Prepare to Merge

Goliath: The 100-Year War Between Monopoly Power and Democracy BY Matt Stoller. Simon & Schuster. 608 pages. $30.

Monopolies have long been a fixture of American life. Since the 1980s, when Ronald Reagan’s free-market policies reshaped the economy, they have become especially persistent. Today, companies with outsize market shares—from Big Tech and large investment banks to retailers and food conglomerates—dominate the US economy. The doctrine incubated by Milton Friedman and others at the University of Chicago, which emphasizes economic efficiency and deregulation, continues to prevail. This laissez-faire approach, presented in Friedman and Anna J. Schwartz’s A Monetary History of the United States, 1867­–1960, a bestseller during the waning days of the Kennedy administration, led to a legal reversal of anti-monopoly reforms—many of which originated with the New Deal. Big companies faced fewer legal barriers when absorbing their competition and cornering a particular market. Meanwhile, individual Americans began to have less control over these companies’ roles in their lives.

In 2010, Barry Lynn’s Cornered challenged the entrenched idea that unrestrained deregulation had been good for the economy. The book showed, in frightening clarity, how monopolies, in everything from banking to brewing quashed diversity, curbed innovation, and undermined democracy. It was the product of years of research at the New America Foundation, which Lynn left (after Google forced his ouster) to establish the Open Markets Institute, an independent nonprofit devoted to eradicating monopolies. What followed was a vigorous anti-monopoly movement to cleanse the US economy of “the curse of bigness.” This has surfaced most prominently in calls to break up Big Tech, a stance that progressive candidates like Elizabeth Warren and Bernie Sanders are now echoing in the 2020 presidential campaign.

Author Matt Stoller, a Lynn disciple and former policy adviser and budget analyst at the Senate Budget Committee, traces America’s dueling monopolist and populist triumphs and failures in Goliath: The 100-Year War Between Monopoly Power and Democracy. An intricate history of US business from 1910 onward, the book details, in part, how monopolies enriched businessmen from the robber barons of the early twentieth century to the founders of Silicon Valley’s biggest firms. It also shows how, in some cases, populist opposition—such as the 1920 coal and steel strikes and Ralph Nader’s consumer-advocacy movement—have managed to quell corporate advances and create more protections for workers and shoppers.

As historian Jill Lepore has noted, narratives of the US tend to document either exceptionalism or atrocity. Stoller’s is no exception. A progressive in the New Deal tradition, he rails against the highly speculative—and uniquely American—enterprises of J. P. Morgan and Andrew Mellon while decrying the atrocity of economic policies and corrupt pols who created them. Stoller’s flair for policy is on display throughout as he dissects financial titans like Charles Mitchell, the Depression-era banker who is often blamed for causing the 1929 crash, and Michael Milken, the junk-bond financier who went to prison for white-collar felonies. The ambition and power of tech goliath Bill Gates scared old-line corporate America and public officials. Gates, who was as powerful as John Rockefeller was in the 1880s, ushered in the era of the tech monopolist after commercializing and cornering the software industry with his Intel alliance—while squeezing competitors and exploiting customers.

The fate and follies of Treasury Secretary Andrew Mellon provide narrative threads that run throughout the book. Stoller describes Mellon’s near-half-century of influence and how it made the world safe for monopolists. Beginning with the banker’s restructuring of the political economy of the 1920s, Stoller goes on to show how Mellon—who, beginning in 1921, served for eleven years, working under three administrations—set tax and fiscal policy with one goal in mind: benefiting his own businesses. The book delves into Mellon’s “chicanery”—how he blocked antitrust actions against Alcoa, his aluminum monopoly; negotiated with foreign leaders for oil concessions on behalf of his own company; and embraced Mussolini’s law-and-order balanced budget, among other eyebrow-raising acts. At the time, the top 1 percent of the population received nearly a quarter of all income. Ultimately, Mellon was impeached by anti-monopolist congressman Wright Patman, who would transform midcentury finance. Patman, who would become the chair of the House Committee on Banking and Currency, created new security laws and fair-trade rules for small businesses; he also accelerated pension payments and aid to veterans. His work was a nod to Supreme Court Justice Louis Brandeis, who helped create anti-monopoly reforms and establish “industrial liberty,” the right of the worker to be free of “overweening industrial power,” as he noted in a 1915 speech at Boston’s Faneuil Hall.

Despite the more-regulated markets and increased protections for workers that took shape in the New Deal and into the 1940s and 1950s, Mellonism resurfaced with the onset of the Chicago school, thanks to the influence of Friedman and former socialist and antitrust scholar Robert Bork, who, as a judge on the Court of Appeals for the District of Columbia, would be nominated to the Supreme Court only to be cast aside—or “borked”—for his civil-rights views. While Patman advocated for low interest rates and prohibitions against banks engaging directly in non-banking businesses, the reform efforts failed. “A new villain, the grubby racist small businessman, had replaced the money trust,” Stoller writes. Bork helped modernize Mellonism as reformers like Patman became marginalized, ushering in a modern era of conglomeration.

The conglomerate wave of the 1960s transformed into a merger wave in the 1980s. Citibank CEO Walter Wriston, economist John Kenneth Galbraith, and “Watergate Babies”—congressman elected after Nixon’s downfall—enabled and even advocated monopolies. When Reagan was inaugurated in 1981, the country entered a period of minimal government control of mergers, because the administration perceived practically any regulation as too aggressive. This was primarily due to the one-two punch of Friedman, the economist who emphasized efficiency, and Bork, the legal scholar who redefined antitrust law.

By the end of the Reagan era, Mellonism went into overdrive as Wall Street was centralizing amid weakened New Deal­–era controls. Goliath illustrates how the ascension of Gerald Tsai Jr. of Fidelity, GE CEO Jack Welch, and Sam Walton of Walmart solidified the influence of monopolies. In the late 1980s, Stoller writes, “Americans were experiencing, once again, what it felt like under Mellonism. Regional inequality widened, as airlines cut routes to rural, small, and even medium sized cities. So did income inequality, the emptying farm towns, the hollowing of manufacturing as executives began searching for any way to be in any business but one that made things in America. It wasn’t just the smog and the poverty, the consumerism, the debt and the shop-till-you-drop ethos. It was the profound hopelessness.”

Stoller’s writing style is cogent, but plain. He is so steeped in anti-monopolism that sometimes he assumes knowledge that generalists do not have. For example, in the first chapter, he briefly mentions the “Gary dinners” where steel-company executives shared pricing without explaining to readers that the dinners were part of the fact pattern underpinning US v. US Steel Corp., the 1920 Supreme Court case that found US Steel did not engage in illegal restraint of trade and, therefore, did not exercise a monopoly. He never discusses antitrust gains in the early Kennedy era or Senator Estes Kefauver’s Senate Subcommittee on Antitrust and Monopoly, which held pivotal hearings from 1957 to 1963 and essentially predicted the return of Mellonism and subsequent age of inequality.

But Stoller’s arguments about the hazards of monopolies will be clear to anyone who has shopped, banked, or Googled. He doesn’t hold back his contempt for weak regulators and government officials, including those of the modern era. Clinton-era Department of Justice Antitrust Division chief Anne Bingaman, like the president who appointed her, “was no populist.” Barack Obama, he writes, called for “Mellon-style policies,” such as “eliminating the budget deficit and keeping public debt low.” Obama’s Democratic Party, he writes, is “the party of Hamilton and Mellon.”

Ultimately, Stoller is an old-line progressive New Dealer with hindsight and a twenty-first-century platform. Part of a growing community of economists, law professors, business leaders, politicians, policymakers, and writers who want to see a form of Brandeisian “industrial liberty” restored, he is not alone. “Nothing about monopolization is inevitable,” he writes. “The real question is not whether commerce is good or bad. It is how we are to do commerce, to serve concentrated power or to free ourselves from concentrated power.”

Jill Priluck is a writer who lives in New York City. Her reporting and analysis have appeared in the New Yorker, Slate, Reuters, and elsewhere.