for government to reestablish fair rules obligating all manufacturers engaged in a particular business to distribute their risk. Time and again, these engineers cited the same antique adage—never put all your eggs in one basket.

During these years, I met often with officials at top levels at Treasury, Commerce, the Pentagon, the CIA, and the Federal Reserve, as well as the White House, and it was here that I began to see a pattern. Time and again, the economists in the room would challenge my reporting. They assured me that what the managers and engineers said could not be entirely true. Such an extreme concentration of capacity, without any backup plan, violated too many core theories. Clearly the executives must be after some handout, some sort of subsidy or protection. I heard this not merely from staff economists, but from men who had won or would soon win Nobels. 

I eventually concluded that many economists educated in the post-Reagan libertarian era were simply unable to see or understand certain forms of systemic risk. They had never learned how to use law to engineer resiliency. If anything, in their fixation on efficiency, they had begun to celebrate—rather than condemn—brittleness and fragility. 

There are many flaws in the French economist Thomas Piketty’s analysis about the origins of inequality. But in his book Capital in the Twenty-First Century, he does cut to the heart of the problem posed by his U.S. counterparts. Despite their “absurd” claims to “scientific legitimacy,” Piketty writes, in actual fact “they know almost nothing about anything.” 

It was in these discussions that I also came to understand there was another factor, besides the flawed theories of the economists, that further reinforced this blindness to the extreme concentration of risk in complex systems. This was the new deterministic thinking that libertarians had been pushing into U.S. policy making since the early years of Reagan. 

When the Clinton officials in the early 1990s first began to lecture Americans on how “globalization” and the digital revolution were forcefully restricting our ability to shape our economy here at home, their goal was to redirect political debate away from actions, such as stripping factories from Ohio and moving them to Chongqing, that voters would oppose. In claiming that those actions were being dictated by forces of nature, they were saying something they knew—or should have known—to be untrue.

Over time, however, I realized that more and more policy makers and journalists were beginning to actually believe in these metaphysical forces, sometimes almost religiously. I found such beliefs to be especially strong among Democrats and progressives. Historically, progressives tend to learn such deterministic thinking from people influenced by Karl Marx, such as the economist Joseph Schumpeter. In contemporary debate, the most influential early source for such thinking was Robert Reich’s 1991 book, The Work of Nations. Probably the single gaudiest distillation was Tom Friedman’s The World Is Flat, from 2005, which he proudly described as a “technological determinist” vision of human thought and action.

Although in 2015 Reich repented of his earlier teachings, the damage had long since been done. The combination of bad science and weird metaphysics had helped foster a broad blindness—a collective incognizance—among an entire generation of progressives to the ways that extreme concentration had destabilized many if not most of the complex systems on which we depend today.

When I published Cornered in early 2010, my main aim was to help people see the new concentrations of power and control and understand all the ways this threatened their liberty, economic well-being, and safety and security. My main means was to resurrect the root language of American democracy, the language of power and structure and community I had learned growing up. Often this was as simple as replacing the word consumer with citizen, or the word welfare with liberty, or the word global with international.

Over the next few years, from a base at the New America think tank in Washington, we built a network of people able to see some key piece of America’s monopoly problem, and created opportunities to learn from one another’s work. We published many of the ideas we developed during those days here in the Washington Monthly. 

For more than decade now, we have also understood that in recovering and renewing America’s anti-monopoly system we were amending the motto that had guided the Democratic Party since the 1990s. Victory, from now on, would mean recognizing that “It’s the POLITICAL economy, stupid.”

In recent years, we have enjoyed phenomenal success. In 2016, Massachusetts Senator Elizabeth Warren thrust our message into public debate in a speech presenting a radically fresh analysis of the threats posed by concentration of ownership and control. In 2019 and 2020, groundbreaking hearings by the House antitrust subcommittee, chaired by Rhode Island Democrat David Cicilline, mapped America’s biggest monopoly threats and lighted the way for powerful antitrust lawsuits against Google and Facebook in 2020. Then President Joe Biden formally embraced our thinking in his executive order on competition in July 2021, and hired a new generation of law enforcers to carry the thinking into practice. 

That was just to start. The Biden White House also used competition philosophy to shape new visions for governing international trade, restructuring industrial systems, and protecting free speech and a free press. They also boosted innovation, protected independent businesses and farms, made it easier for working people to organize, and made it harder for monopolists to inflate prices. 

What these Democrats achieved was nothing less than the sweeping away of an extreme right-wing anti-democratic philosophy, and the first stages in the restoration of America’s true liberal centrist tradition based on pragmatic regulation of corporate power and behavior. These actions reinforced true rule of law, empowered citizens to shape their own futures, and made the world more secure and peaceful.

Come 2024, Democrats had everything they needed to win any debate about power, with Donald Trump or any other Republican. The one obstacle? Much of the aging mainstream of party functionaries and elite press sang from the old Clinton hymnal. In part, this was simply a matter of money; or more accurately, of a desire by people like Senator Chuck Schumer not to chase away some of the big donors who opposed Biden’s populist policies. But it was also—in some ways mainly—a function of intellectual inertia. Of the fact that so many liberals and progressives, convinced of their own necessary moral righteousness and superior erudition, never troubled to free themselves from the ideological shackles of the libertarian revolution of the 1980s and ’90s, with its fetishization of efficiency and pre-Enlightenment metaphysics. 

Reformers tend to blame political cowardice on cupidity and corruption. What I’ve learned over the past 25 years is that fatuousness, especially when combined with lack of imagination, often plays a much bigger role. 

Consider, for instance, the failure of these same Democratic elites to understand—let alone respond to—the threats posed to their own businesses, hence their own positions within society, by Google, Facebook, Amazon, and TikTok. As these corporations rolled up illegal control over advertising, the distribution of news, movies, television, and music, and the social media and email systems politicians use to speak to voters, Democratic-leaning publishers, journalists, and policy makers failed almost entirely to take coherent actions to protect themselves. 

When threatened by the rise of a new technology, every previous generation of Americans—of whatever party—would have immediately begun to use law and other policy tools to protect the democratic foundations of a free press, free speech, and free debate. Yet this last generation of liberals basically acted as if the concentration of control over these activities—and over the businesses they owned and market systems on which they depended—was a natural, inescapable, immutable function of the forces that power technological “evolution.” By contrast, this last generation of Republicans worked avidly for years to build an entire integrated complex of news publishers and communications platforms into a massive propaganda machine designed to shape thinking, action, and voting across the entire nation and political spectrum. (More recently, the Justice Department’s antitrust victories over Google’s monopolies in advertising technology and search offer a huge opportunity for all independent publishers to begin to build next-generation advertising-supported businesses.) 

And yet still, even with all the advantages this information machine conferred on Trump and the Republicans, Kamala Harris could have won comfortably last November. As Rana Foroohar detailed on these pages in October 2023, the Biden-Harris administration could have presented a powerful story of political economic transformation, including a sophisticated strategy to break the ability of monopolists to extort America’s families. 

If there’s a single emblem of why Democrats lost, it was Harris’s repeated refusal during the campaign to own Lina Khan and her team’s work at the FTC. When Reid Hoffman in July called on Harris to promise to fire Khan, the tech mogul provided the campaign an almost perfect invitation to demonstrate that their candidate understood the nature of private corporate power today, and had the strength of character to fight that power. Here was an opportunity to list all the successes of the Biden-Harris team in lowering prices, raising wages, and ensuring freedom in the digital economy. Here was an opportunity to identify a few villains Biden had missed but Harris would now target for action.

Instead, the campaign treated Khan—and Biden’s entire brave political economic team—like bastard children. And they continued to do so even as J. D. Vance and Steve Bannon happily embraced Khan and her policies. 

And so, during the final stage of the campaign, as Trump paraded oligarchs on leashes through the ballrooms of Mar-a-Lago, the apparatbrats of the Democratic Party tutored Harris on how to kiss the Lanvin low-top.

Let’s make sure we pull the right lessons.

Yes, Democratic Party elites’ failure to recognize the continuing bite of inflation played a big role in Harris’s loss. But the Democrats’ inability to speak honestly about the threats posed by concentrated power left much more than prices unaddressed.

Voters also want a party which recognizes that true democracy is not simply a matter of having your vote counted. They want a party that will protect their rights as workers, by addressing the soaring imbalances of power between the corporation and employee. They want a party that will protect their rights not to be manipulated and exploited in their day-to-day lives, by tech corporations that circle their every act and thought. People also want a party that will recognize the revolutionary upheaval in their homes as social media corporations reach into the souls of their children and spouses and brothers—addicting them to porn, gambling, gaming, and crypto—or who throw open the door to vicious bullying by everyone from nasty schoolmates to corporations selling weight loss drugs.

And people want meaning. To feel, if only for a moment each day, that they are part of some common struggle.

In Trump’s sneer, in watching him force the oligarchs to kneel, many Americans see their own rage about all these indignities, their own search for justice gratified, at least in the form of punishment. In the 2024 election, the Democratic Party never delivered a believable promise to fight for true equality of opportunity, responsibility, and dignity. Nor did Trump. What he did do was promise to drag Mark Zuckerberg, Jeff Bezos, and Sundar Pichai into the same stinking pit of mud with the rest of us.

When voters turned to the Democratic Party, by contrast, they heard the treacly language of charity—of condescension—delivered in the tones of a courtier class that itself stands on unfirm ground.

For four centuries, the vernacular of popular democracy taught that we all walk the same path to salvation and enlightenment. It is a language that balances the universal and eternal that binds all humans together, with recognition of the absolute glory of each and every individual quester and dreamer. 

Yet in 2024 as these pilgrims came to the Democratic Party’s door—and in the America of the 21st century, every human being is still in some way a pilgrim making their own particular progress—Democrats offered naught but a sack of pebbles and twigs that we called “policies.”

Our minds spin. We can almost feel his finger on our chest, his spittle in our face, as with twinkling eye he jackhammers our entire world of universities and law firms and goo-goo government offices, even the Kennedy Center. As his droogs perform “a little of the old ultraviolence” seemingly right in our living rooms, we sit in our mid-century loveseats, hands folded, waiting for it all to stop. Or, like that scourge of tyrants Tim Snyder, we book flights for Toronto, or flip through listings of pieds-à-terre in the Marais. 

Ain’t that right, Mr. Jones? 

Since the election, Democrats have been presented with three options for retaking power. The first, courtesy of James Carville, is to play possum till the hillbillies miss us. Second, championed by Bernie Sanders and Alexandria Ocasio-Cortez, is to oppose everything Trump does, everywhere, all at once. Third is to cozy up to good oligarchs, so they can shelter us until the MAGA storm blows over. This thanks to Ezra Klein and the “abundance movement.” 

The better path is to honestly admit the radical nature and full immensity of the political threat we face, which is the direct merger of the power of the private monopoly and the state. And our own complicity in creating this crisis. And all the ways the old libertarian thinking continues to lead us back into darkness, superstition, and savagery. 

And then we should set about finishing the job the true liberal democrats of the Democratic Party began a decade ago—of fully restoring the traditional system of liberty that smarter generations than ours designed precisely to protect us against oligarchy and autocracy. 

Simply assuming that Trump will fail is foolish; weeks from now we may sit marveling as he pulls rabbits out of the sewer in the form of peace in Ukraine and a trade deal with China. Targeting Trump only—as if he were the sole source of today’s crisis—is a good way to lose our democracy forever. Trump is a true autocrat, vicious and violent. But he is our child, birthed of our own barbaric destruction of the rules liberal democrats designed over the course of hundreds of years to master the power of private corporation and state. Trump bestrides oligarchs we created.

For now, these oligarchs fear Trump. For now, they lie quiet in the deep grass. But they know Trump will stumble, later if not sooner. And so they slowly coil themselves to strike, to make our garden forever theirs.

Behold, with open eye, the absolute disdain for all the old constraints that grows in the hearts of today’s big men, not just Elon Musk and Mark Zuckerberg, but Peter Thiel and Larry Ellison. Not only among the junta at Google, but even behind the smiling miens of Satya Nadella and Brad Smith at Microsoft, who in recent months unleashed a savage attack on democratic regulation of corporations in the UK, as they practice for bigger game. Smell their lust for control.

Their existing power over information already threatens a type of authoritarianism almost impossible for us to fully imagine. As Ellison has made clear, his aim is nothing less than an AI-powered surveillance state. Given such plans, any future American president who lacks a coherent strategy to break the oligarchs’ power will end up as little more than their enforcer, or pet.

The other threat, intimately related to that of top-down autocracy, is of chaos, collapse, and war. Every day the danger of cataclysm increases, as Trump in his Lear-like rage breaks the systems on which we rely for peace. As the oligarchs impose on society AI-amplified systems of control that lack any capacity to manage true human complexity, even as the oligarchs themselves create dangerous new chokepoints. It is a chaos that is already creating glittery new temptations for adventurism, perhaps right back at the original fault line of today’s world, Taiwan.

There is one way only to rebuild democracy, true prosperity, lasting security, and peaceful cooperation among nations. This is to break the power of the oligarchs and the system that created them. To join the people in their war to restore their liberty to use simple human commonsense tools to govern.

Today we enjoy the greatest opportunity since the New Freedom and the New Deal to frame a political economic system that truly works for every American. And given that the goal of such a system is to foster the independence, dignity, and confidence of each individual, perhaps we might even find it possible to build a new foundation for moral progress. It’s a prospect we should find exhilarating. 

So feel the cinder block wall against your back. Know with your skin you have nowhere to retreat. Relearn, thus, how to stand and fight. Relearn, thus, how to use the tools the people fashioned—over the course of four centuries—to keep you and your children free and safe. Relearn, thus, how to be a full part of a true American democratic community of equals, based on the common light in each of us.

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What a glorious moment it seemed, the mid-1990s. The Soviet Union had collapsed, and peoples around the world were embracing American-style liberal democracy and capitalism. Better yet, America was a hegemon with no need ever to twist another arm. Economists had begun to speak of a revolutionary new approach to managing power. Three great natural forces—globalization, digitization, the market itself—were remaking the world for us, by destroying all antidemocratic concentrations of political and economic control.

The business corporation, we were told, was melting away. America was becoming a nation of “free agents” able to work with whoever we wanted, bound by little more than a gossamer-thin net of contracts. At the social level, this meant no more need for regulation of business, or for checks and balances between the state and private enterprise. Give free rein to these forces, and they would evolve the economy all but automatically toward a world characterized by, as Robert Reich wrote in The Work of Nations, the “diffusion of ownership and control” within a “global web.”

More radical yet, the nation-state itself was vanishing into the mists of history. The 1980s had been a decade of alarms about new Soviet arms systems, and how Japanese and Germany industry threatened U.S. factories and jobs. Then suddenly these worries vanished. Deep industrial interdependence, we were assured, was tying the people of the world into a single borderless economic community, which would ensure not just mutual prosperity but peace on Earth. As a book titled The Pentagon’s New Map put it, the world had a new “operating theory” in which “connectivity” would “trump” all the old tensions and rivalries. Indeed, within “globalization’s Functioning Core” of industrialized nations, armed conflict had already become impossible.

So for a quarter century we cruised, with hardly a thought about how and where the goods, foods, and drugs on which we depend were made, grown, and traded. Sure, there were a few glitches in the new global matrix—September 11th, the Lehman crash of 2008. But on we went, largely heedless of how the capitalists were using their corporations to concentrate control over factories and foundries and chemical plants, and were then shifting these capacities to the far side of the ocean in ways that destroyed far more than jobs. Even when Donald Trump howled the words “America First,” most college-educated liberals dismissed the idea as silly—just angry white racists, pining for a moment that efficiency and social progress had rendered obsolete. Soil and grease under our nails? Ha! Fingers were for summonsing Ubers and pushing “buy” buttons.

Well, the coronavirus pandemic, Russia’s invasion of Ukraine, and China’s blockade of Taiwan have slapped us awake. And what we see is terrifying. Just in the past three years we have found ourselves suddenly without face masks to protect against a pandemic, without the chemicals we need to test for viruses, without container ship and rail capacity to move basic goods, without semiconductors to build airplanes and medical devices, without formula to feed babies, without natural gas, and with roaring inflation in almost every sector of the economy. Worse, we’ve realized that it’s not hard to imagine far more catastrophic industrial crashes, and, indeed, the White House recently warned that a conflict in Asia could cause $2.5 trillion in damages the first year alone. Rather than harmonious interdependence among peoples we may soon be forced to choose between dependence on autocratic regimes and wider war.

Josep Borrell, the European Union’s head of foreign affairs and security policy, put the problem succinctly. “We have decoupled the sources of our prosperity from the sources of our security,” he said in a recent speech. For decades, the West as a whole relied on China for manufactured goods and on Russia for energy, he said. But that “world … is no longer there.”

It’s not surprising that Americans and Europeans are suddenly scrambling to devise “industrial policies” able to ensure that we can build what we need to be secure and to live well. And that in the United States, President Joe Biden and Congress have already pledged hundreds of billions of dollars to build new semiconductor foundries and components for electric vehicles.

That’s a very good thing. But these still modest advances are already threatened from every side—by the monopolists and the people in their pay, by the Chinese Politburo and the people in their sway, even by the temptation to load every progressive dream onto every individual project.

Done right, a new industrial strategy can help America and its allies solve most of the great crises of this moment. But left incomplete, industrial policy will make many of the biggest problems only worse. And unfortunately, today we still lack a clear hierarchy of threats to guide our decisions, an understanding of how to use competition principles and policies to achieve our ends, and a political narrative that explains why we must see this grand effort through to success.

The extreme concentration of capacity today is something largely new in the world. At the end of the Cold War, most industry was distributed widely. The United States, Europe, and Japan each manufactured their own vehicles, electronics, semiconductors, chemicals, and metals, all the way from subcomponent through finished product. Yes, many Americans drove Toyotas and many Europeans owned Fords, but those cars were usually built at factories within those regions. Today, by contrast, we see increasingly extreme chokepointing within most industrial systems, often to the point where a vital product or key component is manufactured in a single location—sometimes even a single factory—on the other side of the world.

The most well-documented such chokepoint is in semiconductors. Here, lack of supply can trigger cascading shortages across entire global industrial sectors. This is what  happened over the past two years with car production, which in turn led to shortages of used cars and rental cars. Taiwan alone manufactures 92 percent of the world’s most advanced chips, and 75 percent of total semiconductor capacity is located in East Asia. But we see similar concentrations of capacity in the manufacture of pharmaceutical ingredients, antibiotics, agricultural chemicals, industrial food chemicals, industrial gases, and basic materials and minerals including polysilicon, graphite, cobalt, magnesium, and rare earths. Similarly, we see extreme chokepointing of the capacity to assemble iPhones and laptops and to manufacture basic electronics components.

The cause of this concentration is easy enough to discover. Hidden behind the utopian rhetoric used to justify U.S. abandonment of industrial policy in the 1990s was simply an alternative industrial policy—basically, “Let the monopolists rule.” 

We can trace the origins of this ideology to the old feudal systems of corporate control that Americans rejected in the Revolution. In the 1970s, the United States faced a harsh combination of inflation, recession, and rising international competition. In response, left-wing pro-monopolists led by the economist John Kenneth Galbraith and right-wing pro-monopolists at the University of Chicago led by the economist Milton Friedman began to argue that antitrust and other regulation was inefficient and that it was smarter to allow big corporations to, in essence, regulate themselves. Thus unleashed, monopolist corporations at home and mercantilist states abroad ruthlessly consolidated power, then used that power to strip out industrial redundancies in ways that left vital production chokepointed in all but a handful of places.

Japan, Taiwan, South Korea, Germany, and even the Netherlands all ended up holding concentrations of core industrial capacities. But it was China that captured the vast majority of such chokepoints, and the ones most important for maintaining day-to-day life.

The most pressing threat posed by this new structure is that entire industrial systems will simply crash due to a sudden loss of access to some keystone component. The distributed industrial structure of the postwar era ensured that there was always a backup when something went wrong. Today, by contrast, the loss of any one of many single points of failure can trigger cascading collapses of fundamentally important industrial systems. Since the late 1990s, we have seen many such events. In addition to the disruptions caused by COVID-19, there were earthquakes in Japan, floods in Thailand, a volcanic explosion in Iceland, a political spat between Seoul and Tokyo, various financial crises, and the stranding of a single container ship in the Suez Canal, each of which triggered cascading shutdowns of entire industrial systems, including automobiles, electronics, and chemicals. And thus far we’ve been lucky. As destructive as many of these disruptions have been, in every instance it is easy to see how the shock could have been far worse.

Politically, the main threat is that China will simply squeeze or cut off shipments of products we need, in order to force the United States, its allies, or individual Western corporations to cede to some specific demand. China’s control over the production of so many essential components—as well as large shares of the profits of Apple, Disney, Volkswagen, and other corporations—gives it innumerable ways to bend even the most powerful actors to its will.

The United States and its allies can retaliate by blocking shipments of certain products and materials to China—and, indeed, the Biden administration in early October sharply limited sales to China of high-end chips and manufacturing tools. Similarly, Trump-era sanctions cost the Chinese manufacturer Huawei billions of dollars in sales of mobile phones and communications equipment. But the ultimate question in the event of a true showdown between nations is which has more leverage. Or, rather, which nation has the ability to force the other to say “Uncle.”

In our present confrontation with China, we don’t appear to have gamed out how to respond should Beijing counter by cutting off shipments of iPhones, drugs, and chemicals essential to farm and food production.

If there’s any doubt how this works, we need only look to Russia’s effort to force Europe to abandon Ukraine by cutting oil and gas flows. Putin’s power play also teaches us that extreme dependence on another nation may actually tempt that nation to act aggressively. There is much evidence, for instance, that Germany’s dependence on Russian energy helped convince Vladimir Putin that Ukraine was his to take.

The Ukraine war also demonstrates how monopolists can work together to buttress each other’s power. Many German manufacturers, for instance, have responded to soaring prices for gas and oil by shifting yet more production to China of everything from chemicals to electrical equipment to automobiles. As one Chinese commentator gloated recently, Russia’s war has created “tremendous opportunities for China.”

The Declaration of Independence set many revolutions into motion, as white men in America declared themselves free from the power of crown, church, and corporation. But it was the independence of nation from nation that led the citizens of the new United States to understand that they needed a true industrial strategy. If Americans meant to keep their democratic republic, one skill they had to master was manufacturing the weapons and ships they would need to protect themselves. 

In 1791, Treasury Secretary Alexander Hamilton made the first effort to devise such a plan. In his “Report on Manufactures,” Hamilton proposed to subsidize construction of new factories and then to use tariffs to pay for the subsidies and to protect the new factories from foreign rivals. From the first, however, Thomas Jefferson, James Madison, and others assailed Hamilton’s vision as mainly a way to centralize wealth, power, and political control in the hands of a new gang of homegrown monopolists.

After winning the presidency in 1801, Jefferson—along with Secretary of State Madison and Treasury Secretary Albert Gallatin—began to develop an industrial policy they believed posed fewer threats to American democracy. Their approach was based on the simplest of rules: Break all potential economic chokepoints at home and act to assure America’s independence from all economic chokepoints abroad.

Under their model, the government did subsidize certain industries essential to defense, such as the Springfield Armory and the Brooklyn Navy Yard, but only if under direct government control. Their main tool was competition policy, both in the form of strict controls over banking and the governance of corporations and in the form of strong enforcement of anti-monopoly laws at the state and local levels.

By the time the French political writer Alexis de Tocqueville visited the United States in 1831, it was clear that this approach was a startling success. In Democracy in America, he wrote,

The United States of America have only been emancipated for half a century from the state of colonial dependence in which they stood to Great Britain; the number of large fortunes there is small, and capital is still scarce. Yet no people in the world has made such rapid progress in trade and manufactures.

By the early 1850s, Samuel Colt, Isaac Singer, and Cyrus McCormick had demonstrated how to manufacture great numbers of identical pistols, sewing machines, and reapers using machines arrayed in assembly lines. This new “American system” of production so impressed British industrialists that Parliament held hearings. Then, in 1853, Colt built the world’s first overseas factory, near Hyde Park in London.

After the Civil War, however, the maturation of American railroads provided would-be moguls with a way to leverage their way to great power. Although the railroads themselves were highly regulated through their corporate charters and later through the Interstate Commerce Act, industrial barons including John D. Rockefeller and Andrew Carnegie figured out how to exploit the monopoly nature of railroad networks to grow their own businesses to great scale and scope.

In the 1880s, Wall Street bankers took monopolization to the next level, through cartelization of capital, new ownership structures, and other restrictions on the industrial liberty of rival entrepreneurs. The banker J. P. Morgan is remembered today largely for monopolizing the gates to credit. But he also exercised power through interlocking directorships and via control over a vast array of patents in the electrical, telephone, steel, and other industries.

In his presidential campaign in 1912, Woodrow Wilson aimed largely at Morgan’s system of control, and charged Wall Street with threatening democracy itself. But once in the White House, Wilson—along with his intellectual partner Louis Brandeis—looked far beyond Morgan and set about a complete updating of Jefferson’s no-chokepoints rule for the industrial 20th century. Within Wilson’s first 18 months, this included helping to pass the Clayton Antitrust Act, Federal Trade Act, Federal Reserve Act, and first modern tariff system, as well as forcing Morgan-owned AT&T to spin off the Western Union telegraph company.

Wilson, Brandeis, and their allies called their vision the “New Freedom,” and they centered their system on simple bright-line limits on the structure of markets and behavior of corporations. One core rule was that there always be multiple rivals in any business—at both the national and local levels. A second core rule was that corporations that control essential networks like the railway and telephone treat every customer the same. They believed that these two rules, in combination, would in turn deliver fair market wages and prices, opportunity to compete, high-quality goods, and rapid technological innovation. Or at least, by breaking all major concentrations of private power, make it easier to use the power of public government to achieve such aims.

In the mid-1930s, Franklin D. Roosevelt used the New Deal to extend the goals and principles of Wilson’s updated anti-monopoly system into all realms of U.S. political economic regulation. In 1940, FDR’s administration threw America’s competitive industrial system into overdrive with a plan to massively subsidize construction of factories to prepare for war with Germany and Japan. Using an agency called the Defense Plant Corporation, the government paid for some 2,300 factories in 46 different states. Under this model, the government directly owned the plants, then leased them to private operators.

In the 1940s and ’50s, the administrations of Harry Truman and Dwight Eisenhower strengthened and refined the no-chokepoints system. They formalized the idea that government must act to ensure that no corporation control more than 25 percent of the market for any industrial good. And they moved to immediately achieve this end by carefully selling government-owned defense plants to whoever promised to compete with dominant manufacturers. In one famous case, the government broke Alcoa’s long-held chokehold on U.S. aluminum by selling government-built mills to rival manufacturers Kaiser and Reynolds and by using antitrust authority to all but force Alcoa to share its patents.

The Truman and Eisenhower administrations also exported the no-chokepoints system to Europe, Asia, and the larger world trading system. They did so by imposing strict antitrust regimes on Germany and Japan during the postwar occupations of those countries. And although they failed in an effort to build anti-monopoly principles into the postwar trading system, they used America’s tariff system and economic might to achieve the same basic ends by steering much new industrial capacity to France, Germany, Italy, and Japan, and later to South Korea and Taiwan. They also used the new World Bank system to expand industry in Brazil, Mexico, Argentina, India, and elsewhere. Perhaps most surprising from today’s perspective, for more than 40 years the U.S. government used anti-monopoly law to force America’s most powerful manufacturers—including General Electric, AT&T, and RCA—to share their patents with rivals, including corporations abroad.

One of the purest illustrations of how the United States used anti-monopoly principles to enforce the no-chokepoints system internationally came in the mid-1980s. Japanese manufacturers launched a coordinated effort to capture control over the production of semiconductors and the components in personal computers. Ronald Reagan’s administration responded by using tariffs, quotas, subsidies, and other forms of pressure to break Japan’s hold on these capacities. They did so in ways that boosted production not only in the United States, but also in Europe and in countries new to these businesses, including South Korea, Taiwan, Malaysia, and Singapore.

The result was a truly international system with almost no industrial chokepoints. When the Soviet Union collapsed—in no small part because its own highly chokepointed industrial system had seized up—the rest of the world was served by the most open, stable, and innovative production system in human history. It was a system that brought many nations together in constructive cooperation. In short, by the end of the Cold War America’s no-chokepoints system had delivered both a phenomenal prosperity and a wide and growing peace to many of the peoples of the world.

Tragically, at that very moment of triumph, the United States was already in the process of dismantling the system that had delivered so much success. The Reagan administration, even as it continued to enforce a no-chokepoints regime abroad, effectively abandoned the enforcement of antitrust law in the United States, under the theory that monopolistic efficiency would result in greater “welfare” for “consumers.” Beginning in 1993, Bill Clinton’s administration applied this pro-monopoly thinking to trade policy, most dramatically through the Uruguay Round of the General Agreement on Tariffs and Trade, in 1994. This one-two punch left corporate managers free to concentrate capacity at home and then to shift that capacity to whichever nation provided them with the most lucrative deal.

And so, over the next quarter century, monopolists and mercantilists concentrated sector after sector, using their power to strip much, if not all, of the redundancy and resiliency from these production and transportation systems on which we depend. 

Our challenge today, as in 1801 and 1912, is to break all potential economic chokepoints at home and assure America’s independence from all chokepoints abroad.

To succeed, our industrial strategy must fit the realities of this moment. Simply attempting to replicate what we did during World War II won’t work. Our situation today could hardly be more different. Then, almost every factory on which we depended was located in the United States. Today, many of our most important factories lie within the borders of China, a strategic rival with whom we are already in industrial conflict. Further, the extreme concentration and tight gearing of today’s production and transportation systems means that any sudden disruption can trigger a truly shattering shock to our nation and the world as a whole.

Our task, in short, is to design and implement a strategy to widely redistribute industrial capacity, within a world in which production and control are now highly chokepointed, without triggering industrial collapse, provoking a catastrophic conflict, or yielding to industrial coercion. Success demands that we view this task as, to a very large degree, a matter of engineering the U.S. and international industrial systems—using law and policy—to ensure their stability.

The lessons of American policy over our nation’s first two centuries point to a relatively simple six-point plan:

Classify. Our first task is to map every potentially dangerous industrial chokepoint, then determine which pose the gravest threats. In doing so, we must keep in mind that China is not the only nation that might seek to exploit such chokepoints to extort political or economic benefit. We must imagine potential acts by Russia, North Korea, Iran, even our own allies, as well as factions within all these nations. In identifying dangerous chokepoints, we must also imagine the potential effects of natural disasters, financial crises, and third-party wars. This must include every chokepoint within the borders of the United States and our allies, so we know exactly what levers we still hold.

Collaborate. Second, we must work closely with our G-7 allies and other key industrial partners both to identify and classify chokepoints, and to devise a plan to break every dangerous concentration of capacity. Trump’s America First message and some of the more aggressive statements by Biden officials may play well with many voters. But if our goal is to increase our security and reduce tensions as swiftly as possible, blunt protectionism makes for bad policy. We already have an institution purpose built for such a project—in the Organisation for Economic Cooperation and Development (OECD). Let’s put it to its original use again now. 

Construct. Third, we must begin to rebuild almost every industrial capacity the monopolists and mercantilists concentrated, roughly in the sequence demanded by the relative level of threat posed by each chokepoint. The CHIPS and Science Act and the Inflation Reduction Act are an excellent start. But it’s vital also to begin immediately to rebuild outside of China the capacity to produce pharmaceutical inputs, antibiotics, industrial materials, electronics components, and agricultural and food system chemicals. This will require a level of investment and coordination far larger than we have yet seen. It will also require the United States to strongly encourage Europeans and other allies to do the same within their own nations, rather than complaining about U.S. investments designed to make all nations safer. 

Compete. Fourth, we must restore true competition among manufacturers in all essential industrial systems. Our goal in rebuilding factories in America is not to provide “national champion” manufacturers with a quiet and wildly profitable life. It is to assure a safe physical distribution of industrial capacity around the world, and of ownership and control over that capacity. There are many ways to structure competition to ensure that capacity within the international industrial system remains distributed, once we have rebuilt our factories. Perhaps simplest and least intrusive is to impose a set of negative quotas designed to guarantee that no one nation controls more than a specific fraction of our consumption of any good, component, or material. (I wrote about this in the July/August 2021 issue of Foreign Affairs.)

Converse. Fifth, we must engage China in an unfettered discussion about how to work together to avoid a catastrophic disruption of industrial production, and how to cooperate in redistributing capacity to assure the stability and resiliency of systems. The obvious model is the negotiation the United States undertook with the Soviet Union after the Cuban Missile Crisis to avoid a mutually catastrophic nuclear war. Like any monopolist, China has an interest in maintaining its hold over the chokepoints it controls. It has reaped enormous political and economic benefit from such power. But no matter how confident the country’s leaders may be of prevailing in a winner-take-all industrial showdown with the West, they also know that such a conflict could devastate the victor almost as much as the vanquished. Practically, this will require the United States to demonstrate the will to swiftly escalate any industrial conflict, in order to ensure a constructive balance of fear. This will also require the United States and its allies to demonstrate that their goal is not a full industrial decoupling or permanent hobbling of China’s industrial arts and sciences, but rather a careful reduction of flashpoints and tensions.

Cooperate. Finally, we must relearn how to treat nations beyond the G-7 and China as equals. The original promise of the financial and trading systems established after World War II was to develop the industry and skills of all peoples. For half a century, albeit imperfectly, this worked. Since the mid-1990s, however, the general practice of the richest nations has been to subject production and finance in the global South to ever more rapacious and authoritarian control by Western corporations, banks, and “multilateral” institutions, many of which in turn delivered these national markets to governance by Chinese industry and the Chinese state. Over the past decade, the problem has been made only worse by the political and social effects on these nations of unregulated communications and commercial platforms like Facebook and Twitter, and the more clearly imperial projects of China-controlled platforms such as Alibaba.

The moral reason for reversing this despoilment and disenfranchisement of half the world is obvious. There’s a more selfish reason as well. The swiftest way to fully engage the people of India, Brazil, South Africa, Indonesia, Mexico, and other nations in the project of building a secure and resilient industrial system is to give each a full seat at the table. And the best way to enable these peoples to build their own democracies and societies in the fashion that fits them is to impose traditional regulatory controls on Google, Facebook, Twitter, and other platform monopolists.

In two years, the Biden administration has overseen the greatest change in industrial strategy in America in more than half a century. This is most clear in practical policy, where the White House and Congress have directed more than $200 billion to rebuilding industrial and scientific capacities in the United States. 

It’s also true in terms of the philosophy the government relies on to understand and regulate power in the political economy, at home and abroad. In July 2021, for instance, Biden personally condemned the ideology of Robert Bork, who in the early 1980s led efforts to reorient domestic competition policy around the goal of promoting monopoly in the name of efficiency. Internationally, the White House has renounced the extreme free trade thinking President Clinton embraced in the 1990s. Not only did the Biden administration keep Trump-era tariffs on China, it all but abandoned the World Trade Organization, ignored calls for new multilateral trade agreements, and introduced wide-ranging “Buy American” rules for electric vehicles.

In October, National Economic Council director Brian Deese summed up the efforts in a speech in Cleveland. The United States, he said, was back in the business of using government to shape industrial outcomes. “There’s a strong animating vision that unifies” these efforts, he said, “a modern American industrial strategy.” 

Unfortunately, huge holes both in the conception and the practice of this strategy have left much work undone, and threaten the achievements of the past two years.

If we view the government’s overall effort in relation to the magnitude of the threat, and against the guidance provided by the “Six Cs” plan for rebuilding America’s traditional no-chokepoints system, we can identify many fundamental flaws. These include, foremost:

No overarching plan. The government has yet to devise a plan that sets priorities for what to invest in first, or even a plan to address any sudden break in the international production system. It doesn’t even have a team tasked with refining and overseeing such a plan. This is why the U.S.-China Economic and Security Review Commission recently called for the creation of an “office within the executive branch to oversee, coordinate, and set priorities … to ensure resilient U.S. supply chains and robust domestic capabilities, in the context of the ongoing geopolitical rivalry and possible conflict with China.”

Too narrow a focus. The CHIPS and Inflation Reduction Acts will, in theory at least, jump-start the rebuilding of large parts of America’s semiconductor and electric vehicle production systems. Yet despite many warnings, the United States has yet to devise policies to address the extremely dangerous chokepointing—mainly in China—of chemicals, drugs, electronics, materials, and electronics components. Nor has the government fully developed a plan to address the chokepointing of the supply systems for chips, despite extreme concentrations of capacity not only in China and Taiwan, but also in Japan, South Korea, Europe, and the United States.

No means to compel action. The key political lesson of America’s traditional no-chokepoints strategy is that the state must use anti-monopoly and trade power to force corporations to serve the public and to invest in new capacities and skills. Although Jefferson, Wilson, FDR, and Eisenhower sometimes used subsidies to boost production and research, they understood that without a judicious use of the stick, not even the biggest pile of carrots would keep a horse from bolting once he’d eaten his fill. Unfortunately, as Brian Deese made clear in Cleveland, the Biden administration’s industrial policy thus far consists of one tool only—the use of public investment to subsidize private investment, and profit.

Confusion of policy for strategy. The White House has at various times said its new industrial strategy aims at more jobs, more rapid decarbonization, more opportunity for small business, and less dependence on China. Such microtargeting of the message helps to sell legislation. But if taken literally, it can swiftly distract us from the core structural changes necessary to achieve even one of these goals. The key insight of America’s traditional no-chokepoints system is that structure is strategy, and that we should always focus on shaping markets and the behaviors of corporations to break all concentrations of power. The resulting distribution of capacity and control all but automatically assures the redundancy and stability of industrial systems, while empowering us to respond to any specific shock or political threat. Such distribution of capacity and control also makes it far easier for citizens to use government investment to achieve other political, social, and economic goals, by lessening the political power of those few who favor the status quo.

No game theory. Over the decades, the U.S. military has developed numerous detailed plans to respond to potential Chinese military actions. But the U.S. government appears to have spent little time thinking through how to respond to a Chinese industrial blockade or embargo. Nor how its own sanctions on China might affect Beijing’s decisions and actions. As the Financial Times columnist Rana Foroohar wrote recently, the Biden administration is “pushing geopolitical hot buttons at a time when the US has yet to develop a detailed action plan for the economic fallout from such a conflict, or even the continued decoupling of the US and Chinese economies.” Absent such scenario planning, many U.S. actions today border on recklessness.

No master narrative. The White House has put together everything necessary for a story fit to guide the American people through a turbulent period of industrial rebuilding. It has identified villains, in the form of intellectuals whose ideas empowered today’s monopolists. It has set in motion a plot, in which the government both breaks the power of the old guard and subsidizes the rise of the new. It has pointed to the promise of a better world, in the form of stronger democracy, faster decarbonization, a lasting peace. But the White House has yet to weave these elements into a master narrative that explains in simple language how we got here, where we are going, how we’ll get there, and why. Which in turn has left the White House and Democrats in general subject to the misinformation and propaganda of others, be it Republicans yapping about inflation or grand capitalists and their academic lackeys warning of the economic costs of any radical change in policy toward the monopolists and China.

This last failure is especially dangerous. For 20 years now, I and others have raised many alarms about the threats posed by the extreme chokepointing of industrial capacity. This includes writing the first article on the issue in June 2002, publishing the first book on the threat in July 2005, and raising the first warnings about China’s direct control over U.S. corporate leaders in October 2015. 

Over that time, many officials within the U.S. government responded. I myself engaged directly with top leaders in the Treasury and Commerce Departments under President George W. Bush; with top leaders in the Department of Defense, Central Intelligence Agency, and White House under President Barack Obama; and with dozens of senators and members of Congress from both parties, including through testimony on these issues.

We should have mastered all these threats long ago. Yet every time policy makers focused on the need for fundamental change, we allowed those who profit from the chokepoints to distract us from our goals. So too today. Thus far, Biden’s industrial policies enjoy strong support in both parties and from key allies. But the pressure to abandon real reform is building fast.

Germany’s new government has been warning businesses for months about the dangers of dependence on China, and the new chancellor, Olaf Scholz, recently said he was “surprised at how dependent some companies have made themselves on individual markets and have completely ignored the risks.” Yet when members of the government challenged the CEO of the chemical giant BASF for deciding to build an immense new chemical plant in Guangdong, the CEO calmly dismissed the public interest and said, simply, “We have an extremely profitable China business.”

Here in the United States, we have an even more brazen example in Apple CEO Tim Cook. Late last year, The Information reported that Cook in 2016 signed a secret agreement with Beijing. In exchange for a promise by the Chinese Communist Party to relax political and economic pressures on Apple, Cook promised to invest $275 billion in Chinese manufacturing and research. Yet despite being completely dependent for production, research, and profit on a strategic rival of the United States, Cook has personally taken a leading role in fighting new antitrust legislation in Congress designed to lessen the economic and political power of his and other corporations. Which is hardly less audacious than if the CEO of Krupp Steel had lobbied Congress against establishing the Defense Plant Corporation in 1940. 

Or consider the lineup at a recent all-day event at the Cato Institute in Washington, D.C., where participants gathered to discuss the “ascendant political threats” to “the free economy” posed by “antitrust populism, protectionism, business politicization” and “the regulatory state”—in other words, the policies of the Biden administration. What was odd was not that Cato convened the event. It was some of the people who showed up: top economic advisers to President Obama and to John McCain’s 2008 campaign; extreme protectionists and extreme defenders of laissez-faire trade theory; a former FTC commissioner who is one of the main advocates of pro-monopoly competition policy; and Google’s chief economist. All joined their voices to sing the virtues and huzzah the power of monopoly and of China, while wielding the word freedom in ways that would have astonished Orwell himself.

It’s important to understand the game here. The goal of those who oppose this most commonsense distribution of power and risk is not to win any intellectual argument; most now fully understand that they can never restore the magical thinking of the 1990s. Their goal is simply to mislead, bewilder, confound, and delay and delay and delay until once again we lose our way, and fail to throw off the leash the monopolists have fastened on our neck.

Winston Churchill, in a speech in Parliament in October 1938 during debate over the Munich Agreement with Nazi Germany, described the ultimate threat posed by allowing a rival nation to capture an ability to choke off essential supplies. The gravest danger, Churchill said, comes from “our existence becoming dependent upon their good will or pleasure.” Should that ever happen, he warned, “in a very few years, perhaps in a very few months, we shall be confronted with demands [that] affect the surrender of territory or the surrender of liberty.”

That’s why Biden must now devise a true industrial strategy—one designed to break every chokehold on industry—and see that strategy through.

The post Manufacturing and Liberty appeared first on Washington Monthly.

Joe Biden’s grand plan sure sounded right for the final weeks of the campaign. In this time of pandemic and economic upheaval, learn from the hard lessons of the Great Recession and spend big to “build back better.” Focus on jobs, clean energy, infrastructure, and expanding the Affordable Care Act. It was to be nothing less than a new New Deal. Or, as Vox put it in August, Biden is “self-styling as the next FDR.”

Well, Joe Biden did win big. But Democrats did not carry the Senate—and even if they are successful in the Georgia runoffs, their hold on that body will be too tenuous to deliver the trillions of dollars in spending Biden promised. The emerging consensus, as described by The New York Times, is that Biden cannot drive a series of expensive programs forward but must be content to “nibble at the edge of tax policies” and other micro measures while bracing for a sluggish recovery.

And that’s the optimistic take. From day one Biden will also have to parry the populist-tipped thrusts of Republican Senators Josh Hawley and Tom Cotton and other Trump-inspired contenders for 2024, and perhaps of Trump himself if he seeks to reclaim his crown. Biden might also find himself under assault from the left wing of his own party, sometimes wielding the same arguments as anti-corporate Republicans.

The prospect gets ugly fast. Former FCC Commissioner Reed Hundt and others have charged Barack Obama with “wasting” the financial collapse of 2008 by not pursuing deep structural fixes. Faced with an even graver set of challenges, Biden might never get a chance to prove that he’s capable of true reform. Instead, he faces two years as a hostage of the Senate, followed by two years of panic as the MAGA troops muster outside the White House gates.

But what if Biden instead chose to follow through with his promise to transform the nation, only using different tools than he envisioned in the campaign? The fact that he will enter the White House knowing that a Keynesian stimulus is off the table could prove key to his ultimate success if it inspired his team to find smarter ways to achieve its goals.

One set of tools offers the promise of true transformation, without the need for large sums of money or strong congressional support. This is the use of America’s vast suite of anti-monopoly laws already on the books to address the extreme and growing concentration of private power that has harmed the economic and political well-being of almost every American. An anti-monopoly agenda would enable Biden to frame, direct, and drive deep structural reforms tailored to deliver everything from better health care to better jobs to real solutions to the climate crisis, and to create opportunity and stimulate investment and innovation across the entire economy. Such an agenda would even offer ways to steer political debate in a more constructive and civil direction.

Rather than button himself into a beige cardigan next to the White House fire, President Biden can stride forth as a second Harry Truman, taking the fight to the thieves and bullies and demagogues while telling a story of America that explains who broke our nation, how they did it, and how we can fix it.

Fully understood and embraced, anti-monopolism offers Biden the opportunity to establish the foundations for a 21st-century political economy that is fair, just, safe, prosperous, and sustainable, and to do so on the cheap. Even better, anti-monopolism offers him the chance to establish a liberal political regime in America able to protect his achievements for decades to come.

The idea that monopolists pose some sort of threat to the public weal is now widely accepted. In the case of Google, Facebook, and Amazon, for instance, three of every four American voters favor some sort of breakup of the corporations.

Reaction against extreme concentration of wealth and power has in fact played a large and growing role in the nation’s politics for more than a decade. In 2008, Obama’s promise to fight farm monopolies proved key to his win in the Iowa caucus. When he then failed to deliver, and instead bailed out the biggest of banks, populist anger powered the rise of the Tea Party in 2010 and of Occupy Wall Street in 2011. That same anger was a key to Bernie Sanders’s shocking rise in 2016, and to Donald Trump’s even more shocking victory that November. And it played a big role in the Republicans’ strong showing in 2020, as Trump, aided by supporters like the Fox News hosts Sean Hannity and Laura Ingraham, continued to paint Democrats as supercilious servants of financiers and data barons.

Since 2016, elements of the Democratic Party have made big advances in steering the raw anti-wealth and anti-elite anger in a constructive direction. Elizabeth Warren led the way in June 2016, delivering a speech in which she characterized the rise of monopoly as a fundamental threat to the economic well-being of Americans and to democracy. During the 2020 primaries, Amy Klobuchar, Cory Booker, and Bernie Sanders all built on Warren’s analysis of the fundamental role played by bad competition policy.

Then, in early October, the Democratic-led antitrust subcommittee in the House issued a groundbreaking report that detailed how Google, Facebook, and Amazon exploit their power in ways that threaten America’s democracy and system of capitalism, and sketched how to use anti-monopoly law to break that power. Two weeks later, Democratic state attorneys general played a major role in prodding Bill Barr’s Justice Department into filing the first major antitrust suit against Google. Finally, in December, Democratic appointees on the Federal Trade Commission drove the FTC’s decision to sue to break up Facebook.

The Biden team has clearly paid close attention, and a detailed read of the campaign’s policy papers reveals an assortment of promises to break concentrations of power. The statements are simple and strong. Biden’s “Plan for Rural America” promises to “make sure farmers and producers have access to fair markets where they can compete and get fair prices for their products.” The campaign’s “Agenda to Boost America’s Small Businesses” sounds as folksy as Biden himself in its pledge to “combat corporate power, promote competition, and ensure markets work for everyone so that small businesses have a fair shot.”

Unfortunately, beyond these demonstrations of recognition, there’s little sign that the Biden team comprehends the systemic nature of America’s monopoly crisis, or the full suite of tools available to fix the problem. On the contrary, Biden thus far has left the shaping of anti-monopoly policy largely to the same people who failed to address the threat under Obama, and who generally continue to embrace the old Reagan-era doctrines that treat the concentration of private power as mostly benign. 

To be sure, part of the art of making campaign promises is to leave plans vague enough that everyone sees what they need to in order to support a particular candidate. And in this case, it worked. Simply not being Donald Trump was good enough to give Biden comfortable margins in both the Electoral College and the popular vote.

But walking into the White House is different, and the lack of a coherent plan to address concentrated power poses two large and immediate challenges.

The first problem is that Biden’s team does not understand the array of tools available to fix many of the most pressing challenges we face today. Consider Biden’s “Plan to Rebuild U.S. Supply Chains,” which aims to address two grave dangers at one go—the shortages of masks and other protective gear that contributed to the COVID-19 pandemic, and America’s growing dependency on China for industrial goods that are vital to U.S. national security.

There is a lot to admire in the document. In the pledge to address “anti-competitive practices,” we see a recognition that monopolists played a role in creating these problems. The plan also focuses on the right industries—semiconductors, telecom, and electricity grid technologies. And it has the right overarching aim. “The goal here is not pure self-sufficiency, but broad-based resilience.” 

But when it comes to fixing the problem, Biden’s team has little to offer. If we mean to force powerful, private, for-profit corporations to spend billions of dollars to build new factories to manufacture the goods we need, the smart use of tariffs, quotas, and anti-monopoly law is essential. Instead, we get a collection of grossly inadequate half measures, in the form of promises to “leverage” government purchasing, to tweak the tax code to “encourage” corporations to act better, and to publish a “Critical Supply Chain Review” once every four years.

Worse, Biden’s position paper takes no account of the fact that the Trump administration has already launched a supply chain war with China over the production of communications gear by the Chinese corporation Huawei. Given how dependent the United States has already become on China for many vital manufactured goods, the Biden team must be strategically prepared to wield all of America’s trade weapons on the first day, especially given that China could at any time reciprocate Trump’s use of industrial embargoes.

The second immediate problem is that a lack of an overarching plan to address corporate monopoly leaves others free to define Biden as a patsy of the powerful. And many Republicans are already doing exactly that, by attacking the president-elect for simply continuing Obama’s pro-bank and pro-Google agenda. Even before the Pennsylvania results had been called, for instance, Fox’s Tucker Carlson was gleefully labeling Biden a “corporate hologram” and warning that “Big Tech will have more than an ally in the White House; it will have a lackey.”

That’s probably not the decal Biden wants on his Corvette before he even drives past the green flag.

To grasp the full potential of anti-monopoly policy both to frame a fresh story of America and to fix many of our most pressing challenges, we have to first remind ourselves of how Americans, from the earliest days, understood the threat of concentrated private power and repeatedly mastered the problem. Look at U.S. history from 1776 to the election of Ronald Reagan and you’ll see two centuries in which the governing philosophy of American political economics centered on how to break or harness monopoly. 

The American Revolution itself was not merely a reaction against certain types of control—such as the British East India Company’s monopoly on commerce. It was also a positive vision of new forms of human liberty. The Declaration of Independence, after all, is about far more than the liberation of the nation. With its claim of absolute equality among men, it is also a declaration of independence of man from man.

To achieve this end, America’s founding generation created what would become the world’s most sophisticated set of institutions, laws, and policies to protect every (white, male) citizen from concentrated private power. While Americans for many decades did not even pretend to extend such protections and privileges to Black people, Native Americans, or women, their commitment to checking concentrations of both political and economic power was revolutionary. They did so first by distributing homesteads designed to enable a family of modest means to care for itself, and second by devising ways to protect those freeholders from private monopolists. In my new book, Liberty from All Masters, I call this legal and policy arrangement the “American System of Liberty.”

The Constitution was the centerpiece. Nowadays, we focus mainly on that document’s intricate system of checks and balances designed to break the power of the state. But the Framers also intended the Constitution to make it much harder for the financier and the landlord to concentrate dangerous amounts of private power. This was made clear in contemporary debates. After Thomas Jefferson called for the Bill of Rights to ban monopoly, for instance, James Madison assured him that the system of checks and balances would also prevent dangerous concentrations of private power. “Where the power, as with us, is in the many not in the few,” Madison wrote, “the danger cannot be very great that the few will be thus favored.”

This same vision of liberty also shaped how the founding generation framed some of the nation’s earliest and most far-reaching laws. This was especially true of the Northwest Ordinance of 1789, passed by the first Congress and signed into law by George Washington. Yes, the ordinance was in part an imperial document, a guide to settling the lands that now make up Ohio, Indiana, Illinois, Michigan, and Wisconsin. Even at the time, many understood that the plan would result in the displacement and death of many, if not most, of the Native Americans living there.

But the ordinance is also a radical vision for engineering a democratic society among the settlers. The document did so first by carving the lands into 160-acre plots and then by subsidizing their distribution to individual families. It protected those properties from being concentrated into a few immense estates by banning slavery, outlawing developers and speculators, and requiring parents to distribute the lands in equal portions to all of their children, both male and female. This was no libertarian utopia. On the contrary, the vision of state power distilled in the ordinance is of a people’s government actively working to build a good society, through public education, the creation of town-sized communities, and equal voting rights for both Black and white citizens. 

In the greatest triumph of the American system of liberty, beginning in 1861 almost a million citizens raised on these small farms organized themselves into armies and joined with freeborn and freed Black people to overthrow the slave power in the South. Little more than a decade after the Civil War, however, came one of the greatest tragedies in American history. Almost as soon as they completed the original promise of the Declaration of Independence by destroying slavery, America’s citizens found themselves threatened by monopolists armed with great piles of capital concentrated during the war. When financiers combined this capital with sophisticated techniques for leveraging the power of the new railroad and telegraph technologies, the result was a sudden and massive concentration of corporate power that led first to the overthrow of Reconstruction in the South and soon to the throttling of democracy throughout the nation.

In the late 19th century, Americans managed to pass two foundational anti-monopoly laws: the Interstate Commerce Act, to outlaw most forms of discrimination in pricing and service by the railroads; and the Sherman Antitrust Act, to break the power of banker-controlled industrial cartels. Both, however, proved inadequate to the problem, and by the turn of the 20th century a small oligarchy centered around the banker J. P. Morgan had captured control of the heart of the U.S. economy. Or, as W. E. B. Du Bois described it in 1935 in Black Reconstruction, his foundational history of the United States, “it was a new rule of associated and federated monarchs of industry and finance wielding a vaster and more despotic power than European kings and nobles ever held.”

Theodore Roosevelt is often depicted as the first true “trustbuster,” and it was his Justice Department that—after being prodded by Ida Tarbell’s groundbreaking investigations into the corporation—used the Sherman Act to launch the breakup of Standard Oil. But Roosevelt himself repudiated the philosophy of trust-busting, believing that monopoly was natural, and the only practical option was to blend state and private power into a top-down command-and-control system of governance. One result was that he left the bankers largely free to concentrate further power, in what was widely called the “Money Trust.”

It was not until the election of 1912 that Americans figured out how to break the power of Wall Street, and in doing so they achieved nothing less than a second American revolution. Woodrow Wilson and his adviser, the later Supreme Court Justice Louis Brandeis, drove a set of reforms through Congress that entirely restructured the American economy. These included the Clayton Antitrust Act (which clarified and strengthened the Sherman Act); the Federal Trade Commission Act (which created the Federal Trade Commission and vested it with vast anti-monopoly powers); the Federal Reserve Act (which established a publicly controlled central bank to wrest control of credit and the money supply from Wall Street financiers); a progressive income tax (to break up personal fortunes and distribute wealth more equitably); and the first breakup of AT&T. 

Wilson called his revolution the “New Freedom,” and 20 years later it served as the foundation for the New Deal. Although many historians depict the New Deal as devoted to centralization and bigness, right from the beginning Franklin D. Roosevelt focused on protecting independent farmers and businesses, while carefully limiting and dispersing the power of bankers and corporate bosses. In fact, even the notorious National Industrial Recovery Act was aimed largely at protecting smaller businesses, albeit through government-run cartels that the Supreme Court later held to be unconstitutional. Then, as the Great Depression persisted, Roosevelt doubled down in 1936 on the fight against the corporate and banking monopolists, in what is sometimes called the Second New Deal. “The struggle against private monopoly is a struggle for, and not against, American business,” Roosevelt said in October of that year. “It is a struggle to preserve individual enterprise and economic freedom.” Soon after reelection, Roosevelt boosted the number of antitrust lawyers at the Justice Department from 60 to more than 600.

Through the middle of the 20th century, Americans wielded traditional anti-monopoly principles to shape a highly sophisticated economic regime based on separating the economy into three distinct realms of policy. Each realm was governed by specific limits on the size and behavior of corporations, all carefully geared to achieve particular political and economic goals.

In the case of corporations that provide essential services and goods, the core rule was an absolute prohibition against discrimination in pricing and terms of service. The Interstate Commerce Act had applied this rule to railroads, and Congress later extended it to other transportation and communications networks, from trucks and airplanes to telegraphs and telephones. 

In the case of industrial firms engaged in applying science to manufacturing, the core rule was that there never be fewer than four corporations competing in any industry, be it the manufacturing of chemicals, metals, automobiles, or, later, semiconductors. In the case of farming, retail, and light manufacturing, the core rule was to protect the independent businessperson and farmer from Wall Street predators armed with chain stores and processing monopolies.

It worked. Wages soared, both because of greater unionization and because employees had more firms competing for their talent. Independent businesses and communities thrived, as the war on chain stores and big banks largely blocked the transfer of wealth to a few coastal cities. And Americans unleashed the greatest period of technological innovation in history.

This vision of independent citizens, and the system of small property ownership designed to achieve it, even proved one of the most important tools for overcoming Jim Crow laws and segregation. Not only did the anti-discrimination provisions in the Interstate Commerce Act provide a key tool for desegregating public transportation, but independent Black-owned businesses and farms also provided essential support in the fight to break white systems of control and extend full citizenship to all. That’s why in the 20th century some of the strongest supporters of anti-monopoly laws included W. E. B. Du Bois, Martin Luther King Jr., and Thurgood Marshall, who was the last Supreme Court justice fully devoted to protecting these laws, which were so foundational to American democracy. 

When Ronald Reagan took office in 1981, one of his first targets was the American system of liberty. Reagan’s team did not target the hundreds of individual anti-monopoly laws Americans had passed over the course of generations. Instead, they proposed an entirely new philosophy of competition, to govern how we understand and use all existing anti-monopoly law. In place of anti-monopolism’s traditional goal of protecting democracy and the liberty of the citizen, the administration said the laws should instead promote the material “welfare” of the “consumer.” Out were traditional bright-line rules used to structure markets and control the actions of corporations in ways that promoted broad political goals, such as preserving opportunities for upward mobility and personal liberty. In their place, Reagan’s team erected a new system in which economists were to judge each individual consolidation of power based solely on whether it would result in more “efficiency” in the production of goods and services, no matter the larger effects on society. 

This enthronement of efficiency as the ultimate goal of the U.S. political economy, and of economists as the main arbiters of power, marked the single most dramatic ideological reversal in American history, a true intellectual and political coup. And yet the event went all but unnoticed. This was partly because anti-monopoly enforcement had become so successfully routinized by the early 1980s that few Americans thought much about it. It was also because highly influential “progressive” thinkers such as John Kenneth Galbraith and Lester Thurow largely agreed with the underlying goal of Robert Bork and the other libertarian scholars who were advising Reagan. They too favored extreme concentration of corporate power, but, in the tradition of Teddy Roosevelt, they intended it to be under the day-to-day direction of the executive branch.

In the 1990s, under the sway of these and other thinkers, Bill Clinton’s administration would largely complete Reagan’s overthrow of the American system of liberty. It did so mainly by applying Reagan’s pro-monopoly efficiency philosophy to the regulatory structures designed to govern America’s defense, telecommunications, media, energy, and banking sectors, and to the regulation of international trade. In Clinton’s second term, however, the Justice Department grew concerned about concentration of power over the internet and launched one of the biggest antitrust cases in decades, against Microsoft. 

In the years since, the George W. Bush, Obama, and Trump administrations largely operated within the neoliberal intellectual and political framework. The one real exception was the last nine months of the Obama administration, which in April 2016 finally sounded an alarm about America’s monopoly crisis, albeit way too late in their time in office to have any real effect. The result has been a two-stage consolidation of power and control. 

The first stage saw the rise to dominance of corporations like Walmart, Koch Industries, Goldman Sachs, News Corp, Citibank, Tyson Foods, Monsanto, Boeing, and Pfizer. It also saw the dramatic empowerment of Beijing, as many of the monopolists who captured various U.S. markets then chose to sell the factories and technologies under their control to Chinese corporations.

The second stage of monopolization—dating to around the Lehman Brothers crash of 2008—has been driven by the rise of Google, Facebook, Amazon, Apple, and a few other digital monopolists. Not only have these corporations grown far bigger than the giants of the first stage, they also have succeeded in capturing direct control over the communications and commercial platforms on which everyone, including the dominant monopolists of 15 years ago, must do business. And they have exploited this choke hold to exercise increasingly direct authority over other people’s businesses and lives.

In recent years, many Democrats have embraced the mantra that “personnel is policy.” If there’s one lesson we should learn from the neoliberal overthrow of anti-monopolism a generation ago, it is that philosophy is policy. Ideology truly matters. Nowhere is this more true than in the American political economy, where the diffusion of neoliberal ideas into both parties resulted in a pyramiding of power and control that would have awed even J. P. Morgan in his prime, as well as a vast and growing series of political and economic disasters.

Today just about every problem Americans face was either caused or made worse by the concentration of power that resulted from the overthrow of the American system of liberty. Monopolists have driven up the price of hospital beds and essential drugs while colluding food processing cartels drive up the cost of chicken, milk, and other staples. They have bankrupted millions of independent businesses and farms, and gutted the economies of small towns and midsize cities across America. Monopolists have undermined U.S. national security and subverted the communications systems on which our democracy depends.

That’s why it’s exactly here that Biden will find his one true opportunity. 

Few of the executive actions the Biden team lists as priorities—such as rejoining the Paris Climate Agreement—would get at the source of any of the domestic problems that enrage so many Americans across the political spectrum. On the other hand, as soon as the Biden team frees itself from Reagan’s consumer welfare philosophy, they will discover a complex system of institutions and laws they can put to immediate use to bend the American political economy back toward liberty, democracy, and prosperity, on the cheap.

On day one, President Biden will be able to strap himself into the cockpit of a governing machine purpose-built during the Wilson and Roosevelt administrations—and fortified by Truman, Dwight Eisenhower, Lyndon Johnson, and even Richard Nixon—to break power, distribute opportunity, build community, protect security, and engage citizens in constructive activities. This system includes agencies with great untapped powers, like the FTC and the Department of Agriculture, which have far-reaching and long-neglected rule-making authority. And it includes strong anti-monopoly powers in just about every office of government, including the Federal Reserve, the Treasury Department, the Federal Communications Commission, the Securities and Exchange Commission, the Defense Department, the Transportation Department, and the Federal Energy Regulatory Commission, among many others.

What could Biden do if he made full use of the anti-monopoly powers the government holds? Consider, for a moment, how these tools could be applied to just a few of the problems that now threaten the American people and the United States.

The next pandemic. Biden can’t do much to lessen the harms of COVID-19, given the Trump administration’s grotesque mismanagement of the crisis. But he can use anti-monopoly tools to make us much less vulnerable going forward, such as by breaking cartels that have cornered the markets for masks, drugs, and other medical supplies. 

Health care costs. Without control of the Senate, Biden won’t be able to complete the Affordable Care Act and achieve universal health coverage. But he can crack down on the hospital mergers that drive up prices and drive down service. He can also use antitrust and other competition policies to block drug company mergers, patent holdups, and other tactics that lead to higher prices, less innovation, and loss of capacity.

Falling real wages. Biden can’t decree a higher minimum wage. But he can use his appointments to the FTC to ensure that the commission uses it powers to stop corporations from imposing noncompete and no-poach agreements that keep workers from changing jobs. And by simply using the Justice Department, the FTC, and other agencies to block more mergers and bust up monopolies, he can increase the number of employers competing to hire each worker. 

Climate. Without the Senate, the Green New Deal is DOA. But Biden can immediately use anti-monopoly to break the power of giant hydrocarbon combines like Koch Industries and thereby reduce their political power and funding of climate denialism. He can also use anti-monopoly laws to crack down on utilities that block people and companies who invest in solar and wind from selling their power on the grid. 

The collapse of entrepreneurship and community. Biden, acting alone, can’t subsidize independent business. But he can use existing antitrust law to protect the upstart firms that have always been America’s prime source of new jobs and new ideas from the predations of Amazon, Google, Uber, and concentrated capital generally. In doing so, he will also restore America’s tradition of promoting opportunity through ownership of family businesses.

Stimulus. Without the Senate, Biden won’t get more than a fraction of the spending he has planned on to revive the economy. What he can do with vigorous enforcement of anti-monopoly laws is open up a flood of private investment. For years, giant reserves of capital have been building up because of the high barriers to entry created by cornered markets. Every market Biden opens to competition creates new opportunities to put more of that cash to productive use. 

Failing rural economies. Biden might not be able to deliver on his promise of providing loans to beginning farmers. But he can use tougher antitrust enforcement and the creation of true cooperatives to free farmers from having to pay monopoly prices for seed, fertilizer, and tractors. And he can rebuild competitive markets for their crops—and for the labor of food chain workers—by breaking the power of the slaughterhouse and food processing monopolists. 

International trade. Biden can’t rewrite any major international agreement on his own. But he can use anti-monopoly principles to guide how he enforces U.S. trade laws, and to ensure that no foreign nation ever be allowed to capture a choke hold over the manufacturing of any good or service vital to American security and well-being.

Arts and literature. Even if he wanted to, Biden wouldn’t be able to subsidize America’s writers and artists, who have found their business models entirely disrupted by the power of Google, Amazon, and other platform monopolies. But he can impose nondiscrimination rules on these corporations and strengthen copyright protections, so content creators can earn a fair market price for their work and never fear retaliation for speaking out against power. 

Disinformation and censorship. No president will ever be able to stop propagandists, social saboteurs, or just plain crazy folks from having their say. But Biden can also use these same nondiscrimination rules to force Google and Facebook to abandon the business models that reward them for spreading information specifically designed to divide and radicalize voters. And he can use anti-monopoly law to stop these corporations from diverting into their own vaults the advertising dollars that—for the past 250 years—have helped to support trustworthy local journalism.

Some members of Biden’s team will surely oppose such a robust anti-monopoly agenda. One reason is fear that doing so will make it hard to keep the votes of the independent and Republican voters who helped put Biden in the White House. Another fear is that taking on Facebook, Google, and Amazon will hurt fund-raising. In short, they will argue that strong anti-monopoly policy makes for bad politics.

But any close reading of U.S. history shows the exact opposite to be true. Anti-monopoly policy is smart politics, both today and over the long run. This is especially true now that the American people have woken up to the problem of concentrated power and are looking for someone to protect them. Surveys show that this is as true of independents and Republicans as it is of Democrats.

The first thing Biden would get from fully embracing anti-monopolism is an easy-to-tell story of what went wrong in America, why it went wrong, how we can fix it, and where we are going as a nation. Biden would also gain the ability to demonstrate that he understands the anger and hopelessness that so many Americans feel about the loss of their prosperity and independence and about the destruction of their families and communities.

Learning how to tell this story will prove surprisingly easy. The beauty of traditional American anti-monopolism is precisely that the language is not technical, and enforcement does not depend on phalanxes of specially trained economists or any of the other “experts” long ago pressed into the service of oligarchy. It is a language Biden himself already fully understands. After all, anti-monopoly is about giving everyone “a fair shot” and ensuring that everyone is treated with “dignity” and “respect.” It is about fighting cheats and crooks and evildoers.

Consider Biden’s speech on the Saturday when CNN finally called the race. “I’ve always believed we can define America in one word: possibilities. That in America everyone should be given an opportunity to go as far as their dreams and God-given ability will take them.” That is the essence of the original idea of America, the America the neoliberals broke when they unleashed the monopolists.

The Biden team will also find anti-monopoly policy to be a strategic weapon of great potency.

Fully embrace anti-monopolism, and Biden will find himself able to unify the two wings of the Democratic Party. After all, anti-monopolism will allow him to begin to break down many of the economic and political structures that underlie inequality, the hydrocarbon economy, and even racism, while simultaneously creating opportunities for entrepreneurs and investors to build new businesses and create more and better jobs. 

Fully embrace anti-monopolism, and Biden can also begin to break the GOP’s choke hold on the Senate and the Electoral College. Strong anti-monopoly policy will, after all, empower Biden to deliver millions of rural Americans from the isolation and humiliation that drove so many of them to Trump in the first place. It will do so by breaking the grip of the agricultural, retail, and transportation monopolists who for 40 years have appropriated these people’s lands, looted their communities, and destroyed their families.

Fully embrace anti-monopolism, and Biden might even be able to begin to unify much of the American people as a whole against the common threat posed to our national and personal security by the monopolists and their allies in China.

An assertive anti-monopolism will even give Biden the ability to scatter the corporate and judicial reactions and reveal them as the empty threat they are. As Wilson did in 1913, Roosevelt did in the 1930s, Truman and Dwight Eisenhower did in the 1950s, Johnson did in the 1960s, and Gerald Ford did in the 1970s, Biden can use anti-monopolism to pit the great majority of American entrepreneurs and investors against the few who seek to engross all opportunity and all power. The burst of public and private legal cases, meanwhile, many making arguments that have not been heard in decades, will overwhelm the judiciary’s already weakening embrace of Reagan-era neoliberal thinking.

By contrast, if Biden fails to seize the initiative, he might be remembered as little more than a woebegone regent for Trump in his exile, in Elba by the Sea Florida. And Democrats should be absolutely honest about what a defensive, cautious, backward-looking, tortoise-like Biden administration will deliver, which might be something like the end of democracy in America and around the world.

Failure to use anti-monopolism to seize the initiative would leave Trump’s Republican Party free to use the same populist rhetoric to divide and scatter the Democratic Party in 2022 and 2024, while once again bringing the Koch-funded neoliberal wing of the GOP back into gawky alignment with Trump’s national populist wing. 

Even more dangerous, such a failure would leave Google, Facebook, and Amazon free to exploit their control over our communications and commercial systems to further separate each American into a perfectly isolated bubble of rage, bewilderment, and despair, in ways that might soon shatter forever the ability of either party to communicate coherently with America’s voters.

So we know the road we must take, and why. We even know what action we need to see on Inauguration Day to be sure we are heading in the right direction. 

The opportunity to found a new regime comes along only rarely in America, perhaps once a century. Yet that is exactly what Biden can do. By restoring the American system of liberty, Biden can be the president who connects the United States of the 21st century to the main line of American liberalism and enlightenment stretching back to the nation’s founding. In so doing, he can restore a true people’s democracy that is open, forward looking, wisely internationalist, and triumphant.

Will January 20, 2021, mark the dawn of the Age of Biden? That’s up to Joe to decide.

The post How Biden Can Transform America appeared first on Washington Monthly.

There are many competing interpretations for why Hillary Clinton lost last fall’s election, but most observers do agree that one—economics—played a big role. Clinton simply didn’t articulate a vision compelling enough to compete with Donald Trump’s rousing, if dubious, message that bad trade deals and illegal immigration explain the downward mobility of so many Americans.

As it happens, Clinton did have the germ of exactly such an idea—if you knew where to look. In an October 2015 op-ed, she wrote that “large corporations are concentrating control over markets” and “using their power to raise prices, limit choices for consumers, lower wages for workers, and hold back competition from startups and small businesses. It’s no wonder Americans feel the deck is stacked for those at the top.” In a speech in Toledo this past October, Clinton assailed “old-fashioned monopolies” and vowed to appoint “tough” enforcers “so the big don’t keep getting bigger and bigger.”

Clinton’s words were in keeping with Bernie Sanders’s attacks on big banks, but went further, tracing how concentration is a problem throughout the economy. It was a message seemingly tailor-made for the wrathful electorate of 2016. Yet after the Ohio speech Clinton rarely touched again on the issue. Few other Democrats even mentioned the word monopoly.

The pity is that Clinton’s stance wasn’t simple campaign rhetoric. It was based on a substantial and growing body of research—much of it first presented in the pages of this magazine and since validated by the Obama administration’s own economists—that confirms that consolidation is at the root of many of America’s most pressing economic and political problems.

These include the declining fortunes of rural America as farmers struggle against Big Ag. It includes the fading of heartland cities like Memphis and Minneapolis as corporate giants in coastal cities buy out local banks and businesses. It includes plunging rates of entrepreneurship and innovation as concentrated markets choke off independent businesses and new start-ups. It includes falling real wages, as decades of merger mania have reduced the need for employers to compete to attract and retain workers.

Monopoly is a main driver of inequality, as super-fat profits concentrate more wealth in the hands of the few. The effects of monopoly enrage voters in their day-to-day lives, as they face the sky-high prices set by drug company cartels and the abuses of cable providers, health insurers, and airlines. Monopoly provides much of the funds the wealthy use to distort American politics.

For these and other reasons, the Clinton campaign, along with the White House and the Democratic Party, made a huge mistake by failing to flesh out their anti-monopoly message. Yet the full dimensions of the missed opportunity are greater yet. Properly understood, the anti-monopoly frame doesn’t just offer a way to talk to Americans about their material needs; it’s also a way to connect to deeply and broadly held American ideals, like the freedom to be one’s own boss and the liberty to choose one’s own course.

For most of the twentieth century these values were hallmarks of the Democratic Party. This tradition, which dates to the time of Thomas Jefferson, found expression in anti-monopoly policies designed to protect Americans not just as consumers, but also as citizens and producers, from domination by the powerful. Yet today most Americans associate terms like “freedom” and “liberty” with Republicans, even as that party appears to be preparing to deliver something more like autocracy.

This is a tragedy. Going forward, Democrats should make anti-monopoly—in the name of liberty, democracy, community, family, and innovation—the foundation of their economic thinking and the leading idea of their economic messaging. If they do, Democrats will be attacking what’s actually wrong with America. They will also swiftly begin to split the Trump vote and to rebuild their own shattered party.

The idea that America has a monopoly problem is now beyond dispute. Since 2008 there have been more than $10 trillion in mergers, and the pace of deal making continues to accelerate, with 2015 setting a record for the most mergers in a year and October 2016 setting the record for the most mergers in a month.

In 2016, London’s Economist magazine published three front-page stories on America’s monopoly problem. The magazine reported that two-thirds of all corporate sectors have become more concentrated since the 1990s, that corporations are far more profitable now than at any time since the 1920s, and that an inordinate amount of profit goes to a very few immense investment funds, such as  BlackRock and State Street. In April, the White House Council of Economic Advisers came to much the same conclusion, and called for a “robust reaction to market power abuses.”

Ordinary Americans didn’t need experts to explain the danger of monopoly. Populist movements like the Tea Party, Occupy, and the Sanders campaign have all focused to varying degrees on the threats posed by concentration. Polls show that a majority of Americans now believe big corporations are too powerful. Yet through 2016, mainstream Democrats failed to admit that this growing fear of monopoly power might affect how citizens vote.

Consider some of the mainstays of Democratic confidence going into the fall, and how these collided with the real world.

Party leaders were, for instance, right that millions of Americans today are grateful for Obamacare. But the travails of Obamacare also reinforced for millions of other Americans that hospital, insurance, and pharmaceutical monopolists are driving up costs and cutting back on care, and that the administration had no plan to stop them.

Party leaders were also right that the U.S. economy is on sounder footing than when Barack Obama took power. But while most citizens are in less-dire straits than they were eight years ago, they also have more time to consider the rest of their lives. They see corporations like Comcast blocking them from better internet and charging too much for their entertainment. They see giant enterprises like Dean Foods and Tyson’s driving down the quality of their milk and chicken, and Monsanto driving up the cost of seeds and pesticides. They see a few huge corporations dominating the sale of home mortgages, groceries, office supplies, and restaurant meals, and gouging consumers when they buy everything from eyeglasses to cowboy boots.

Party leaders were also right that the rate of joblessness has fallen sharply from 2009. But those figures do nothing to address the fact that many of those jobs feel very different from the ones that were destroyed in the crash of 2008. For millions of working Americans, the wonder technologies of the last decade are fast turning into oppressive systems of direct control. Consider the truck drivers, warehouse workers, receptionists, nurses, and cabbies who find their actions and even their speech monitored and directed in ever-increasing detail. Or consider the white-collar workers in the Seattle headquarters of Amazon, where, according to a recent New York Times feature, executives run a “continual performance improvement algorithm on its staff.” Such forms of control, especially when wielded by giant corporations, tend only to amplify the sense of powerlessness.

Mainstream Democrats are also right, in their post-election assessments, of the need to rethink the challenge of reaching voters in the era of Facebook and Reddit. But taking on fake news is just a piece of the whole. Party leaders must also address the fact that Facebook actively manipulates the flow of real news between journalist and citizen. And that Amazon actively manipulates the flow of books between America’s authors and readers. And that by creaming off more than 80 percent of all online advertising revenues, Facebook and Google are helping to drive traditional news publishers and even online news start-ups out of business.

Here, too, party leaders ignore monopoly at their political peril. Not only do the monopolists directly threaten Democrats’ ability to communicate with one another, and with the rest of Americans, but a failure to deal with the dangers posed by Facebook and Google soon will enrage the millions of Americans who actually care about the integrity of the nation’s journalism, most of whom vote.

The election of a man like Donald Trump is precisely what the Democratic Party was first built, and then rebuilt, to prevent.

When Thomas Jefferson and James Madison founded the party in 1792, their goal was to oppose Alexander Hamilton’s plan to centralize power in a financial aristocracy tied to the state. In place of Hamilton’s vision of an America in which a few capitalists managed most business, leaders of the new party envisioned a political economy in which fighting monopoly and the concentration of power would foster the creation of independent, self-governing citizens.

As any casual reader of history knows, this experiment in radical economic democracy did not last. In the 1840s, southern planters seized the party and used it to protect their slave estates. After the Civil War, a new southern elite wielded the party as a shield against northern capital and the will of the free farmer, white and black. For a short while the new Republican Party took up the flag of liberty. But the GOP was soon captured by the emerging class of Wall Street tycoons and Gilded Age monopolists.

Only in 1896, during William Jennings Bryan’s run for president, did a group of white, male citizens dedicated to anti-monopolism recapture the levers of control within the Democratic Party. This time they held on, and for most of the next 100 years, through the administrations of Woodrow Wilson, FDR, Harry Truman, and beyond, a prime purpose of the Democratic Party was to protect the worker, farmer, shopkeeper, and other independent citizens and innovators from concentrated power.

During these decades, Democrats understood that in making markets and regulating competition they were also establishing a set of political economic checks and balances that helped citizens maintain control over their own destinies and those of the communities in which they lived. In defending this vision, leaders like President Wilson used much the same language as had Jefferson and Madison. “There is no salvation for men in the pitiful condescensions of industrial masters,” Wilson said during the 1912 campaign. “Guardians have no place in a land of freemen.”

In the years between the election of Wilson and the beginning of World War II, Americans built the world’s first modern political economy designed to preserve both liberty and democracy, and also to enable economic growth and innovation. Guided largely by the thinking of Supreme Court Justice Louis Brandeis, they did so by devising three distinct but coordinated approaches to competition policy.

In the case of network industries like electricity, railroads, and other “natural monopolies,” they held that the public must directly own the corporation or regulate its actions. In the case of industrial activities like manufacturing cars or chemicals, citizens accepted high degrees of vertical integration and concentration of capital, but they also insisted that all such corporations compete with at least three or four other large corporations making the same products. In all other sectors of the economy—such as retail, farming, and banking—the aim was to promote as wide a distribution of power and opportunity as possible by preventing concentration almost everywhere. Across the political economy, but especially in sectors where capital and power were highly concentrated, they promoted unions to protect the worker.

The result was a revolutionary success. For years, conventional wisdom among mainstream Democrats has held that the New Deal was mainly an experiment in concentration and socialization. Yet with a few exceptions, the main thrust of both the Roosevelt administration and Congress was to promote, in the frustrated words of one of the main advocates of centralization under FDR, the “atomization” of American business. Indeed, the U.S. economy, as we reported in the last issue, became steadily less consolidated year after year from the mid-1930s until the early 1980s.

Besides delivering to citizens much of the “industrial liberty” they had demanded, this anti-monopolism also laid the basis for a period of rapid technological advance, material prosperity, and financial stability that helped make possible the broad expansion of American democracy in the great mid-century battles for civil rights. It was a vision that bridged the racial divide; one of the greatest advocates of the Brandeisian vision was Supreme Court Justice Thurgood Marshall. It was a vision that even bridged the two parties: Presidents Dwight Eisenhower and Richard Nixon both maintained strong antitrust operations during their administrations.

In 1792, Madison wrote that it was the “independent” citizen who served as “the best basis of public liberty, and the strongest bulwark of public safety.” Thus it proved in the twentieth century. For decades, the Democratic Party’s overwhelming electoral success was due in no small part precisely to the fact that it delivered an important form of political economic freedom to the businessperson, worker, shopkeeper, and farmer. These free citizens then returned the party to power.

The end came after the election of Ronald Reagan in 1980. Reagan brought to power a group of lawyers and economists—loosely affiliated with the University of Chicago—dedicated to overturning the anti-monopoly philosophy of the Democrats. Key leaders of the group included the economist Milton Friedman and the lawyers Richard Posner and Robert Bork. The Reagan radicals argued that instead of using competition to protect liberty and democracy, the laws should instead promote only efficiency, theoretically in the interest of the “consumer.” Even straight-up monopoly was fine, they said, as long as the monopolist promised to lower prices.

In previous decades, Democrats would have moved swiftly to smash Reagan’s new pro-monopoly policies. But in the late 1970s a new generation of party leaders had begun to embrace aspects of the libertarianism of the Chicago Schoolers (or, as the Democrats would later call it, neoliberalism). Unlike traditional Democratic ideology, which holds that all economics is political, libertarian ideology holds that markets are self-regulating and inherently competitive and that monopolies are naturally efficient in ways that are good for “consumers.”

Many among this new breed of Democrats also embraced the corporate monopolists themselves, along with their partners on Wall Street, and competed with Republicans for campaign contributions from the biggest of the big. In the 1990s, this way of thinking and acting lay behind Bill Clinton’s decisions to unleash concentration in the banking, media, energy, and defense sectors, and to embrace a new approach to trade policy that largely opened the U.S. border to foreign monopolists, such as the Brazilian bankers who in recent years have taken over Anheuser-Busch, MillerCoors, Kraft, Heinz, and Burger King. (Late in his administration, Clinton partially corrected course by bringing a tough antitrust suit against Microsoft. The Obama White House followed a similar trajectory: early indifference followed in the last year by vigorous, if insufficient, attempts to take on power.)

Most damaging, the Democratic Party almost entirely failed to live up to its traditional promise to protect the independent farmer, shopkeeper, and businessperson. Instead, party leaders sat by quietly as Wall Street financiers armed with giant corporations expropriated the livelihoods of millions of American families.

This generation of Democrats also adopted a new party hero in place of Jefferson and Madison. That new hero, blazoned in the name of the Brookings Institution unit that supplied many of the top-shelf financial and banking experts of the Obama administration, was that father of Wall Street and preacher of monopolism, Alexander Hamilton.

Some in the Democratic Party have finally awakened to America’s monopoly problem. Last June, Senator Elizabeth Warren delivered what was the most important anti-monopoly speech in America by a major figure since Franklin Roosevelt. “Concentration,” Warren said, “threatens our markets, threatens our economy, and threatens our democracy.”

In July, reformers succeeded in writing strong anti-monopoly language into the Democratic Party platform, the first time since 1988. In September, Renata Hesse, Obama’s acting assistant attorney general for antitrust, delivered a speech that went a long way toward overturning the Chicago School approach to antitrust.

But with the exception of Warren, most of today’s Democrats, to the extent that they even understand the threat posed by monopoly, still treat competition policy as one of many potential solutions to the problems we face, an arrow of roughly equal importance with all the other arrows in the quiver, rather than as a philosophy able to guide how we see and think and act in all corners of the political economy.

Donald Trump has proved that economic populism is smart politics. If Trump perfected a version of dangerous populism, based on resentment, xenophobia, and paranoia, then anti-monopolism is smart populism. Americans—all of them—have every right to be angry. A main job for Democrats now is to explain that they should direct that anger not at immigrants or China, but at monopolists and the policies that empowered them.

Anti-monopolism will also provide Democrats with many other political benefits. It will, for instance, help provide a fix for the party’s Electoral College problem, which has bitten Democrats hard twice in the last sixteen years

One of the by-products of monopolization is that business is becoming concentrated in a few cities, mainly along the coast. Consider St. Louis. In 1980, twenty-two Fortune 500 companies called the city home; today only nine are left. In 1979, per capita income in the metro area was 89 percent as high as in New York; since then it has fallen to 77 percent. Even when St. Louisans launch smart companies—like Twitter and Square—these swiftly flee to the new metropoles.

This, in turn, leads to a concentration of certain kinds of people who tend to think and vote in certain ways, in fewer places. (The Washington Monthly has documented this phenomenon in depth in recent years: see “Terminal Sickness,” March/April 2012; “Bloom and Bust,” November/December 2015; and “The Real Reason Middle America Should Be Angry,” April/May/June 2016.)

It is no coincidence that this pattern of growing regional inequality looks remarkably like the 2016 electoral map, with coastal states blue and a giant “red wall” running down the center of the country. Donald Trump’s success was partly due to the fact that he spoke to the fears of voters in this increasingly stripped-out red zone.

In the short term, anti-monopolism will give the Democrats a believable pro-business, pro-liberty message that will play in almost every section of every state, and indeed can be wielded immediately by state AGs and state legislators. Take on Big Ag, and Democrats could start painting red counties blue by 2018. Longer term, a true anti-monopoly program will help to distribute opportunity, commerce, and people more evenly across the nation, exactly as the framers of the Constitution intended.

Anti-monopoly is also a way to get ahead of the story. The vision that Donald Trump pedaled was strikingly anachronistic. The offshoring of jobs peaked a decade ago, and since the crash of 2008 America has registered zero net illegal immigration. Monopoly, by contrast, is today’s problem. Thanks to the rise of immense platform monopolists like Amazon and Google, the fight against monopolization will continue to drive politics for years to come. Indeed, a focus on anti-monopolism will provide Democrats with a constant flow of opportunities to educate and rally voters, and to attract new classes of funders, as new takeover deals are announced.

Anti-monopolist principles will also help Democrats define their stances against much of the rest of the Trump/GOP agenda. Paul Ryan, for instance, contends that the phaseout of Medicare is necessary to control costs. Democrats will be able to counter that not only will such a move merely shift costs onto enrollees, but it also ignores the biggest driver of health costs, which is monopoly. The giant hospital groups that control regional health care markets have enormous power to jack up prices. So, too, pharmaceutical giants with drug prices. How will Ryan’s plan address that?

Perhaps best of all, anti-monopoly is a simple philosophy that can be understood by every American. Just as the Republicans have distilled their anti-government philosophy down to “Starve the beast,” Democrats can distill a fight against corporate concentration down to “Break the power.” It is also a philosophy that provides Democrats a way to reveal the true nature of the libertarianism the Republicans preach with such effect, namely that the only liberty promoted by these friends of monopoly is for the powerful few to rule the rest of us.

Anti-monopolism may give Democrats something else as well—a way to bring two big wings of the party into harmony. In the weeks that followed the election, the combination of Clinton’s big victory in the popular vote and a fresh attack by Sanders on “identity politics” had most Democrats once again arguing over whether to organize the party foremost around identity politics or economic populism.

Re-embrace anti-monopolism, and this breach will yawn less wide. After all, what folks call identity politics is in many respects just another way of saying “Don’t tell me what to do” and “Don’t tell me how to live.” At its core lies much the same desire for personal liberty that has so shaped American anti-monopolism over the last two centuries.

Almost all Americans want freedom from bosses, economic and cultural and racial. Almost everyone wants the freedom to make their own families and communities, and their own careers and characters. That’s the American way. It should again be the way of the Democratic Party as a whole.

Donald Trump rumbled about monopolists a few times during his campaign. And in the realm of “Anything is possible” he may yet deliver on his promises to block AT&T’s takeover of Time Warner and to bring an antitrust case against Amazon. But given Trump’s lusty embrace of such Wall Street monopoly makers and milkers as Wilbur Ross and Paul Singer, it’s much easier to imagine that under his administration, concentration in America will get only worse.

Our single most pressing task is to be honest about the magnitude of the crisis we face. To one side lies the threat of a democracy rebuilt as carefully stage-directed mobocracy. To the other is the danger of an America dominated by a few increasingly authoritarian command-and-control corporations.

The last time we faced such threats, after the rise of the plutocrats in the early decades of the twentieth century, it was the Democrats who spoke directly to the fears of the citizenry. Consider Franklin Roosevelt’s words in 1938. “The liberty of a democracy is not safe,” he said, “if the people tolerate the growth of private power to a point where it becomes stronger than their democratic state itself. That, in its essence, is Fascism—ownership of Government by an individual, by a group, or by any other controlling private power. . . .Among us today a concentration of private power without equal in history is growing.”

The flag of true American liberty—in which it is the people who rule both the government and the economy—lies in the muck. Dare the Democratic Party pick it up again? Dare the Democratic Party lead people down a third path, away from mobocracy and command-and-control corporatism toward a new democratic republic?

Of one thing we should be certain: do so, and the American people will follow.

The post Democrats Must Become the Party of Freedom appeared first on Washington Monthly.

It’s bad form to falsify someone’s argument, in the hope that doing so will make it easier to refute. I did not write that our society suffers from technological “stagnation.” I wrote that the concentration of control over our technological systems endangers our ability to introduce the right new ideas in the right places at the right times. As I made clear, I believe that open and competitive markets usually offer us the best way to do this.

What’s worse, Michael, is to fail to knock over a straw man once you’ve set it up. Let’s say I did argue merely, as you contend, that a few giant tech companies are stunting innovation. Does your counterargument – that the introduction of the iPhone and Android and apps proves me wrong – hold up?

I agree with you that Apple and Google both introduced great products in recent years. But who exactly cleared the way for them to do so? Wasn’t it America’s trustbusters? Specifically, wasn’t it those men and women in our state and federal governments who in the late 1990s won a case against Microsoft when that corporation was at the height of its powers?

Imagine, Michael, what our tech industry would look like today had we failed to hobble Microsoft 14 years ago. Google? Nothing but an old smear on Bill Gates’ Bentley. And Apple? Steve Jobs might well have spent the aughts working as a senior VP in Redmond.

I love my iPhone and my apps as much as anyone. And I hugely admire the smarts of the scientists and engineers who brought us these products. But, Michael, that’s the past now. The question we face today is who will ensure that yesterday’s successful corporations don’t kill tomorrow’s new ideas.

But as I said earlier, the argument I actually made in “Estates of Mind” is more complex than that. The issue is not merely growth but democracy and survival. The path to a more sustainable, and more fair tomorrow is not to ignore power or to apologize for power or to pretend that America’s scientists and entrepreneurs need to be directed from above. That idea is, at the very least, naïve. The path forward is to fight for liberty and democracy in our political economy, as we have for more than two centuries, and thereby ensure that our scientists and entrepreneurs are free to think whatever they will.

Yours,
Barry Lynn

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The post The True Roots of Innovation – A Response to Michael Mandel appeared first on Washington Monthly.

For many Americans, the economy is still a cold and hard place. Wages are down, job numbers are barely creeping up, and the latest asset bubble drifts high out of the reach of most folks. About the only hot business around is the rivalry to identify a root cause for our woes. Even as Democrats and the GOP continue to argue the value of stimulus, two new schools of thought have shot into fashion. Importantly, both focus on the role of technology. Strangely, they do so from diametrically opposed points of view.

One is led by MIT professors Erik Brynjolfsson and Andrew McAfee, who proudly write in the Luddite tradition. The problem, they say, is too-rapid automation. In short, robots are taking our jobs. The other viewpoint, epitomized by the writings of economists Robert Gordon and Tyler Cowen, says no, the real problem is that we have entered a “great stagnation.” The digital revolution has reached maturity, and no other transformational technology is in sight.

Both groups muster an abundance of evidence. It hardly needs saying that we live in an era in which millions of workers have been displaced by technology. Less obvious to some, but also demonstrably true, is that we live in an era in which the pace of technological progress has stagnated in many key realms. Where, for instance, is the “century of biology” we were promised only a few years ago? And that once-vaunted pharmaceutical “pipeline” looks awfully dry these days.

But what if both camps are right about the effects they observe and wrong about the causes? What begins to make sense of this odd picture is a problem that previous generations of Americans also had to confront—a concentration of economic control that enables a few corporate bosses to manipulate technological advance entirely outside of any open and competitive marketplace. Put another way, what can explain both of these problems is that the masters of America’s biggest technological corporations increasingly enjoy the power to speed the rollout of technologies that favor capital and to slow those that disfavor their own private interests.

Back in the 1930s, America suffered from a similar set of ills, and the government took direct aim. Specifically, starting in the second half of the New Deal, Franklin Delano Roosevelt’s administration combined stepped-up antitrust enforcement with the forced licensing of key patents held by monopolistic enterprises. Today, few people know this history, but the policy laid the groundwork for the long era of prosperity and technological progress that followed, including the birth of Silicon Valley.

Indeed, when the late industrial historian Alfred Chandler Jr. set out to research his second-to-last book, Inventing the Electronic Century, he came to a conclusion that surprised even him. What was most responsible for America’s astounding technological advance in the twentieth century? It was, Chandler wrote in 2001, the men and women of the Roosevelt administration’s antitrust division. They were the “gods,” he wrote, who “set the stage” for the information revolution. Follow where Chandler points, and we may yet recover the key to restoring broad prosperity, along with the ability to devise the technological tools we need to fix many of our most pressing problems.

Our first challenge is simply to recognize how few companies now govern our technological economy. A good starting example is the chemical and biotech giant Monsanto. Here is a corporation that wields almost complete control over the basic genetic traits of key crops, including corn and soy; that over the last decade has buttressed that power by spending upward of $12 billion to buy direct competitors such as Dekalb Genetics and Delta and Pine Land as well as at least thirty companies that breed and retail its seeds; and that has brought at least 145 lawsuits against small farmers to enforce those rights.

Or consider the business software giant Oracle. Its CEO, Larry Ellison, once said that acquiring another company was “a confession that there’s a failure to innovate.” Then in 2004 Ellison began to gobble up precisely those competitors most likely to force Oracle to innovate. This included PeopleSoft, Siebel, Sun Microsystems, and more than eighty other firms.

The story is not much different at Google, which has vacuumed up more than 120 former competitors, along with their products, patents, and, often, their scientists and engineers. If you think of Google as an innovative company, remember that it was the smaller companies it swallowed that actually developed most of its key components. These include YouTube, DoubleClick, and the ITA airline reservation system, as well as ten search companies that no longer compete with Google because Google now owns them. Much the same is true of Intel, Corning, Pfizer, and Microsoft. These giants don’t merely set standards for certain formats of semiconductors, glass, pharmaceuticals, and software. Their mastery over patents and markets empowers them to block or buy most any newcomer that might threaten their sovereignty. What technologies are developed, and how and where they are developed, is increasingly up to these small clubs of executives alone.

Such private dominance over whole precincts of applied science does not lack for defenders. In academia, an entire industry has emerged to preach the gospel of Joseph Schumpeter, the Austrian economist who in 1942 wrote an eloquent defense of the monopolist as the prime mover of innovation. He claimed that monopoly is of social value because of “the protection it … secures for long range planning.” A good example of a modern-day Schumpeterian is Michael Mandel, the former chief economist at BusinessWeek. Noting that society faces “enormous challenges” in remaking our energy, health, and other sectors, Mandel concluded in a recent paper that “only large firms have the staying power and scale” to “implement systemic innovations.”

What’s odd is the almost complete lack of attention to this roll-up of control over our system of industrial science, especially given the public’s fascination with the last high-stakes antitrust suit against a tech goliath. This came in 1998, when the Justice Department charged Microsoft with leveraging its monopoly over operating systems to capture control over lines of business such as browsers. The case resulted in a court order to break Microsoft in two, which the Bush administration later set aside. It also resulted in controls over Microsoft’s actions that, many argue, cleared the way for the initial emergence of companies like Google.

Gary Reback, an antitrust lawyer who took part in the case against Microsoft, sums up the current policy: “In information technology we have no antitrust enforcement today, and I don’t expect any enforcement for at least the next four years.” Worse, in realms ranging from drugs to genetically modified food, the longer the government allows big companies to swallow smaller ones, the harder it becomes to restart the processes of innovation. As antitrust lawyer Robert Litan has observed, “Mergers in high-tech markets should face an extra degree of scrutiny.” The “relative sluggishness of the judicial process,” he says, can make it very hard to “unscramble” a deal after the fact.

The debate over the relationship between monopoly and innovation goes back at least as far as the Industrial Revolution. Indeed, striking the right balance was a preoccupation of the Founders, as evidenced by their concern with patent monopolies. Thomas Jefferson, who served on the first U.S. Patent Commission, rejected the idea that a citizen had any “right” to monopolize control over a technology. Ideas, Jefferson wrote, “cannot, in nature, be a subject of property.” But, to give the inventor a chance to perfect his conception and grow it to scale, Jefferson believed that some ideas are “worth … the embarrassment of an exclusive patent.” Jefferson emphasized, however, that officials must always be chary in granting such privilege.

Nevertheless, problems soon emerged. By the mid-nineteenth century, American financiers had figured out how to use patent monopolies not merely to hobble rival innovators but also to erect corporate empires; by the turn of the twentieth century, they had largely perfected the art. One of the more notable instances saw J. P. Morgan grab control of the electrical patents of Thomas Edison, George Westinghouse, and Nikola Tesla, and then use the resulting “pool” to control the entire electrical industry. One lawyer of that era even penned a primer for businessmen. “Patents are the best and most effective means of controlling competition,” he wrote. Sometimes, he added, patents “give absolute command of the market, enabling the owner to name the price without regard to cost of production.” The first coherent reactions against such abuse of patents also date to this time. In 1900, political scientist Jeremiah Jenks proposed using antitrust law to compel giant companies to license their patents.

During the Progressive Era, the country passed its first antitrust legislation, but enforcement proved weak and never tackled the problem of patent monopoly. This remained true through Roosevelt’s first term. Indeed, during the first two years of the New Deal, FDR largely suspended antitrust enforcement. But following the economic and political failure of the National Industrial Recovery Act, Roosevelt reversed course. In a 1938 message to Congress, FDR said he would use antitrust policy to unleash the “vibrant energies” of entrepreneurs and thereby bring a “new vitality” to America.

The first step was not to dispatch a mob of hillbillies with broad axes. Rather, it was to join Congress in launching the Temporary National Economic Committee (TNEC) to investigate—empirically—how big companies concentrated and used power. The result was the most extensive study of monopoly in the history of America, and a series of shocking revelations. One was the detailed account of how the glass companies Hartford-Empire and Owens-Illinois had managed to capture and hold a 100 percent monopoly over the business of making bottles in America.

As a summary of the TNEC put it, Hartford-Empire had “demonstrated how a corporation might rise to a position of power and monopoly, not through efficiency or through managerial skill, but by manipulating privileges granted under the patent laws.” Once there, Hartford-Empire maintained a “control over production and prices more complete than that exercised by most public utility commissions.”

U.S. patent policy, the summary concluded, promoted two contradictory processes: “One is creative, the other, restrictive; one encourages or rewards inventiveness, while the other fosters monopoly; one promotes production, the other fosters predation.” The overall balance, however, favored the suppression of better ideas. “The patent system permits powerful units or combinations to destroy small competitors by endless litigation or by threats of litigation, regardless of the merits of the small producer’s case or of his product.”

Based largely on these revelations, the Roosevelt administration began to establish the foundations of a competition policy that would remain in effect for two generations. The main architect was Wyoming-born lawyer Thurman Arnold. During the early days of the New Deal, Arnold had been skeptical of antitrust enforcement. But when he was named to head the TNEC inquiry into patents and saw how companies like Hartford-Empire operated, his thinking on the issue changed completely.

Roosevelt named him to run the Antitrust Division of the Department of Justice (DOJ) in 1938; by 1942, Arnold had boosted the staff from eighteen to nearly 600. He also launched a slew of new cases, bringing ninety-two in 1940 compared to just eleven in 1938. And he established clear strategic goals. Arnold agreed with Jeffersonians like Louis Brandeis that the central aim of
anti-monopoly law is to disperse political power. He also believed that competition was best for technological advance, and here he made his greatest mark.

There were three main components to the overarching competition strategy that emerged in the 1930s in the complex dialog between the Roosevelt administration and Congress. One was an acceptance that some industries, like electricity, telephones, and gasworks, were natural monopolies and hence should be regulated by the public. Second was the belief that in areas of the economy that did not require high degrees of scientific knowledge—such as retail, farming, and banking—the government should promote as wide a distribution of power and opportunity as possible. Hence the anti-chain store legislation of the time.

The third component, created largely by Arnold and his team, was a coherent approach to regulating industrial corporations engaged in the art of applying science to mass production.

Well into the 1930s, giant companies like AT&T and DuPont were investing in research, sometimes extravagantly. But their dominance over their markets meant they—like Hartford-Empire—often had little incentive to introduce superior technologies when doing so threatened to cannibalize their existing product lines or otherwise diminish their profits. Arnold tackled this challenge first by insisting that all such companies compete at least to some degree. This led the DOJ to adopt a general policy of aiming to have at least three or four firms engaged in every industrial activity. (One example is the government’s 1945 decision to force Alcoa to share its 100 percent aluminum monopoly with Kaiser and Reynolds.)

Arnold then combined this policy with an entirely new approach to patents. The TNEC had recommended that any patent held by a dominant firm be made “available for use by anyone who may desire its use,” that all licenses be entirely “unrestricted,” and that suits for infringement be all but prohibited. As one writer put it, the goal was to treat the patent monopolies of dominant companies as “a public utility.”

Innovation by Acquisition? The graphs below depict some but not all of the major high-tech companies absorbed in recent years by Google, Oracle, and Monsanto.

Under Arnold’s leadership, in 1941 the DOJ and the Federal Trade Commission (FTC) began to apply a variant of this policy. The government’s general approach was to start by bringing an antitrust suit against a firm that had captured undue control of some sector of the economy. It would then accept a settlement (in the form of a consent decree) by which the corporation promised to share its basic technologies with all comers, for free.

Until the Ronald Reagan administration killed the policy, the U.S. government applied this model to most technologically dominant large corporations in the nation. In the process they forced the people who controlled these companies to spill perhaps upward of 100,000 technological “source codes” into the world. A study done in 1961 counted 107 judgments just between 1941 and 1959, which resulted in the compulsory licensing of 40,000 to 50,000 patents.

One result was the greatest dissemination of industrial knowledge in human history. The world was treated to the secrets behind the televisions of RCA, the light bulbs of General Electric, the cellophane and nylon of DuPont, the titanium of National Lead, and the shoemaking technologies of United Shoe Machinery, among many others.

Another result was a new balance of power in the political economy of technology. By using antitrust law to trump patent law, Arnold and his team largely solved the traditional dilemmas of patent law. The big companies were less free to use patents to protect their bastions. The small firms, precisely because their size exempted them from antitrust oversight, could still fully exploit patent monopoly. Without breaking a single big industrial company, Arnold and his team helped foster a world in which engineers and scientists—no matter how small the company they worked for—could go about their work safe from predation, albeit not competition.

To get a sense of how Arnold’s team liberated the ingenuity of America’s citizens, consider what took place after the DOJ brought an antitrust suit against AT&T in 1949. By the late 1940s, AT&T had become notorious for its failure to integrate the most recent ideas of its subsidiary, Bell Labs, into the telephone system it controlled. The FTC, for instance, had cited the monopoly for sitting on such ready-for-market innovations as automatic dialing, office switchboards, and new handsets.

Even before settling the case, AT&T began licensing out key patents it controlled. One was for an obscure device called the “electronic transistor.” At the time, transistors were seen merely as a potential competitor to existing vacuum tube technology, and AT&T wasn’t much interested in disrupting its existing business lines by developing them. In 1952, AT&T licensed the technology for a small fee to thirty-five companies, twenty-five from the United States and ten from abroad.

Today, of course, transistors are the bedrock of all computer technology. The path to practical application was blazed not by AT&T or any other big firm; as business historian David Mowery has written, “the more aggressive pioneers in the application of the new transistor technology were smaller firms that had not produced vacuum tubes.” One of the smallest, Texas Instruments, introduced the first commercially viable transistor in 1954, just three years after its founding. Other early drivers were Motorola and Fairchild.

Consider, also, what happened inside the big, science-based industrial corporations after they were forced to compete with the fruits of their own scientists’ labors. In his close study of DuPont, business historian David Hounshell writes that “a particularly virulent attack” by the DOJ in the 1940s led executives to conclude that DuPont’s “generation-old strategy of growth through acquisition was no longer politically feasible,” and, further, “that the corporation’s growth would have to be based almost exclusively on the fruits of research.” Pointing to DuPont’s subsequent investments in R&D, Hounshell concluded that Arnold’s policy, although not necessarily best for DuPont’s short-term profits, “was good for the scientific community” at large.

We see much the same pattern in copier technology. Here the key action was a 1975 consent decree between the FTC and Xerox. In 1972, Xerox had been able to use patents to block Litton and IBM from entering the plain paper copier market. But the new agreement opened the market to new competitors and spurred Xerox to redouble its own development efforts. “The transition period” after the consent decree, Stanford economist Timothy Bresnahan has written, “saw a great deal of innovative activity from entrants and Xerox.” Faced with new competitors on all sides, he adds, “Xerox introduced new products in all segments.”

We also see this pattern in the software industry. In January 1969 the DOJ filed suit against IBM, charging the giant with retarding the growth of data-processing companies. In direct response to the suit, IBM decided to “unbundle” its hardware, software, and services. As then CEO Thomas Watson Jr. wrote, to “mollify” the Justice Department IBM abandoned its old marketing practice, by which it would “lump everything together in a single price—hardware, software, engineering help, maintenance, and even training sessions.”

One result, as Alfred Chandler observed, was to open up a market for “companies [including the Computer Sciences Corporation and Applied Data Research] hoping to sell independent software applications.” The other was to spur IBM to new and greater feats of science and engineering. In the years after the suit, Watson writes, IBM “prospered—which made the antitrust laws easier for me to accept.”

Now consider, in contrast, what happened within the walls of the giant science-based industrial corporations after the Reagan administration abandoned most of Arnold’s approach to regulating competition. We see a sudden collapse of investment by giant firms left to govern entire realms of technology as they alone determined.

In the 1980s and ’90s, General Electric was run by Jack Welch, widely recognized as one of the brightest CEOs of the time. Almost as soon as the Reagan administration overturned Arnold’s antitrust regime, Welch embarked on what he called his “No. 1 and No. 2 strategy.” First was a campaign of buying up and selling off business units in order to insulate GE from competition in every industrial sector in which it operated. Second was a shift from a reliance on R&D to drive profitability to a reliance on exploiting Welch’s newly forged corporate power. The bottom line? In 1981, GE was the fourth-biggest U.S. industrial firm and one of the top spenders on research. By 1993, GE had fallen to seventeenth in spending on R&D but had become the most profitable big company in America.

For a more recent example, there’s Pfizer. Here the buying binge did not begin until 1999, but once it started executives pursued it with abandon. Over the next ten years they grabbed Warner-Lambert, Pharmacia, and many smaller companies. The culmination came in 2009 when they seized Wyeth. The executives cut 19,000 jobs. They also cut R&D by a phenomenal 40 percent, from $11.3 billion at the two companies to about $6.5 billion. The former president of Pfizer Global Research, John LaMattina, summed up the results in Nature. “Although mergers and acquisitions in the pharmaceutical industry might have had a reasonable short-term business rationale,” LaMattina wrote, “their impact on the R&D of the organizations involved has been devastating.”

The American public has a fundamental interest in empowering our scientists and engineers to bring forth what is truly new and better, and in empowering ourselves—as a community and as individuals—to adopt these ideas at the pace and on a path that we alone choose. Why then have we almost entirely ignored, since the case against Microsoft, the role competition policy must play in promoting citizen-friendly technological advance?

The most obvious answer is money. In his 1942 defense of monopolists, Schumpeter wrote that dominant firms use their outsized profits to develop and introduce new technologies. In the real world, many goliaths invest their hoards in advertising old technologies, purchasing friendly treatment from Congress and the White House, and hiring “experts” at think tanks and universities to make their case with sponsored research.

The giants have also invested liberally in a powerful, but specious, political argument—that the “global” nature of competition today makes bigness necessary. They use this argument to justify more concentrated corporate power. The economist Michael Mandel distilled this idea in a recent paper. “In order to capture the fruits of innovation,” he wrote, “U.S. companies have to have the resources to stand against foreign competition, much of which may be state supported.” They also use this argument to justify greater control over intellectual property. The 1994 Uruguay Round trade deal, for instance, enabled these giants to reinforce patent and copyright protections not just in developing nations but also here at home, such as by extending patent terms from seventeen to twenty years.

Given how effective this “global competition” argument continues to be, even among sophisticated intellectuals, it merits a detailed response. The first point to consider is simple: the idea entirely ignores all historical evidence. Under the system Arnold pioneered, the American economy prevailed over and ultimately vanquished two rival economic systems, those of National Socialism and, later, Soviet Communism. America became the “Arsenal of Democracy” during World War II even as the Justice Department was busy slapping domestic monopolies with antitrust suits. In the 1950s and ’60s, while American prosperity was putting the lie to Soviet Communism, we were deploying a competition policy that today’s libertarians conflate with “command and control” but that was really the exact opposite.

Today, of course, global trade has vastly expanded. But that makes the idea that U.S. citizens must allow domestic monopolies to concentrate power so as to help “our” companies compete with “their” companies only that much less valid. For one, such arguments contradict the intent and existing structure of the interdependent international industrial system built with such care in the years after World War II.

The American architects of this system assumed that industrial integration with countries like Japan would make it all but impossible for the Free World’s industrialized nations to engage in armed aggression against one another. This strategy was so successful that it provided the argument for the subsequent extension of this system of “free trade” to countries like India and China in the mid-1990s.

The architects of the system also believed that such integration would provide an important economic by-product, namely more competition for big U.S. corporations—and, by extension, more rapid technological advance. Forcing companies like General Motors and RCA to compete with companies like Toyota and Panasonic, so the thinking went, was a great way to supplement antitrust enforcement, not an excuse to abandon it.

The architects of the system were completely confident that the U.S. government could—and would—use trade law to police the international system. One of the best examples of such enforcement took place in the mid-1980s, when Japanese electronics corporations including Hitachi and NEC made a play to capture control over key components of the personal computer, such as DRAM memory chips. The U.S. government responded by applying tariffs and quotas to Japanese-made components. The goal was not to bring the activity home to America but to spread it more widely. And, in fact, the action gave a huge boost to manufacturers in places like South Korea and Singapore.

Today, viewing corporations as national champions that need to be favored with expanded monopoly power is a form of protectionism and extremely dangerous. It leads to less innovation and to a loss of public control over how technology is deployed and for whose benefit. Worse, it distracts us from the challenge of working with citizens of other nations to ensure that our international system—which is, for all intents, now a form of global industrial “commons”—is structured to ensure its safe operation and resiliency at all times. The most important goal? The distribution of physical risk in the system, via the safe distribution of the production capacity we rely on for our foods, drugs, electronics, and other vital supplies. Which is, at bottom, just another way of saying we need a coherent competition policy.

So what technological gems lie hidden inside today’s giant corporations? Which vaults of patents should we crack open first? The fact is, we don’t know which ideas will prove most useful to us, over time. Those that now seem most promising might not pan out. Others, less glittery in their infancy, might yield wonders. The only way to find out is to drag the ideas into the light, and let the public pick through them and play with them just as we did in the golden age of American prosperity.

Today, we are being herded in a very different direction. A century ago, America’s lords of industry boasted of their power right in the names of their industrial estates; there was Standard Oil, Standard Distilling, Standard Rope and Twine. Today’s corporate chieftains often as not choose names that lend an aura of smallness, even cuteness, to the imperial enterprise. But it’s not hard to identify which corporations could be renamed Standard Operating System, Standard Semiconductor, Standard Enterprise Software, Standard Storage, and Standard Search.

The problem is not standardization per se. Some standardization is necessary in almost every technological system: think electrical sockets, doorframes, railroads, and television broadcasting. But too rigid a standardization, or standards setting left in the wrong hands, can be stifling. As the editors of Engineering magazine explained the conundrum a century ago, the challenge is “to suppress the folly of individualism which prefers sliding down a rope to using the standardized staircase, and yet not suppress the benefactor of standards who can evolve the escalator.”

That’s why it matters whether a standard is open or closed. And why it matters whether decisions about how and what to standardize are made by a democratic community or by a single private corporation operating in the name of a few individuals.

Today, in almost every key technological sector in America—including electronics, software, pharmaceuticals, medical devices, and the Internet—standardization is determined and enforced by private actors for private profit. The result is not merely to leave the decision about what technologies to deploy and under what terms in the hands of private corporate governments; it is also to force all of our scientists and engineers to goose-step down particular technological pathways.

Do nothing, and we will get the future they want, as fast as they want it, at the price they set.

The post Estates of Mind appeared first on Washington Monthly.

Cowboys and labor? Plotting together? Polo shirt and bolo tie? In recent years, the two groups have, on occasion, signed the same statements against foreign trade. But closer to home, ranchers and unions have tended to view one another as rivals for the same wafer-thin slice of the retail dollar and as parties on opposite ends of a gaping cultural divide. It wasnt easy, one union organizer summed it up recently. In recent years, we have not been friends.

Yet half a year on, its evident that the alliance was no momentary fling, no mere enemy of my enemy excuse to clink a few beer bottles before stumbling back to opposite ends of the political corral. When the Justice Department held a series of hearings last year on concentration in agriculture markets, including cattle, the UFCW helped to pack the room for the cattlemens testimony, one of the only times in recent decades that an American labor union has promoted stronger enforcement of anti-monopoly law.

And in exchange? While in that room, the UFCW got a chance to make the case that the trustbusters should take on Walmart. The union views the retailing goliath as the main force smashing down the wages and benefits of the retail workers the union represents. More to the point, the union has also come to view Walmart as the real power driving the big meatpackers assault on both cattlemen and packinghouse workers. (The basic thinking here is that Walmart now controls such a giant swath of the U.S. marketplace that it can dictate prices even to the biggest of suppliers, which leaves less money in the system for the people who actually produce goods and provide labor.)

Ever since Scott Walker and the Republican Party of Wisconsin set out to bust the public-sector unions in that state, one of the biggest questions in American politics has been whether organized labor, seventy-five years after winning a seat at the mahogany table, is about to get the bums rush. And if so, what does this mean for the Democratic Party and for popular politics in general?

Yet the future may be brighter than even the most optimistic of union members hope. If, that is, the UFCWs example inspires the rest of organized labor to open its eyes to the political and economic dangers posed by the radical consolidation evident in most sectors of Americas political economy over the last generation. Doing so would give organized labor a far more complete and sophisticated grasp of how the few exert power over the many in America today. And it would arm organized workers with a message that enables them to reach out to all sorts of economic groups that now tend to oppose labor politicallynot least Americas independent entrepreneurs.

In a recent editorial, the Wall Street Journal urged GOP operatives to attack the monopoly power of unions to win votes and undermine popular political structures. If organized workers respond in kind, and attack the monopoly power of actual monopoliststhe people who pose real threats to the economic and political well-being of the great majority of Americansmaybe they too would win some votes. Better yet, maybe they could begin to undermine the ideological and institutional foundations of the very groups that are now using both major parties to organize the assault against labor.

The idea that labor is doomed to imminent irrelevance has become an accepted truth of American politics. The story of labors long decline has been told and retold so often that the blunt numbersunionization has fallen from about a third of all non-farm workers to less than 10 percenthave lost much of their power to shock.

This story of decline and fall is built on two main arguments. First, that labor began to lose political clout long ago. At the level of the party, this is certainly true. Organized labors relationship with the GOP was tenuous even at the best of times, and Ronald Reagan all but drove unions from the party in 1981. Labors problems with Democrats, meanwhile, date to the 1960s, when younger activists began to break ranks with workers. The usual take here focuses on the rise of the New Left and political fights over the Vietnam War. But the breach was also philosophical. In the 1970s, a number of left-leaning economists and a new breed of consumer activists associated with groups like the Consumers Union tended to view the wages of organized labor as a cost to drive down, rather than an achievement to prop up.

The second argument is simply that times have changed that immense and irresistible forces have destroyed the economic environment that first gave birth to big labor. According to this theory, unionism requires great assembly lines and industrial campuses to grow and thrive. But globalization and technological advance have done away with these forever. As a reporter for that bastion of left liberalism, Mother Jones, put it recently, Unions, for better or worse, are history.

But is this really so?

For starters, the idea that popular support for collective bargaining has dropped dramatically is simply not true. Perhaps the most fascinating fact to emerge from the battle in Wisconsin is that support for unions was far stronger and more widespread than party leaders have assumed. This is true even when unions represent public-sector workers, and even among citizens who identify themselves as Republicans.

Meanwhile, the idea that globalization and technology have scoured away the soil in which unions grow is even harder to defend. On the contrary, millions of American citizens continue to labor in highly commodified jobsas teachers, nurses, bus drivers, maids, janitors, home care workers largely untouched by either of these factors. If anything, entirely new pockets of the American workforceones that dont necessarily enjoy collective bargaining rights, narrowly definednow stand in desperate need of collective bargaining power. As the cattlemen can attest, when a single packer captures control over an entire market, even the most self-reliant of ranchers can become just as subject to the arbitrary whims of a local boss as any salaried worker.

The American people, in other words, still want unions. And the American people still stand to benefit from unions.

The question, then, is not whether the Democratic Partyor progressives in generalcan survive without organized labor. The question is whether labor can radically change its thinking. More specifically, will organized workers notice that many other groups of American workers and entrepreneurs are also fighting for survival against the same powers that have fingered labor for extinction? And if so, will labor have the savvy to link up with these other groups to form a broad political alliance that can fight back effectively, over the long run?

The first big challenge is intellectual. The idea that labor should attack big business for being big strikes many in the movement as hypocritical, and potentially dangerous. After all, the basic premise of labor law is that workers can earn a license to cartelize some particular labor market. And among labor leaders, the standard response to the mere mention of the word antitrust tends to be big is better for us.

Indeed, labor leaders for decades have generally assumed it is easier to organize workers after they have been lined up in rows by capitalists using giant corporations. And labor leaders have also tended to assume that bosses who enjoy sufficient market power to charge higher prices for their products will also be willing to share some of this booty with their employees.

Yet it doesnt take much sifting through Americas political economy to realize that far bigger dangers are posed by labors complete failure to account for the effects of the radical changes in the enforcement of anti-monopoly law over the last generation.

For 200 years, Americans used various forms of antimonopoly lawat the local, state, and federal levelsto disperse power, foster productive competition, and protect open markets. Americans used these laws, in essence, to extend the system of checks and balances into the political economy. Then, beginning in the late 1970s, an odd coalition of the consumerist (and Democratic Socialist) left and laissez-faire rightled by such Chicago School stalwarts as Robert Borkimposed a new consumer welfare test for anti-monopoly enforcement.

The goal now was to promote greater efficiency, even if this meant outright monopoly. And corporate managers and financiers were quick to oblige, responding with the greatest merger frenzy in American history, a deal-making mania that has crested four times in the years since.

The revolutionary result, a generation later, is that the U.S. economy as a whole is, if anything, more concentrated today than during the age of John D. Rockefeller and J. P. Morgan. Back then, Americas citizens faced private corporate control over heavy industry, transport, and banking. Today, these sectors are often even more consolidated than a century ago. And we also face private dominion over retail (the sale of eyeglasses, for instance, is dominated by the Italian firm Luxottica, which controls such chains as LensCrafters and Pearle Vision); farming (more than 90 percent of all soybeans grown in America contain genes patented by one company, Monsanto); and information (one company, Intel, still makes and sells some 90 percent of all semiconductors used in personal computers). And to complicate matters, unlike a century ago, many of todays powers are based overseas.

Arguably, this massive consolidation of power is the single biggest political economic story of the last thirty years. It is a story that helps to explain the extreme and growing concentration of wealth and power that is fast remaking our political system. It helps to explain the radical restructuring and relocation of huge amounts of manufacturing activity. Yet organized labor in America has all but willfully ignored this revolution, despite the fact that these changes have directly affected organized workers in innumerable ways.

Take jobs. In recent years, labor has devoted a huge amount of time and money to calling on the federal government and big business to create new jobs. Yet not once did labor question the laws that enable many of these same companies to engage in forms of consolidation that tend to result in fewer jobs in America.

The simple fact is that almost every large merger is followed by significant cuts in staff. The Pfizer takeover of Wyeth in 2009, for instance, resulted in the destruction of 19,000 jobs. Mergers also reduce the impulse for big business to create new jobs. Lack of competition means bosses can increase revenue simply by charging more for less. Giant firms today already boast of record profits, even without running the risk of investing in new lines of business. Mergers can also reduce the ability of smaller businesses to create new jobs. Not only does the fencing in of markets make it harder for up-and-coming entrepreneurs to launch new firms, it can prevent successful entrepreneurs from growing proven firms to scale (see Who Broke Americas Jobs Machine?, March/April 2010).

Or take the quality of jobs. Here again the equation is simple: the fewer the number of employers, the easier it is for bosses to exert power down onto workers, even when those workers are organized. As Stephen Ross, an antitrust attorney who has worked at the Justice Department and the Federal Trade Commission, says, Theres a tipping point when a more concentrated market is no longer good for workers. A good example of this was the 2003 mutual aid pact in which three California supermarkets agreed to pool profits to fight a looming strike. In the years leading up to this deal, the employers had strengthened their hand through a long series of mergers. At least in this case, Ross says, unionized workers were better off when they had six or seven big supermarkets than only three.

Much of this consolidation has occurred right under the nose of labor leaders. The Big Three American automakers, for instance, have cut more than half a million jobs since 1980. Some firings were due to the loss of market share, and others to greater automation. Many, however, were due to consolidation, albeit not among the branded automakers whose labels we know so well. Rather, the consolidation took place down within the supply system, among, say, the companies that make dashboards and windshield wipers.

Over the last ten years organized labor has launched attack after attack on outsourcing, as the breaking apart of a vertically integrated corporation is often called. Yet during this period, labor appears not to have noticed that, in many instances, as fast as the carmakers spun off internal partsmaking operations, monopolists swooped in to roll up control. Or that, once in control, these new bosses used this more consolidated power to drive down wages and benefits and to speed the process of shifting work offshore.

Even more embarrassing is labors failure to make sense of the nature and scope of the threat posed by big box trading companies like Walmart and Home Depot. Consider the case of Walmart itself. Even as this firm grew to be well more than five times bigger than any previous retailer ever (relative to the overall size of the U.S. economy), labor leaders tended to view the giant trading company mainly as a vast pool of retail workers in need of organizing. Indeed, until the UFCWs recent efforts, labor all but ignored the fact that Walmart had grown big enough to essentially dictate terms even to the largest of its suppliers and hence, indirectly, to the individual employees who work for those suppliers, many of whom are unionized.

Most stunning, perhaps, has been labors failure to connect the dots when it comes to whos been funding the attacks on public education, teachers unions, and public-sector unions generally. As many in labor know, the Gates Foundation, established by Microsoft cofounder Bill Gates, has been one of the more active institutions in America in advocating policies that weaken the clout of teachers unions. And as many in labor also know, one of the main institutions behind the school voucher movement has been the Walton Family Foundation. What labor has all but ignored is that, a generation ago, neither Bill Gates nor the heirs of Walmart founder Sam Walton would have commanded nearly so much personal political power, in no small part because robust enforcement of antitrust laws would have limited their ability to build and exploit monopolies.

As organized labor leans on the ropes, absorbing blow after blow to head and body, it has no idea who hits it or how. Labor believes it cant see its opponent because of all the blood pouring over its face, from cuts opened in a brutal and one-sided battle. The real reason labor cant see? It has been covering its own eyes.

Organized labor is one of the few institutions in Washington with any sense of history. Labor leaders are often lifers, who love to swap stories about antique victories and are wont to break into song about battles lost long ago. Yet labors version of history, like all versions, is highly selective.

For decades one of labors mantras has been that the American middle class of the twentieth century was built on a simple foundationthe freedom to organize the workplace. It is a story that is routinely repeated back to workers whenever Democratic politicians panhandle for support. As Vice President Joe Biden put it in 2009, Over the last 100 years the middle class was built on the back of organized labor.

Yet it is a story based on an incomplete reading of the achievements of American citizens in the 1930s.

The Wagner Act of 1935designed to protect the right of citizens to organize and bargain collectivelywas undoubtedly one of the great political milestones in the decades-long effort to restore, after two generations of top-down plutocratic rule, some measure of the economic freedom and dignity that Americans enjoyed for the first hundred years of the nations existence, when most citizens were independent farmers, mechanics, craftsmen, and shop keeps. So too the creation of Social Security, also in 1935. What is missing from labors standard history of the New Deal era, however, is the fact that 1935 also saw the Roosevelt administration reverse itself 180 degrees on the regulation of competition, as it moved from promoting monopoly and the centralization of power to promoting competition and the distribution of power.

Soon after taking power in 1933, the New Dealers essentially suspended antitrust enforcement, as part of the National Industrial Recovery Act. The authors of NIRA believed the best way to restore the wage and price levels that existed before the Depression was to empower business and labor leaders and government officials to cooperate as closely as possible.They believed these groups would be able to rationally plan economic output, and to set production levels, prices, and wages throughout the industrial portion of the economy. But after the Supreme Court, in a 9-0 decision, declared this grand experiment in corporatism to be unconstitutional, both Congress and the administration took another look at antimonopoly law. (The fact that NIRA also failed economically contributed to this rethink.)

By the late 1930s, the Justice Department had developed an entirely new approach to managing competition in the industrial sphere. This second generation of New Dealers did not seek to impose government directors atop corporate giants, nor did they seek to break giant industry into little pieces. Rather their goal was to ensure at least some competition among a few large oligopolies manufacturing more or less the same basic product. Outside the industrial sphere, meanwhile, in sectors such as farming, retail, and services, Congress often took the lead. Here the aim was, often, nothing less than to restore the Jeffersonian yeoman to his property, and then to protect the open markets of these citizens from enclosure within the fences of private corporations.

The basic thinking was expressed by Wright Patman, the populist congressman from Texas. In a book he wrote to explain the workings of his 1936 Robinson-Patman Antitrust Act, often called the Anti-Chain Store Act, Patman said the purpose of the bill was to protect the independent merchant, the public whom he serves, and the manufacturer from whom he buys from the use of predatory tactics by overcapitalized traders. And in the event, the act, along with a wide-ranging set of other anti-monopoly laws, largely reversed the growth of retail chains and agricultural combines that had emerged as a major force in the economy during the plutocratic era.

By the early 1970s, the American economy had settled into a balance. Roughly half the economy was controlled by 1,000 industrial giants. The other half was divided among some twelve million small enterprises, competing in open market systems.

Which means that the great middle class of twentieth-century America stood atop two foundations. One was freedom to organize the industrial workplace, to erect a countervailing power within a necessarily hierarchical governance structure. The other was freedom from organization, the freedom to be ones own boss, the freedom to build up a business thatthanks to anti-monopoly lawwas largely safe from predation. Every American could choose the path that fit best. A citizen who wanted to be her own boss, or run his own family business, could count on robust anti-monopoly law to protect farm, factory, or store from predators wielding massed capital. Citizens who wanted the security of a weekly wage could hire themselves out to an industrial giant or government monopoly, confident that they were protected against economic exploitation and arbitrary rule by open market systems and robust labor law.

And until the rise of the socialistic New Left and the laissez-faire Chicago School crew, this great alliance of workers and proprietors, for all intents, controlled both major parties.

Admittedly, today, it can be hard to conjure an image of labor leaders and small business leaders marching arm in arm toward the political barricades. On the contrary, small business and labor groups find themselves almost always on opposite sides of the line. Theres little mystery as to why. The nations main small business group, the National Federation of Independent Business, is even more intricately woven into the structure of the GOP than labor is woven into the structure of the Democratic Party. Last November, twenty-five members of the NFIB won new seats in the House or Senate. Every one was a Republican.

Yet a closer look reveals that this iron alliance between small business and the GOP may be much more brittle than it first appears. For one thing, recent surveys of small business owners show the portion who identify themselves as Democrats is roughly equal to the portion who identify themselves as Republicans. For another, many of the most energetic and creative of todays small businesses are in sectorsrestaurants, brewing, organic farming, technology and informationthat tend to attract more progressive entrepreneurs.

Further, the traditional mom-and-pop businesses that have long been the backbone of the NFIB are in deep trouble, often precisely because of concentration. Between 2006 and 2009 the NFIB reduced its membership rolls from some 600,000 enterprises to roughly 350,000. Although the organization claims most of the drop was the result of better accounting, a spokesman recently admitted that it is also due to the fact that the number of main street businesses in America have been diminished by the big box stores.

Which leads us to what appears to be the NFIBs failure to stand up for some of the most basic interests of its members. As Inc. magazine reporter Robb Mandelbaum wrote recently in the New York Times, the NFIB has never made halting the big box expansion one of its battle cries, despite the fact that the big box stores are crushing its members. On the contrary, as Mandelbaum noted, NFIB members have found themselves roped into supporting tax cuts for the very big businesses that already enjoy such a huge advantage of power against them.

All of which means theres a good chance that many existing members of the NFIB are looking for a new date.

Labor may never be able to ally effectively with the present leadership of the NFIB. But a well-structured appeal to Congress and the administration to take real practical action now to protect Americas independent proprietors from being wiped from the land by a few giant corporations might open the way for all sorts of new partnerships. At a minimum, such a strategy will attract the support of at least some individual small businesspeople and smaller associations. And it is not inconceivable that an honest discussion of monopolization in America today will weaken or even split this pillar of the GOP, much as labors push for a more aggressive response to Chinas trade policies has helped to whittle down the once-great power of the National Association of Manufacturers. But even if labor does not win a single small business ally, theres another reason for it to ramp up attacks on the enclosure of Americas markets. Defending open markets may well prove one of the most effective ways to educate unorganized groups of workers of the need to support stronger unions. After all, even if Congress and the administration moved tomorrow to take on Americas many monopolies, few of these powers will go easily into the good night. Which means that in many cases, employees would be wise to work together to protect themselves now.

To understand the potential stakes, consider the Justice Departments revelation last September that Google, Apple, Intel, and other tech giants had secretly colluded not to hire each others workers. The agreement, the DOJ said, had eliminated a significant form of competition to attract highly skilled employees.

The fact that some of the worlds biggest and richest firms openly conspired to drive down wages and to restrict the most basic freedoms of individual employees would be, one might think, of some use to organized labor. Here, after all, is a perfect story to illuminate the fact that even the smartest and best educated of AmericansPhD scientists and PhD engineerssometimes need protection when their markets are enclosed, just like autoworkers and nurses and teachers. Indeed, given that such concentration has begun to destroy the open market systems that have long helped to protect all sorts of white-collar professionalsranging from book editors to advertising executives to doctorsa generalized attack on monopolization might prove to be a highly effective way to go on the offensive among groups of salaried employees who have, until now, viewed themselves as, somehow, immune to such rude treatment.

But when I recently mentioned the DOJs Silicon Valley settlement to a top executive at the AFL-CIO, he had never even heard of the case. It wasnt that he and his team didnt understand the value of the story. On the contrary, he immediately interrupted our talk to pick up the phone to yell at one of his subordinates. It was just that, as he explained later, he and his staff were not used to sifting for prospects in antitrust cases.

He neednt fret about missing this particular opportunity. The Obama administrations settlement will remain in place for only five years, so unions will soon enough have another chance to point out the Silicon Valley hiring cartel as an appeal to Americas high-tech workers.

Seven years ago, Thomas Frank wrote a book, Whats the Matter with Kansas?, about people getting their fundamental interests wrong, because they voted for Republicans rather than Democrats. Six years ago, Reihan Salam and Ross Douthat, in an article for the Weekly Standard, largely agreed with Frank. After noting that a large portion of GOP voters were comfortable with bad-but-popular liberal ideas like raising the minimum wage, expanding clumsy environmental regulations, or hiking taxes on the wealthy to fund a health care entitlement, they concluded the GOP was out of touch with many of its own voters. Then two years ago, after watching their leaders join Democrats in using tax dollars to bail out banks that had been made Too Big to Fail, a goodly portion of this same GOP wandered off the ranch to form the Tea Party.

The achievement of convincing so many hardworking entrepreneurs and farmers and salaried workers to vote GOP, supposedly against their own interests, is usually credited to the schemes of party hacks, or the purchase of votes by the malefactors of great wealth, or the pounding of propaganda machines like Fox News. And certainly, all of these have some effect.

But this version of recent political history seems to get cause and effect backward. Our parties today, just like the parties of yore, are merely the tools of the groups who know how to use them. And given that today labor and small business, two very large and politically active groups of American citizens, find that neither party works for them, it may be worth assigning at least some of the fault to labor and small business.

The traditional goals of organized labordemocracy, liberty, rule of law, the economic independence of the individual citizen, and the protection of property (in the form of labor)do not differ all that much from the dreams that animate most small business owners and most farmers. (Or, for that matter, most members of the Tea Party.) Nor do many of these same business owners and farmers (or, for that matter, most members of the Tea Party) object to the fundamental idea behind organized laborthat individual citizens, to protect themselves and their families and their communities from impoverishment and autocracy, must link arms with one another.

Yet in recent decades, as the same concentrations of power that have been used to deprive workers of their most basic rights have also been used to deprive small business owners of their economic liberties and properties, organized labor has chosen to look away, largely because these neighbors, cousins, and brothers stood beneath a red banner rather than a blue.

Organized labor, in other words, violated the first rule of solidarity. By failing to understand the powers arrayed against their fellow citizens, by failing to reach out to their own neighbors, by failing to lock arms within their own communities, labor made it easier for the powerful few to split organized workers away from their own allies.

Americas independent entrepreneurs desperately need an organized brain to help them make sense of the dangers they perceive. Labor, meanwhile, retains an institutional capacity to think, but has lost the ability to see. If organized labor learns once more to open its eyes, learns again how to talk to its own neighbors about the powers that surround and threaten us allthen who knows what new coalitions can be built, and what power can be concentrated in the name of the people.

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