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IntendedforTheAntitrustBulletin(forthcoming)CopyrightAlbertA.Foer
11-16-17
CULTURE,ECONOMICS,ANDANTITRUST:THEEXAMPLEOFTRUSTAlbertAllenFoer*
___________________________________________________________________________________Whatroledoculturaldimensionsofcooperationandcompetitionplayineconomic
life?Takingamultidisciplinaryperspective,thisessayusestheexampleofthe
conceptoftrusttoconsidersomeimplicationsforcompetitionpolicy.Theauthor
suggeststhatthefieldofcompetitionpolicyisatcoreabouttheauthoritative
allocationofcategoriesofeconomicactivityalongaspectrumwithindividualism
andcompetitionatoneendandcollectivismandcooperationattheother.The
allocationisafunctionofthestate,madeonthebasisofavarietyofimprecise
inputs—cultural,political,historic,economic,andinstitutional–andnotmerely
neoclassicaleconomictheory.Sensitivitytotheculturalaspectsofcompetitionand
cooperationplacesconstraintsonoverlyoptimisticexpectationsforglobal
harmonizationofantitrustenforcement.
KEYWORDS:culture,trust,competition,competitionpolicy,individualism,collectivism,
cooperation,socialcapital,globalharmonization,convergence.
_________________________________________________________________________________________________
I. INTRODUCTION
“Antitrust”isawordthatconfusespeople.Mostoftheworldprefers,quite
understandably,tospeakof“competitionpolicy,”andIdo,too.1Thedistinctly
*Founder,formerPresident,andcurrentlySeniorFellow,AmericanAntitrustInstitute.ThisarticledoesnotnecessarilyrepresenttheviewsoftheInstitute.AUTHOR’SNOTE:Ihavebenefittedfromtheknowledgeandadviceofmanyduringthepreparationofthispaper,butespeciallywanttothankNeilAveritt,DonaldBaker,HenryBalikov,PeterBehrens,PeterCarstensen,ThomasCheng,JohnConnor,William
2
Americanword,“antitrust,”isanhistoricalrelicderivedfromthelegalisticformthat
wasusedtocreatecorporateholdingcompanies,e.g.,theStandardOilTrustorthe
TobaccoTrust,inthepost-CivilWarera.Sometimesitwasspelledwithahyphen,
“anti-trust,”clarifyingthatthiswaslegislationinoppositiontothelargetruststhat
werethenappearingonthescene.Iwillsuggest,however,thattheoriginally
unintendedmeaning–treating“trust”asin“trustworthy”--isactuallyquiteusefulin
thinkingaboutcompetitionpolicy.Considerforamomentthemostwidely
approvedfunctionofantitrustlawtoday:stoppingcartels.Cartelsarebasedontrust
amongtheconspiratorsthattheywillcooperatewitheachotherratherthan
competeoncertainkeytermsoftradesuchaspriceoroutput.Theantitrust
enterpriseaimstodeterandbreakdownthattrust.Theextremelyeffectivepolicyof
grantingleniencytowhistle-blowingconspiratorsisspecificallydirectedatcausing
distrustanddefection.Itisliterallyapolicyofanti-trust.
Isthisjustwordplay?InthisessayIwillreflectupontheimportanceoftrust,
asanexampleofaculturalvalue,intheoperationsofeconomicinstitutionsinwhich
competitionpolicyisembedded.Thiswillentailrecognizingtheintertwiningof
competitionandcooperation,whichinturnwillleadtoafunctionalappreciationof
antitrustasastate’sauthoritativedeterminationofthelegitimaterolesofboth
competitionandcooperationintheeconomicrealm.Recognitionoftheroleof
culturalvaluessuchastrustwillbeshowntomodifytheuniversalisticconceptsof
neoclassicaleconomicsbasedonthemodeloftherationalself-interestedman.
Curran,ArthurDurst,EleanorFox,GregoryGundlach,ChristopherLeslie,MitsuoMatsushita,JulianPena,DouglasRosenthal,ChristopherSagers,MelissaSchilling,RobertSkitol,RandyStutz,andSandeepVaheesan.Ofcoursetheybearnoresponsibilityformyerrorsorwrongheadedness.1Infact,inthispaper,Iwillsometimesbeusingtheword“antitrust”broadlytocoverthewiderangeoflawsandpoliciesunderstoodtoconstitutecompetitionpolicy,suchassectoralregulation.Atothertimes,thecontextwillmakeclearthatIamspeakingonlyofthethreebasicU.S.antitrustlaws,i.e.,theShermanAct,theClaytonAct,andtheFederalTradeCommissionAct.
3
Sensitivitytotheculturalaspectsofcompetitionandcooperationplacesconstraints
onoverlyoptimisticexpectationsforglobalharmonizationofantitrustenforcement.
Sectiontwoofthispaperbeginswithadiscussionofthemeaningoftrustas
anaspectofcultureanditsimportanceineconomiclife.Sectionthree,”From
DarwinisticCompetitiontoCooperation,”drawsonarangeofacademicdisciplines
tointroducetherelationshipbetweencompetitionandcooperation.Sectionfour
askswhethertherecanbetoomuchofeithercompetitionorcooperation,
concludingthatsometypeofabalanceisneeded.InthefollowingSectionfive,the
paperreviewstheconceptofsocialcapital,whichincludestrust,anditsrolein
economictheory.Thesixthsectiontakesashortbreakfrommoretheoretical
considerationstoillustratewaysinwhichthetrustfactormayberelevantto
competitionpolicyinvolvingtheInternet.Sectionsevendiscussescross-cultural
data,trust,andcompetitionpolicy.Sectioneight—“trustandantitrust”--identifies
waysinwhichtrustaffectsvariousaspectsofcompetitionpolicy:vertical
integration,cartels,mergersandacquisitions,dominanceandfirmsize,theroleof
thestateand“themissingmiddle,”growthorientation,andtrade.Sectionnine
providestheexampleofAbuseofSuperiorBargainingPower(“ASBP”),an
anticompetitiveclaimwithinaverticalbuyer/suppliercontextthatisrecognizedby
someofourmajortradepartnersbutnotbytheU.S.,toindicatehowtrustandother
culturalvaluescaninfluencetheassignmentsofcompetitionandcooperation.
Sectiontenraisescomplexitiesthatoccurinthinkingabouttherelationship
betweencompetitionandcooperation.Itproposestheheuristicvalueofaspectrum
fromindividualism/competitiontowardcollectivism/cooperation,ontowhichcan
bedisplayedastate’schosentreatmentofvariouscategoriesofeconomicbehavior.
Sectionelevenprovidesconcludingremarks.
II. TRUST:MEANINGANDIMPORTANCE
4
Iwaswalkingonabeachwithanoldfriendaboutadozenyearsagoandwe
werediscussingourrespectiveretirementplans.Hehadinvested,throughan
intermediary,inafundthatwaspayinghimahandsometenpercentannually,every
year.“HowcouldIgetintothis?”Iaskedsomewhatgreedily.“Notsoeasy.Youhave
toknowSomeone.”AfewyearslateritturnedoutthattheMr.Someoneheknew
wasanacquaintanceofoneBernieMadoff.Myfriendisstillhopingtorecovermost
ofhisinitialinvestment.Hehadtrustedhisfriend,whohadwhatisknownasthick
trustinBernie.Thatis,itwasasituationofoneindividualevaluatingthecharacter
ofanother,personally.Myownfriend’sknowledgeofBernie,however,wasindirect,
anexampleofcomparativelythintrust.Inbothcases,however,thedirectand
indirecttrustweremisplaced.Theproblem:Madoffwasnottrustworthy.
Themodernworldwouldnotfunctionwithouthighlevelsoftrust,bywhich
wemustincludenotonlytrustinknownindividualsbutalsoinsystemsand
institutions.Considerthelevelsoftrustrequiredwhenoneboardsanairplane.
Potentialdoubtsabound.Willthepilotbeasober,well-trainedandquick-witted
herointheimageofthelegendaryCaptainSullenberger,whosafelyparkedhis
engine-lessplaneontheHudsonRiverafterflyingintoaflockofbirdsontake-off?
Werethemechanicsnotonlytechnicallycompetentbutalsoresolutelyfocusedas
theymaintainedtheplane?Willtheairtrafficcontrollersnotbedistractedortired?
Andsoon.Thelevelsoftrusthere,asinsomuchofmodernsociety,areverythin
indeed;somehaveevenreferredtothisasforcedorcoercedtrust.2
2SeeGEOFFREYHOSKING,TRUST,AHISTORY,46-49(2014).Othersmightarguethatpartsofthisexamplearenotabouttrustatall,followingwhatiscalledthe“encapsulatedinterest”modeloftrust,whichsays:“wetrustyoubecausewethinkyoutakeourintereststoheartandencapsulateourinterestsinyourown.”KARENS.COOK,RUSSELLHARDIN,ANDMARGARETLEVI,COOPERATIONWITHOUTTRUST?5(2005).Ireplythatwedon’tknow,forexample,thatananonymousperson--airplanedesignerortechniciannecessarilyhasourinterestinmind,orthatthepilotofourplane,whomwehavenevermetpersonally,isnecessarilysoberornon-suicidal.Ibelievetheencapsulatedinterestmodelistoonarrow,makingitawkwardifnot
5
Theefficientfunctioningofgovernmentandtheeconomyoftendependson
trust,amajorfacetofthecooperationthatunderliescommonundertakingsofall
sorts.3Taxrevenue,ratherobviously,isessentialtoagovernment’sabilityto
influenceitseconomyandachievethegovernment’spublicpurposes.Institutional
factorssuchaslawanditsenforcementalsoclearlyaffectthecollectionoftaxes,but
withoutcitizens’trustthatmostfellowcitizensarealsopayingtheirshare,how
manywouldconsistentlymakeanefforttopaytheirowntaxeshonestly?The
trustingassumptionsalsoincludethatthegovernmentistrustworthyinitshandling
ofyourmoneyandthatthegovernmentwillidentifyandprosecutethosewho
cheat.4Thus,theruleoflaw,theabsenceofcorruption,thethreatofpunishment,and
theconceptoffreeridersarebroughtintoplayasinfluencersofwhatwewould
commonlyspeakofastrust.Weneedtoadmitattheoutsetthatsegregatingtrust
fromothermotivations,aspectsofculture,andvarioussortsofinstitutionsisnot
alwayssimple.
Theveryconceptofmoneyasamediumforexchangeinamarketeconomy
dependsontrustthatasymbolwillbebackedbyconsistentvalue,requiringfaithin
theissuingauthorityandthegeneralstabilityofthesocialorder.5
impossibletospeakoftrustaswedocolloquially,e.g.ashavingtrustinaninstitution.3Usingtheirnarrowdefinitionoftrustasencapsulatedinterest,Cook,Hardin,andLeviarguethatinthecomplexmoderneconomymuch,perhapsmost,coordinationoccursasaresultofinstitutionsratherthantrust,suchasexternallyregulatedbehavior.SeeCOOKetal.,supranote2,at106.Thisisfurtheraddressedatnote41.4Trustaloneisquitereasonablydeemedaninsufficientmotivatoroftaxcompliance.ThusintheU.S.wehavewithholdingandthethreatofauditsandworsetocomplementgeneraltrust,butauditsandpenaltiesarewidelyknowntobequiterare,yetcomplianceisthenorm.5HOSKING,supranote2,at89(“Thepowerofmoneyisderivative:moneymediatespowerbecauseinmosttimesandplacespeopletrustit.”).SeeYUVALNOAHHARARI,
6
ThesocialscientistFrancisFukuyama,inafascinatingbooktitledTrust:The
SocialVirtuesandtheCreationofProsperity,recognizesthattrusthasbeendefined
inmanyways,butchoosesthefollowingdefinition,whichcanalsoserveour
purposes:
Trustistheexpectationthatariseswithinacommunityofregular,honest,andcooperativebehavior,basedoncommonlysharednorms,onthepartofothermembersofthatcommunity.6
Fukuyamaplacestrustonahighpedestalinexplainingeconomic
phenomena.Hesummarizes:
Oneofthemostimportantthingswelearnfromanexaminationofeconomiclifeisthatanation’swell-being,aswellasitsabilitytocompete,isconditionedbyasingle,pervasive,culturalcharacteristic:theleveloftrustinherentinthesociety.7
SAPIENS,ABRIEFHISTORYOFHUMANKIND,180(2016)(“moneyisthemostuniversalandmostefficientsystemofmutualtrusteverdevised”).6FRANCESFUKUYAMA,TRUST,26(1995).Iwillcomebacktothesignificanceoftrustasbothaninputandresultofcooperativebehaviorandthemysteryofhowhomosapienscametobedescribedas“acooperativespecies”orindeedas“super-cooperators.”SeealsoChristopherR.Leslie,Trust,Distrust,andAntitrust,82TEXL.REV.515,529-36(2004)(discussingthemanydefinitionsoftrustandtherelationshipbetweentrustandcooperation).TheRussellSageFoundationhaspublishedaseriesofmorethantenbooksontrust,includingCooketal.,supranote2.7FUKUYAMA,supranote6,at7.Cf.ROBERTPUTNAM,BOWLINGALONE(2000).TheCook,Hardin,andLevibook,supranote2,seemstohavebeenwritteninlargepartasaresponsetoFukuyama’sbookandanotherpopularbookwhichthispaperdiscusses,BowlingAlonebyRobertPutnam.Cooketal.believethatFukuyamaandPutnamdefinetrusttoobroadly,mistakenlyacceptsurveydatabasedonaverygeneralizedconceptoftrust,andconsequentlyoverstatetheimportanceoftrustintheeconomy,whileunderstatingtheroleofinstitutions.AnotuncommonargumentisthatwhilelevelsoftrustbetweenhumansintheU.S.maybeatalowpointhistoricallyorcomparedtoothercountries,theU.S.hassucceededeconomicallybecauseofstrong
7
Amajorreasonforthesuccessoftrustingsocieties,asdocumentedinthe
Fukuyamavolume,isthattrustreducestransactioncosts.8Itisdifficulttoexaggerate
money’sefficiencygainsoverbarter,providedthemoneyistrustworthy.Ingeneral,
thealternativestotrustwithinaneconomyaremanyformalrules,enforcedthrough
heavymonitoringandcostlyinstitutions,orevencoercion.Inhisessayontrust
BritishhistorianGeoffreyHoskingcommenceswithatourofRussiaunderStalinin
the1930’s,“thelandofmaximumdistrust.”9Itisnotaprettylandscape,e.g.,“Asa
result[ofStalin’screationofdistrustthroughouttheSovietsociety]theordinary
everydayexchangeofthoughts,hopes,andfeelingsbecamevirtuallyimpossible.”10
EconomistJoelMokyrrecentlyobserved,“[M]anymainstreameconomists
arenowcommittedtothesignificanceofcultureintheevolutionofmodern
economics.”11InabookfocusedontheculturalunderpinningsoftheIndustrial
Revolution,hearguesthat“culture”affectedtechnology“bothdirectly,bychanging
attitudestowardthenaturalworld,andindirectly,bycreatingandnurturing
institutionsthatstimulatedandsupportedtheaccumulationanddiffusionof‘usefulinstitutionssuchastheruleoflaw,thejudiciary,andacentralbank,whichserveasproxiesfortrust.Thisbegsthequestionofwhythepopulationtruststheseinstitutions–aquestionofhighcurrentimportancewhen,forexample,thePresidentrefusestogivecredittothenation’sintelligencecommunity,itsmedia,andtheinstitutionsofinternationalalliancecreatedbyhispredecessors.8SeeNIALLFERGUSON,THEASCENTOFMONEY,23(2008)(“Money,itisconventionaltoargue,isamediumofexchange,whichhastheadvantageofeliminatinginefficienciesofbarter…”).AlsoseeIlanaE.Strauss,TheMythoftheBarterEconomy,www.theatlantic.com/business/archive/2016/02/barter-the-society-myth/471051/(Feb.26,2016)(arguingthatthereisnoevidenceofabartereconomythatexistedpriortocurrency-basedexchange).9HOSKING,supranote2at10.10Id.at15.11JOELMOKYR,CULTUREOFGROWTH:THEORIGINSOFTHEMODERNECONOMY,7(2017).
8
knowledge.’”12Mokyradoptsthefollowingdefinitionofculture,whichIwillalso
use:
Cultureisasetofbeliefs,values,andpreferences,capableofaffectingbehavior,thataresocially(notgenetically)transmittedandthataresharedbysomesubsetofsociety.13
Mokyrseestrustasanaspectofculture.Hesays,forinstance,
Onemechanismthroughwhichcultureisbelievedtohaveaffectedeconomicperformanceisthroughtheideathathighertrustandcooperationreducetransactioncosts,andthusfacilitateexchangeandemergenceofwell-functioningmarkets.14
Trustissoessentialtoeconomicinstitutionsandindeedtothesuccessof
societypreciselybecauseitisanimportantcomponentofcooperativebehavior.
WritesJoshuaGreene,“[t]heproblemofcooperationisthecentralproblemofsocial
existence.”15
12Id.13Id.at8.Like“trust,”“culture”isthesubjectofavastliterature,includingmanydifferentdefinitions.Arecentandcomprehensivebookthatgivescarefulconsiderationtotheroleofcultureinhumanbehaviorusesthedefinitionthatcultureis“howwedoandthinkaboutthings,transmittedbynongeneticmeans.”ROBERTM.SAPOLSKY,BEHAVE,THEBIOLOGYOFHUMANSATOURBESTANDWORST,271(2017).14MOKYR,supranote11at13-14.(“Mostresearchbyeconomistsoncultureastheyseeitfocusesprimarilyonsocialattitudes,beliefs,andpreferencessupportinginformalandformalinstitutionsthatincreasecooperation,reciprocity,trust,andtheefficientoperationoftheeconomy.”)15JOSHUAGREENE,MORALTRIBES,9(2013).
9
III. FROMDARWINISTICCOMPETITIONTOCOOPERATION
Theessentialproblemofcooperationisoftendepictedinnarrativessuchas
ThePrisoner’sDilemma16andtheTragedyoftheCommons,17showing(under
selectedconditions)thatwhatisineachindividual’sinterestmaynotbeintheir
commoninterest.CharlesDarwin’stheoryofevolution,stressingnaturalselection
andsurvivalofthefittest,assumedastartingpointforallofnature,includinghomo
sapiens,tobethecompetitivenessofalloflifeinthestruggleforsurvival.Andyet,
asmathematicianandgametheoristMartinNowackobserves,“[h]umansociety
fizzeswithcooperation.”18
Beforegoingfurther,weneedtoconsiderhowcooperationisunderstoodto
arisefromcompetition.
16ThePrisoner’sDilemmais“thetextbooknon-zerosumgame.”ROBERTWRIGHT,NONZERO,THELOGICOFHUMANDESTINY98(2001).Prisoner’sDilemmadescribesthechoicestobemadebytwopartnersincrimewhoareseparatelyinterrogatedbypoliceunderconditionsinwhichiftheytrusteachotherandactcooperatively,theoveralloutcomewillbebest;butiftheydefectinordertotakethedealthatoffersindividuallybetteroutcomes,theirmutualinterestinthebestoutcomewillbethwarted.AsWrightputsit,“[I]fyouthinkyouraccompliceisgoingtorenegeonthedeal,andratonyouafterall,thenyou’rebetteroffcoppingapleaandrattingonhim.Somehowthisfearofbeingcheatedmustbeovercomeforthingstoworkout.”Id.17TheTragedyoftheCommonswasputforthbyGarrettHardinin1968.Hardenusedthemetaphorofapastureopentoall,inwhicheachherderismotivatedtoaddmoreandmoreanimals,thusservinghisowninterest,butwiththeresultofovergrazingthepasture.It“hascometosymbolizethedegradationoftheenvironmenttobeexpectedwhenevermanyindividualsuseascarceresourceincommon.”ELINOROLSTROM,GOVERNINGTHECOMMONS2-3(1990).18MARTINNOWACK,THESUPERCOOPERATORS:ALTRUISM,EVOLUTION,ANDWHYWENEEDEACHOTHERTOSUCCEEDxiii(2011).
10
Agreatdealofthoughthasgoneintotheoriginofcooperation.19Isithard-
wiredintothebrain?Diditevolvethroughexperience?Isthisaboutnatureor
nurtureorsomecombination?
Howdoculturaltraitsliketrustorcooperativenesscomeabout?First,let’s
furtherdevelopwhatwemeanby“culture.”Fukuyamasaysthatcultureis
“inheritedethicalhabit.”20Putdifferently,itisapeople’slanguageofgoodandevil,
rightandwrong,fairandunfair.Itissomethingthatisacquiredthrougheducation
inthefamily,fromfriendsandneighbors,orinschoolorreligion.Andbecauseitisa
matterofethicalhabit,itgenerallychangesveryslowly,thoughitiscriticalto
observethatnotallsuchhabitschangeatthesamepace.
Isanaffinityforcompetitionorcooperationbuiltintothehumanbrain?The
emergingscienceofneuroeconomicshasidentifiedabrainhormonecalledoxytocin,
whichseemstopromotecooperationandtrust,atleastforthein-group.Itmayalso
promoteaggressiontowardout-groups.21AsJoshuaGreeneputsit,ourbrainsmay
bedesignedforin-groupcooperationandbetween-groupcompetition.22
19E.g.ASHLEYMONTAGU,DARWIN,COMPETITION&COOPERATION(1952);ROBERTAXELROD,THEEVOLUTIONOFCOOPERATION(1984);ROBERTWRIGHT,THEMORALANIMAL,WHYWEARETHEWAYWEARE:THENEWSCIENCEOFEVOLUTIONARYPSYCHOLOGY(1995);MATTRIDLEY,THEORIGINSOFVIRTUE,HUMANINSTINCTSANDTHEEVOLUTIONOFCOOPERATION(1996);ROBERTWRIGHT,NONZERO(2001);GEERATJ.VERMEIJ,NATURE,ANECONOMICHISTORY4-21(2004);SAMUELBOWLES&HERBERTGINTIS,ACOOPERATIVESPECIES,HUMANRECIPROCITYANDITSEVOLUTION(2011);SAPOLSKY,supranote13(2017).20FUKUYAMA,supranote6at34.21JONATHANHAIDT,THERIGHTEOUSMIND,WHYGOODPEOPLEAREDIVIDEDBYPOLITICSANDRELIGION,270-74(2012)(“Themenwhoreceivedoxytocin[vianasalspray]madelessselfishdecisions—theycaredmoreabouthelpingtheirgroup,buttheyshowednoconcernatallforimprovingtheoutcomesofmenintheothergroups.”);SAPOLSKY,supranote13,at108-117summarizedat135(“Oxytocinandvasopressinfacilitatemother-infantbondformationandmonogamouspair-bonding,decreaseanxietyandstress,enhancetrustandsocialaffiliation,andmakepeoplemorecooperativeandgenerous.Butthiscomeswithahugecaveat—thesehormonesincreaseprosocialityonlytowardanUs.WhendealingwithThems,theymakeus
11
Asidefromourdisappointmentinrecognizingthatanoxytocinbombwillnot
solvetheproblemsoftheKoreanpeninsula,onedifficultywithGreene’s
generalizationisthatmostpeopletodaybelongtomultiple,overlappinggroupsand
theprioritytheygivetothesegroupsforself-identificationcanchange.Ismyin-
groupdefinedbymyreligion,myrace,myprofession,mynation,orevenmyplanet?
Astheparticulardefinitionofanin-groupenlarges,whathadatonetimebeen
competitionbetweenthein-groupandanout-groupmaybecomecooperation
withinthelargergroup,withcompetitionnowaimedatadifferentlydefinedout-
group.Theoppositewouldalsobetrue.Intheworldofantitrust,manymergers
eliminatesomecompetitionbyextinguishingarival,butaredefendedintermsof
enlargingthesurvivingfirmtoallowittobecomeastrongercompetitoragainstthe
otherremainingfirms.
Studyofthebrain’sconnectiontocompetitionandcooperationisatanearly
stage.Wemightspeculateonwhetheronedaywewillfindthatthepresenceof
oxytocinorsomeotherchemicalorchemicalsvariesbysocietyinawaythatis
correlatedwithmoreorlesscompetitivebehavior,buttherewillstillbeachallenge
todemonstratewhethercausationrunsinaparticulardirection(i.e.wouldwebe
abletodeterminewhetheroxytocinisthecauseofcooperativeeconomicbehavior
orisoxytocincausedbyacooperativeculture,orboth?).
moreethnocentricandxenophobic.Oxytocinisnotauniversalluvhormone.It’saparochialone.”);cf.,PaulJ.Zak,ValuesandValue,inMORALMARKETS,THECRITICALROLEOFVALUESINTHEECONOMY,266-68(PaulJ.Zaked.,2008)(“[W]henapersonmakesanintentionalmonetarysacrificesignifyingthatheorshetrustsastranger,thebrainofthepersonbeingtrustedproducesasurgeintheneuroactivehormoneoxytocin.”)22GREENE,supranote15at54.Thisthemeisdevelopedinchaptereleven,“UsandThem,”inSAPOLSKY,supranote13.
12
Forthepresent,whetherculturaltraitsarebiologicallyinheritableisa
controversialtopic.23Thusfar,wehavenotfoundagenethatallowsustoanswer
thequestion,butthisdoesnotmeanthataculturaltraitcannotevolveandina
socialsense,atleast,beinheritedviacollectivelearning.Darwinhimselfsuggested
thatthemostcohesiveandcooperativegroupsgenerallybeatthegroupsofselfish
individualists.24Evolutionarytheoriesofcooperationtendtostartwiththeselfish
individual,andmoveoutwardtothefamily,kinship,lineage,clans,tribes,and
nations.Theenginesforthisoutwardmovementarereciprocityandreputation.
Theevolutionaryviewofcooperationbeginswiththeindividualandthe
individual’sgenes.Theindividualisassumedtobehaveinwayscalculatedto
enhancesurvival,andthisisoftenexplainedintermsoftheindividual’sgenes
23AnthropologistAshleyMontaguewrotein1952:“[W]ecansafelyinterpretDarwintomeanthatnaturalselection,thestruggleforexistence,hasbeenthesupremearbiterindeterminingtheevolutionofman’sphysicalcharacters,aswellashis‘socialinstinct,’butthatoncehearrivedatahighstageofmoraldevelopment,culturalfactorsassumedthesupremeplaceindetermininghissocialdevelopment…Thehighstageofmoraldevelopmentoncebeingreached,culturalfactorstakeoverthefunctionofnaturalselection.”MONTAGUE,supranote19at94.Manywritershaverecognizedtheintimateinteractions(co-evolution)betweengenesandcultureinhumans.Seee.g.,BOWLES&GINTIS,supranote19at14-16(“No‘geneforcooperation’hasbeendiscovered.Norisitlikelythatonewilleverbefound,fortheideaofaone-to-onemappingbetweengenesandbehaviorisunlikelygivenwhatisnowknownaboutgeneexpression,andisimplausibleinlightofthecomplexityandculturalvariationofcooperativebehaviors.”)24CHARLESDARWIN,THEDESCENTOFMAN134-35,quotedinBOWLESANDGINTIS,supranote19at46.ComplexityeconomicsexpertEricBeinhockerwrites,“Overtime,societiesthatarebetterabletoorganizethemselveswillsocially,economically,andmilitarilydominatesocietiesthatarelesssuccessfulatcreatingcooperativestructures.Thus,itisthecompetitiontocooperatethatdrivessocialinnovation.”ERICD.BEINHOCKER,THEORIGINOFWEALTH:EVOLUTION,COMPLEXITY,ANDTHERADICALREMAKINGOFECONOMICS266(2006).[Myitalics.ThisistheonlytimeI’veseenthisexpressionofarelationshipbetweencompetitionandcooperation.]
13
seekingtosurvivethroughtheirownreplication.25Inthecaseoftheindividual,the
initialprinciplemightbedirectreciprocity:“I’llscratchyourbackandyouscratch
mine,”whichassumesexpectationofrepeatinginteractions.26
Anuclearfamilyofatleasttwoparentsandtheirchildrencontributestothe
sustenanceoflifeandprovidessocialcomfort.Inthelongeraofforaging,itbecame
habitualforthefamilymemberstoworkcloselytogethertoprovidefoodand
shelter.Thus,thememberscountoneachothertofunctioninterdependentlyasa
team.Todothis,eachmustsacrificesomeaspectofindependenceinreturnforthe
indefinitebutanticipatedreciprocityoftheothers.Thesacrificeisalsoreferredtoin
thecooperationliteratureasaltruism.
Summarizing,cooperationwouldseemtohavefirstarisenwithinthenuclear
familyinthecontextofprovidingasurvivaladvantageinthehuntingandgathering
offoodandprovisionofshelter,leadingtotherecognitionthatthereciprocity
expectedoffamilymembersinrepeatedinteractionsjustifiesthesacrificeofsome
degreeofindividualindependence.Perhapsthisalsoinvolvedthedevelopmentof
emotionalattachmentsinwhichtheindividualcomestocareforandlovetheother
membersofthefamily.27
Fromageneticperspective,thestoryseemstobethattheindividual’sgenes
wanttoreplicate,andthebeststrategyforachievingthatisfortheparenttohelp
thechildrenwhocarrythegenestosurvive,thusgeneratingaspecialprotective
relationshipfromparentstowardchildren.Theparentswouldnaturallytryto
25RICHARDDAWKINS,THESELFISHGENE2(1976)(“[A]predominantqualitytobeexpectedinasuccessfulgeneisruthlessselfishness.Thisgeneforselfishnesswillusuallygiverisetoselfishnessinindividualbehavior.”).26NOWACK,supranote18at270.27WRIGHT,supranote19(2001)at324.
14
inculcatetheteamworkapproachinthechildren,passingonthehabitualethicthat
appearssuccessful.
Thiscanexplainhowcooperationisgeneratedwithinanuclearfamilyandto
alesserextenttonearrelativeswhoshareasmallerportionofthegenes.Buthow
doesitspreadbeyondthefamily,sothatthein-groupcanbeenlargedto
incorporateclustersandnetworks?(Whydosoldierswillinglysacrificetheirlives
fortheircountryortheirbuddies?)Probablyatfirst,familiesgrewlarger,into
kinshipgroups,livingtogetherornearby,sharingsomegeneticmaterial.AsDarwin
suggested,whenthesegroupsworkedtogethercooperativelytheyhadabetter
chanceatsurviving.Forexample,huntinglargeranimalsrequiredmorehunters
cooperatinginthecaptureorkilling,andalsothesharingofthemeat.Thisprocess
probablyevolvedtoincludenon-relatives.Inaddition,whenout-groupsandin-
groupsbecameconfrontational,thesizeofthegroupanditsabilitytocoordinate
andcooperatewoulddeterminewhocameoutontop,whichoftenmeantsurvival.
Asthegroupbecamelarger—lineagegroupings,clans,tribes,nations--the
expectationsofdirectreciprocitybecomesmaller,butthepayoffintermsof
competitivepotential(e.g.,morehunters,morewarriors)isgreater.28Greatersize
anddivisionoflaborascivilizationmovedintoagricultureandurbanization—
increasedcomplexity—wouldentailmoresocialnorms,andthiswouldincreasethe
altruisticsacrificesthatindividualsneedtomaketoconformtotheenlargedsocial
norms.Whymakethesesacrifices?InYogiBerra’smemorableformulation,“Alwaysgotootherpeople’sfunerals,otherwisetheywon’tcometoyours.”Thissentiment28Ofcoursethehistoryofcooperationcouldbetakenbacktoanimallifepriortohomosapiens.MattRidley’sbook,forinstance,includesachapterontribalprimates,wherehetalksaboutanimalscooperatinginordertocompeteagainstothers.RIDLEY,supranote19at151-69.Thedynamicsdescribedinthetextwouldcontinuetoapplyashumansocialandeconomicorganizationevolvedfromforagingtoagricultureandeventuallytoindustry.SeeDAVIDCHRISTIAN,MAPSOFTIME,ANINTRODUCTIONTOBIGHISTORY(2004).IwritethispaperinthespiritofChristian’sBigHistory.
15
containsaself-interestedbasisthatoperatesoveralongperiod,evenbeyonda
lifetime.Itassumesrepeatedinteractionsinsmallgroupsofpeoplewhoknoweach
other.Thefactthat“diversefaithsareunitedbythereciprocityoftheGoldenRule”
suggeststhatreciprocityhasproventobeapowerfulimpulseindeed.29
Trustmayhavebeenthickwhenthecommunitywasquitesmallandpeople
notonlykneweachotherpersonally,butalsointeractedrepeatedly.Theemergence
ofmorecomplexsocietiesraisesthiskeyquestion:Whatmotivatedaltruismtoward
unknownoutsiderswithwhom(a)repeatedengagementsandtheopportunityfor
receivingareciprocalfavorwouldberelativelysmall,and(b)thegeneticpayofffor
survivalwouldbeattenuated?
Entertheimportanceofreputation(alsoknownintheliteratureas
reciprocalaltruismorindirectreciprocity),tocomplementthicktrustwhenthe
personalrelationshipsarenotpresent.Itissaid,perhapscontemplatingthe
exampleofGlaucon’smetaphoroftheringofinvisibilityinPlato’sRepublic,that
mandoesn’tcaresomuchaboutbeinggood,asthatotherpeopleshouldperceive
himasgood.30Weactasifwearebeingwatchedbecauseifwehappentobe
detecteddefectingfromthesocialnorms,wewillbetalkedaboutandgossipmay
leadtosomeformofdisadvantageorpunishment.31Peoplemayshunusorrefuseto
dobusinesswithus,orperhapspunishusthroughstoning,imprisonment,exile,or
worse.HaidtpraisesGlauconas“theguywhogotitright—theguywhorealizedthat
29NOWACK,supranote18at273;PUTNAM,supranote7at135.30InTHEREPUBLICGlaucontellsSocratesaboutaringthatmakesitspossessorinvisible,suchthathecanengageinunjustactswithoutbeingobserved.TheringwasfoundbyanancestorofGyges,whouseditspowersforhisownadvantage.Glauconassertsthatifthereweretwosuchrings,oneownedbyanunjustmanandtheotherbyajustman,thejustmanwouldsoonbeactingasunjustlyasthefirst.31Foraquickinsightintotheimportantroleofgossip,seeDavidDobbs,Gossip,Grooming,andYourDunbarNumber,https://www.wired.com/2011/06/gossip-grooming-and-your-dunbar-number.
16
themostimportantprinciplefordesigninganethicalsocietyistomakesurethat
everyone’sreputationisonthelineallthetime,sothatbadbehaviorwillalways
bringbadconsequences.”32
Thestoryofthedevelopmentofcooperationisnowfairlycomplete.Itis
supportedbyfieldevidencefromculturalanthropologyandmicrohistoriesofsocial
movements,allpointingawayfromthePrisoner’sDilemmaandtheTragedyofthe
Commonsinthedirectionofcooperation.33Thecomponentsofthestory–family,
reciprocity,reputation(withgossipandpunishment)—havebeenmodeledbygame
theoristslikeMartinNowack,aprofessorofmathematicsandbiologyatHarvard
anddirectoroftheProgramforEvolutionaryDynamics,whohavedeveloped
formulaetoexpressthesemechanismsandthendemonstratehowtheycouldevolve
bycomputersimulationsofevolution.34Nowackconcludes,
Thankstothesemechanisms,theessentiallycompetitivedriveofevolutioncan,inmanycircumstances,giverisetocooperation.Becauseourinstinctshavebeenshapedinthiswayoverthegenerations,itisnosurprisethatone
32HAIDT,supranote21at86.33Theevidencerelatingtotrustinsocialdilemmagames(“situationsinwhichgroupsofindividualsfindthemselvesfacingincentivesidenticaltothosepresentedinthefamiliarprisoner’sdilemmaofgametheory”)isexploredinMargaretM.Blair&LynnA.Stout,BehavioralFoundationsofCorporateLaw,149U.PA.L.REV.1735,1761(2001).Theyconcludethattheexperimentalevidenceindicatesthatpeopleshiftbetweenatleasttwopreferencefunctionsormodesofbehavior,dependingonthesocialcontext.Onemightbedescribedasa“competitive”or“self-regarding”personality;theotherisa“cooperative”or“other-regarding”personality.Socialcontext,temperedbyconsiderationofpersonalcost,determineswhenthecooperativepersonalityemerges.Id.at1761-2.34NOWAK,supranote18.SeealsoseeAlbert.A.Foer,BookReview:Competition,Cooperation,andMartinNowak’sSuperCooperators,AM.ANTITRUSTINST.,(July28,2015)http://www.antitrustinstitute.org/sites/default/files/FoerBookReview.7.28.152.pdf.
17
corollaryofthisisthatuniversalbehaviors—suchaslove,friendship,jealousy,andteamspirit—areseenacrossallhumansocieties.35
Economicstextsoftenbeginwiththeassumptionofaworldoflimited
resourcesinwhichcompetitiontoacquireandholdresourcesisthekeytosurvival.
Yethumansociety,includingitseconomicmanifestations,isremarkablyreplete
withcooperation.Competitionandcooperationcoexist.Thequestionis,howisthis
coexistencetobemanaged?
IV. BALANCINGCOMPETITIONANDCOOPERATION
Ifitsometimessoundsasifcooperationisthefinalteleologicalobjectiveof
evolutionandthatwhatmustsoonerorlatercomenextisanall-inclusiveglobalin-
group(thepartyofAll)thatwouldeliminatewarandotherharmfulmanifestations
ofcompetition,thiswouldbeagrossmisunderstanding.Itiswidelyrecognizedthat
intheabsenceofanimportantroleforcompetition,evolutionitselfwouldnolonger
haveanengine.Ofcoursetherearesomewhodon’tcredittheconceptofbiological
evolutionorwhoaresufficientlysatisfiedwiththestatusquothattheyopposeall
changeasthreatening.Soletmeapproachthequestionfromanotherdirection.
Fromasocial,political,oreconomicpointofview,toomuchortoolittle
cooperationcanbeasdamagingastoomuchortoolittlecompetition.Italldepends
oncontextandobjectives.Competitioninitsmostextremeformis“everymanfor
himself”assummarizedinHobbes’famousdescriptionoflifeinthestateofnature
as“solitary,poor,nasty,brutish,andshort.”Cooperationinitsmostextremeformis
thetotaleclipseofcompetition,whetherpoliticaloreconomic.36Monopolymightbe
35NOWACK,supranote18at272.36Everyonewithinanorganizationneednotagreeinorderforanundertakingtobeconsideredcooperative,althoughthepurestformofcooperationwouldexcludeallcompetition.Thisappliestoeveryorganization,wherethefundamentalcooperativeactistoparticipateintheorganization,oratleastnottoexit.Thestateitselfcanbeviewedasthemostcollectivist,i.e.,cooperative,ofunits,representingsomething
18
thoughtofastheprivatemodeofmaximumcooperation.Thestate,Hobbes’
Leviathan,representsthepublicmodeofmaximumcooperation,althoughitcan
takemanyforms,includingdemocratic,autocratic,andtotalitarian.Totheextent
thatastateeliminatesallopposition,onecouldsayitrepresentsacoerciveformof
cooperation,justascertainkindsoftrust(wherethereisnopracticalchoicenotto
trust)havebeendescribedascoerced.TohelpvisualizewhatIamtryingtodepict,if
acompletelyfragmentedsocietyofindividualsispicturedatthecompetitivepoleof
aspectrum,thenacompletelycollectivistsocietywouldbeatthecooperativeend.I
returntoandmodifythisvisualizationinthepenultimatesectionofthispaper.
Intheeconomicrealm,theargumentsagainstmonopoly,wherethereis
virtuallynomeaningfulcompetition,arewell-known,rangingfromthe“deadweight
loss”resultingfromunderproductionofgoodsandservicestomisallocatingwealth,
excludingrivals,andabusingemployees,consumers,andsuppliers.37Economic
monopolymayonoccasionbebeneficentincertainrespects.Forinstance,the
marketmaynotsupportmorethanoneefficientfirm.Theprospectofatleasta
short-termmonopolymayinspireinvestmentinnewproducts.Twocommon
misunderstandingsaboutmonopoliesalsoshouldbementioned.Amonopolistisnot
compelledtochargetheprofit-maximizingprice,thoughithasthepowertocause
damagebyvirtueofcontroloverprice.Also,amonopolydoesnotnecessarilybring
allinnovationtoahaltandmayindeeduseitssurplustoengageinresearch,butit
generallychannelsinnovationintowhatisbestforthemonopolist.Theabsenceof
competitorsthereforedeprivesthesocietyofnewwaysofadjustingtochanging
consumerdemandandtechnologychange,therebytherestrictingthepublic’s
economicpotential.38
likethegeneralwillofthecommunityorthesocialcontract,ordemocraticsupremacy.37See,e.g.,HERBERTHOVENKAMP,FEDERALANTITRUSTPOLICY,ch.1(1994).38SeeJonathanB.Baker,EvaluatingAppropriabilityDefensesfortheExclusionaryConductofDominantFirmsinInnovativeIndustries,80ANTITRUSTL.J.431(2016);
19
Withmonopoly,lifecanbeveryeasyfortheinsidersandlessconvenientand
moreexpensiveforsuchout-groupsasthefirm’sconsumersorsuppliers.Moreover,
monopolypowermaygivethefirmresourcestoinfluenceorcapturerelevantparts
ofthegovernment,therebyraisingentrybarriersevenhigherandmaking
avoidanceofefficientperformanceeasier,aswellasunderminingdemocracy.
Perfectmonopolyappearstobeextremelyrare.Therearetypicallypotential
rivalslurkingjustoutsidethemonopolyzoneandnewtechnologycanespecially
threatentounderminethebasisofthemonopoly.Powerfulbuyersorsellersmay
reduceamonopoly’sdiscretion.Oncetherearesuchthreats,itcanbeusefultothink
ofthemonopolyasjustanotherfirmconsistingofanin-groupcommunitywith
cooperationoperatinginsideitsboundariesandbiasoperatingagainstout-groups,
incontrasttowhichitdefinesitself.Internalcooperationisofteninspiredbythe
objectiveofcompetingmoresuccessfullyagainsttheoutsiders.Theindividualsand
divisionswithinafirmlikelyhavetheirowninternalaggressivetendenciesbutthe
successfulfirmchannelsthisfactorintoadesiredlevelofcooperationsothatthe
firmitselfcancompetemoresuccessfullyagainstrivals,therebyfacilitatingboththe
firm’ssurvivalandtheincomeandeasierlifepotentiallyavailabletotheindividuals
andunitswithinthefirmandthefirm’sownership.39
JonathanB.Baker,BeyondSchumpetervs.Arrow:HowAntitrustFostersInnovation,74ANTITRUSTL.J.575(2007).39 AsJudgeFrankEasterbrookwrote,“Everymarketentailssubstantialcooperationoversomedomaininordertofacilitatecompetitionelsewhere…Antitrustlawpermits,evenencourages,cooperationwithina‘firm,’forsuchcooperationisthebasisofeconomicproductivity.”FrankH.Easterbrook,TheLimitsofAntitrust,63TEXASL.REV.1(1984).SeealsohisopinioninPolkBros.v.ForestCityEnters.,Inc.,776F.2d185,188(7thCir.1985)(“Cooperationisthebasisofproductivity.Itisnecessaryforpeopletocooperateinsomerespectsbeforetheymaycompeteinothers,andcooperationfacilitatesefficientproduction....Antitrustlawisdesignedtoensureanappropriateblendofcooperationandcompetition,nottorequirealleconomicactorstocompetefulltiltateverymoment.”).
20
Fromageneticperspective,monopolisticcooperationbringsanendto
competition,whichmeansthatsuccessfulevolutionbecomeslesslikely.Isuppose
theselfishgenecouldviewthisasavictory,butsocietyshouldnot.Thesocietythat
permitsexcessivepoliticalandeconomiccooperationtominimizecompetitionmay
gainsomenear-termbenefitsandstabilityattheexpenseoflonger-termdynamism.
Thislogicsuggeststhatsomebalancingofcompetitionandcooperationis
bothessentialanddesirable.Thisobservation,indeed,shoulddefinethe
fundamentalfunctionofcompetitionpolicy:todetermine,whetherbypositive
actionorpassiveacceptanceofcustom,whatthemixofcompetitionand
cooperationshallbeforvariouspatternsofbehavior.
V. SOCIALCAPITAL,TRUST,ANDECONOMICTHOUGHT
Ihavebeenwritinginthebeliefthatcultureandespeciallyaparticular
aspectofculture–namely,trust--influenceseconomics.40Thequestionofcausation
requiressomecomment.Considerthedebateonwhysomepoorcountries
stubbornlyremainpoor.Oneinstitutionalistviewholdsthatatleastwhenfocusing
onthecausesofglobalinequality,themostinfluentialdriverisnotculturalbut
institutional.ThedebateishighlightedbyinstitutionalisteconomistsDaron
AcemogluandJamesA.Robinson.41Inconsideringtheoriginsofpower,prosperity,
40SeegenerallyAlbertA.Foer,CompetitionCultureandtheCulturalDimensionsofCompetition,inCOMPETITIONPOLICYATTHEINTERSECTIONOFEQUITYANDEFFICIENCY(DamienGerard&IoannisLianoseds.forthcoming2018)(describinghowcultureinfluencesantitrust).41DARONACEMOGLU&JAMESA.ROBINSON,WHYNATIONSFAIL45-69(2012).Moregenerally,considertheinstitutionalistexplanationoftheprocessofeconomicchangepresentedinDOUGLASSC.NORTH,UNDERSTANDINGTHEPROCESSOFECONOMICCHANGE2(2005):“Thedominantbeliefs—thoseofpoliticalandeconomicentrepreneursinapositiontomakepolicies—overtimeresultintheaccretionofanelaboratestructureofinstitutionsthatdetermineeconomicandpoliticalperformance.Theresultantinstitutionalmatriximposessevereconstraintsonthe
21
andpoverty,theydiscusswhythreereceivedtheoriesdonotwork.First,theysay,
theoriesrestingongeographicaldifferencesfailasanexplanationofthecausesof
worldinequalitybecause“[h]istoryillustratesthatthereisnosimpleorenduring
connectionbetweenclimateorgeographyandeconomicsuccess.”42Second,the
ignorancehypothesisisalsoexaminedandrejected.Itassertsthatworldinequality
exists“becauseweorourrulersdonotknowhowtomakepoorcountriesrich.This
ideaistheoneheldbymosteconomists.”43Ignorance,theauthorsconclude,can
explain,atbest,onlyasmallpartofworldinequality.
Alternatively,theculturehypothesispositsthatreligionandothertypesof
beliefs,values,andethicshelpintheunderstandingofworldinequality.Theauthors
sayitisusefulinthesensethatsocialnorms,whicharerelatedtoculture,domatter
andcanbehardtochange,andtheyalsosometimessupportinstitutional
differences,
But…thoseaspectsofcultureoftenemphasized—religion,nationalethics,AfricanorLatinvalues—arejustnotimportantforunderstandinghowwegothereandwhytheinequalitiesintheworldpersist.Otheraspects,suchastheextenttowhichpeopletrusteachotherorareabletocooperate,areimportantbuttheyaremostlyanoutcomeofinstitutions,notanindependentcause.44
choicesetofentrepreneurswhentheyseektoinnovateormodifyinstitutionsinordertoimprovetheireconomicorpoliticalpositions.”Northfurthernotes,“Theintimateinterrelationshipofbeliefsandinstitutions,whileevidentintheformalrulesofasociety,ismostclearlyarticulatedintheinformalinstitutions–norms,conventions,andinternallyheldcodesofconduct.Theseinformalinstitutionsnotonlyembodythemoralcodesofthebeliefsystem,whichtendtohavecommoncharacteristicsacrosscultures,butalsoembodythenormsparticulartoindividualsocieties,whichareverydiverseacrosscultures.”Id.at50.Furthermore,“Tounderstandthehumanconditionitisessentialtofocusontheintentionalityoftheplayers.Economistshavethecorrectinsightthateconomicsisatheoryofchoice.Buttoimprovethehumanprospectwemustunderstandthesourcesofhumandecisionmaking.”Id.at170.42ACEMOGLU&ROBINSON,Id.at49-50.43Id.at63.44Id.at57.(emphasisadded.)ComparetoCOOKETAL.,supranote18.
22
Thisappropriatelytreatscultureandinstitutionalcausesofeconomicchange
asofteninter-relatedratherthancompletelyseparatefactors,butitundervalues
thecausalrolethatculturemayplayinmakinginstitutionalchangespossible.Here
aretworeasonsforsayingthis:First,inhiscontextofexplainingtechnological
change,Mokyrobserves,“[O]ncethepossibilityanddesirabilityofeconomic
progresshasbeenaccepted,aconcreteagendaofpolicymeasuresandinstitutional
changehadtobeformulated,elaborated,proposed,andimplementedforlong-term
progresstotakeplace.”45Inotherwords,theattitudetowardprogress(acultural
manifestation)comesbeforeaconcreteagenda(theinstitutions).
Second,intheirdiscussionofhowChinaswitchedfromafailedcommunist
economytoamuchmoresuccessfulmarketeconomy,AcemogluandRobinson
conclude,“Itwaspoliticsthatdeterminedtheswitch…notbetteradviceorabetter
understandingofhowtheeconomyworked.”46Myquestion(andperhapsMokyr’s)
45Mokyr,supranote,11(emphasisinoriginal).Mokyrsuggeststhataculture’shighvalueonindividualismstimulatesinnovation.Id.at18.Intheoverviewandsynthesisofanimportantstudyofexperimentalgamesplayedbytwelvediversegroupsinsmall-scalesocieties,theeditorspointout“theinstitutionsthatdefinefeasibleactionsmayalsoalterbeliefsaboutconsequencesofactionsandtheevaluationoftheseconsequences.Forexample,amarket-orientedsocietymaydevelopdistinctcognitivecapacitiesandhabits.Thefactthatalmosteverythinghasapriceinmarket-orientedsocietiesprovidesacognitivesimplificationnotavailabletopeopleinsocietieswheremoneyplaysalesserrole…Totakeanotherexample,extensivemarketinteractionsmayaccustomindividualstotheideathatinteractionswithstrangersmaybemutuallybeneficial.Bycontrast,thosewhodonotcustomarilydealwithstrangersinmutuallyadvantageouswaysmaybemorelikelytotreatanonymousinteractionsashostileorthreatening,orasoccasionsfortheopportunisticpursuitofself-interest.”JOSEPHHENRICH,ROBERTBOYD,SAMUELBOWLES,COLINCAMERER,ERNSTFEHR,ANDHERBERTGINTIS(EDS),FOUNDATIONSOFHUMANSOCIALITY:ECONOMICEXPERIMENTSANDETHNOGRAPHICEVIDENCEFROMFIFTEENSMALL-SCALESOCIETIES46(2004).46ACEMOGLU&ROBINSON,supranote41at68.
23
is,whydidthepoliticshappentomoveinthesamedirectionaswassuggestedbya
betterunderstandingofmarkets?Whatvaluesandbeliefs,withintheelite
communitythatmadethecriticalpoliticaldecisionsinChina,weredrawnupon,and
whatvalueswithinthelargercommunitywereunderstoodtobeavailableto
supportthedecisions?
Therelationshipbetweencultureandinstitutionsissoclosethatthedetails
oftherelationshipandthedirectionofcausationaredifficulttospecifyandmay
verywelldependonwhetheroneistalkingaboutthecausesoftheIndustrial
RevolutionorthereplacementofcommunismbyrelativelyfreemarketsinChina.In
somecontexts,culturemaysimplybeaninformalinstitution.Iamsatisfiedto
explorehowaspectsofculture,herefocusingmainlyontrust,influence(ratherthan
cause)theinstitutionalcontextofeconomicsgenerallyandantitrustmore
specifically.Idon’tdisputethatinstitutionscanhelpshapeculture,aswell.
Economicsnormallyfocusesonthreeformsofcapital(i.e.,assets):financial
(e.g.,theresourcesneededtoinvestinprojects),physical(e.g.,toolsandmachinery),
andhuman(e.g.,primarilyskillsandeducation).Afourthform,ofmorerecent
vintage,issocialcapital,whichcapturestheideathatthereisvalueinthesocialties
amongindividualsandthenormsofreciprocityandtrustworthinessthatarisefrom
thoseties.47Theconceptofsocialcapitalhadbeenmentionedatvarioustimesinthe
47HAIDT,supranote21,at338.SeeTHEWORLDBANK,WHEREISTHEWEALTHOFNATIONS?MEASURINGCAPITALFORTHE21STCENTURYxvii(2006)(“Byconstruction,theintangiblecapitalvariablecapturesallthoseassetsthatareunaccountedforintheestimatesofproducedandnaturalcapital.Intangibleassetsincludetheskillsandknow-howembodiedinthelaborforce.Thecategoryalsoincludessocialcapital,thatis,thetrustamongpeopleinasocietyandtheirabilitytoworktogetherforacommonpurpose.Theresidualalsoaccountsforallthosegovernanceelementsthatboosttheproductivityoflabor.Forexample,ifaneconomyhasaveryefficientjudicialsystem,clearpropertyrights,andaneffectivegovernment,theeffectswillresultinahighertotalwealthandthusahigherintangiblecapitalresidual.Theregressionanalysisinthischaptershowsthathumancapitalandruleoflawaccountforthemajorityofthevariationintheresidual.Investmentsineducation,thefunctioningofthejustice
24
past,butwaspopularizedinthe1990’sbyRobertPutnam,especiallyinabestselling
bookaboutthecollapseandrevival(mostlytheformer)ofAmericancommunity.48
Socialcapitalreflectstheobservationthatwearenotmerelyindividualsbut
membersofgroupsandorganizationswhereweworktogetherforcommon
purposes.“Thecoreideaofsocialcapitaltheory,”saidPutnam,“isthatsocial
networkshavevalue.”49
Shouldtrustbeincludedinthecategoryofsocialcapital?Cook,Hardin,and
Levisaythatwouldbeamistake:50“Yourtrustingdoesnotdomuchforyouwhen
youneedtocallonanetworkofassociatestohelpyouresolvesomefamilyor
broadersocialproblem.”51Whatisatstake,theysay,isnottrust,butthe
trustworthinessofthepeopleinyournetwork.Ontheotherhand,theysaythat
socialcapitalmaybetakentomeanthesocialvaluethatinheresintheconnections
withingroups.Inthissense,too,theysay,theissueisnotoneoftrust.Socialcapital
is“merelyameanstodothings”whichcanbebeneficialortheopposite.Discussions
ofdecliningsocialcapitalmustbewrong,theysay,becauseindividualaccessto
socialcapitalingeneralisincreasingformanypeopleinmodernsocieties,not
decreasing.Despitethesecaveats,basedonanarrowdefinitionoftrustas
“embeddedinterest,”theconceptofsocialcapitalmakeslittlesensewithoutthe
culture’sleveloftrustbeingcentrallyincluded.
system,andpoliciesaimedatattractingremittancesarethemostimportantmeansofincreasingtheintangiblecomponentsoftotalwealth.”) http://siteresources.worldbank.org/INTEEI/214578-1110886258964/20744844/Introduction.pdf(lastvisitedMay22,2017).48BOWLINGALONE,supranote7at22-24.49Id.at18-19.SAPOLSKY,supranote13at292(“Socialcapitalisthecollectivequantityofresourcessuchastrust,reciprocity,andcooperation….Putsimply,cultureswithmoreincomeinequalityhavelesssocialcapital.”).50COOKETAL.,supranote2at88.51Id.at88.
25
Putnamandothersinhiswakearguethatindividualismbegantoeclipse
communityintheU.S.duringthe1960’s,andthesystemhasbeenincreasinglyout
ofbalanceeversince.52Fukuyama,forexample,pointstotheriseofviolentcrimes,
breakdownoffamilystructure,declineofchurchesandneighborhoods,unions,
clubsandcharities,andageneralsenseofalackofsharedvaluesandcommunity.53
Hepointstosurveysthattracequestionslike“Doyouagreethatmostpeoplecanbe
trusted?”--towhichthe“yes”responsein1960was58%butonly37%in1993.54A
morerecentPewResearchCentersurvey(priortothepresidencyofDonaldTrump,
incidentally)reportedthatonly19%ofAmericanstrustthegovernment“alwaysor
mostofthetime.”Pewnotesthatcurrenttrustlevelsareamongthelowestin
surveysofthepast50years.In2016,Pewsaid,“[t]hetrustleveltodayisabig
changefrom15yearsago,rightaftertheterroristattacksofSept.11,2001.Atthat
time,60percentofAmericanssaidtheytrustedthegovernment.”55
Cook,HardinandLevireportstudiesthatsuggestthatthegeneralityofthese
surveymeasuresoftrustisproblematicforpredictingactualbehavior.56Trust,in
52Foranearlierexpositionoftheargumentthatthingsareoutofbalance,seeALFIEKOHN,NOCONTEST:THECASEAGAINSTCOMPETITION(1986,rev.1992).Foracritiqueof“culturalisttheories,”seeHA-JOONCHANG,BADSAMARITANS,THEMYTHOFFREETRADEANDTHESECRETHISTORYOFCAPITALISMch.9(2008).53FUKUYAMA,supranote6at11.54Id.at314.55Poll:AmericansDistrustTheirGovernment,VOANEWS(Nov.27,2015),http://learningenglish.voanews.com/a/americans-distrust-their-government-poll-says/3077692.html(Nov.27,2015).56COOK,ETAL.,supranote2at24.SeeSAPOLSKY,supranote13at292,tothecontrary(“Youcanlearnatonaboutacommunity’ssocialcapitalwithtwosimplequestions.First,‘Canpeopleusuallybetrusted?’…Thesecondquestionishowmanyorganizationssomeoneparticipatesin…”)
26
theirview,involvespowerrelationships,whichcanonlybeunderstoodinthe
contextofspecifics:
Itishardtosaywhatcouldbethecooperativeendeavorsthatawholesocietywishestosharein—perhapswinningawar.Hence,someoftheconcernwithso-calledsocialorgeneralizedtrust—meaninguniversaltrustintherandomotherpersoninoursociety—issurelymisplaced.Itwouldbepointlessforuseventoassessthetrustworthinessofmostpeople,anditoftenclearlywouldnotbenefitustotrustthegeneralother.Itisonlybeneficialforustotrustthosewhoaretrustworthyintheirinteractionswithus,andthesepeopleconstitutenowherenearallofthesociety.57
Someskepticismisindeedwarrantedtowardthehighlygeneralizedsurveys
oftrust.(IhavenoideahowIwouldanswer,yesorno,whetherIgenerallytrust
otherpeople.Whichotherpeople?Trustthemtobabysit,tonottalkbehindmy
back,tonotmugme?Trustwhenmystomachisfullorempty?Afterataxidriver
overchargedme,afteranactofterrorism?)Apartfromtheselimitationsonhighly
generalizedquestions,however,asubstantialliteraturefocusespersuasivelyon
morespecificmeasuresoftrust,demonstratingpersuasivecross-cultural
differencesinlevelsoftrust.58
Whilepoliticalconservativestendtoblametheturnfromcommunityinthe
U.S.onhippiesandindividualisticliberalismthatseemedtopermeatethe1960’s
and70’s,thefocusonsocialcapitalsincethe1990’smayinsteadreflectanunder-
recognizeddissatisfactionwiththeneoclassicaleconomists’modelofthegreedy,
self-interestedandcoldlyrationaleconomicman—oftenreferredtoas“TheChicago
School”model--,whichcameintoadominanceovernationalpoliciesalongwiththe
electionofRonaldReaganinthe1980’s.Inanyevent,theworldofeconomic
thinkinghasnotbeenstandingstillsincethe‘80’s.Increasinglyrecognized
specialtieswithinortouchingthefieldofeconomicsbroughtforththinkingabout
theroleofinstitutions(includingculture),psychology(behavioraleconomics),
57Id.at68.58SeeSectionVIIinfra.
27
evolution,gametheory,andstrategicmanagement.FiveNobelPrizeswereawarded
toinstitutionalorbehavioraleconomists–ElinorOstrom59,DanielKahneman60,
RonaldCoase61,OliverWilliamson62,andRobertJ.Shiller.63Someofthenewer
economicthinkingquestionedtheneo-classicalmodel’sunderlyingassumptionof
rationaleconomicbehavior.Authorssuchastheneo-conservativeFrancis
Fukuyamawhohavegivenspecialattentionto“trust”recognizeexplicitlythat
economicscannotbedivorcedfromculture.64GeoffreyHoskingsaystherational
choicemodeloftrustitselfisinadequate:wemustincludeamoralelementthat
cannotbededucedfromrationalchoicealone.65
59SeeELINOROSTROM,GOVERNINGTHECOMMONS,THEEVOLUTIONOFINSTITUTIONSFORCOLLECTIVEACTION(1990).60SeeDANIELKAHNEMAN,THINKING,FASTANDSLOW(2011).KahnemanandAmosTverskyintroducedpsychologyintoeconomicthinking.ThestoryoftheirfriendshipandthedevelopmentofbehavioraleconomicsistoldinMICHAELLEWIS,THEUNDOINGPROJECT(2017).61SeeR.H.COASE,THEFIRM,THEMARKETANDTHELAW(1988).Coaseintroducedtheimportanceoftransactioncostsinmarketeconomics.62SeeOLIVERE.WILLIAMSON,MARKETSANDHIERARCHIES:ANALYSISANDANTITRUSTIMPLICATIONS(1975);OLIVERE.WILLIAMSON,ANTITRUSTECONOMICS(1987).WilliamsonfurtherdevelopedCoase’stransactioncostfocusintotheworldofantitrustanalysis.CoaseandWilliamsondidnotquestiontherationalityassumptionofneoclassicism,butrelaxedtheassumptionofzerotransactioncostsandperfectinformation.However,whentherearepositivetransactioncostsandimperfectinformation,mutualtrustisdifficultanddistrustmustbeovercomethroughinstitutionalmeans.63SeeGEORGEA.AKERLOF&ROBERTJ.SHILLER,ANIMALSPIRITS:HOWHUMANPSYCHOLOGYDRIVESTHEECONOMY,ANDWHYITMATTERSFORGLOBALCAPITALISM25(2009)(“Wehaveshownthatagreatdealofwhatmakespeoplehappyislivinguptowhattheythinktheyshouldbedoing.Inthissensemostofthetimepeoplewanttobefair[andtheygetupsetwhentheythinkothersarenotbeingfair.]Fairnesstheninvolvesbringingintoeconomicstheseconceptsofhowpeoplethinktheyandothersshouldorshouldnotbehave.”).64FUKUYAMA,supranote6at13.65HOSKING,supranote2at34describesthe“encapsulatedinterest”viewoftrustasanexampleofrationalchoicetheorybasedoncalculatedself-interest.Hesaysthat
28
Forthefieldsofantitrustandeconomicregulation,thedefectionfromthe
modelofrationaleconomicmanisimportantbecauseitundercutstheChicago
School’s66fundamentalfootingthatwasestablishedinantitrustpolicyduringthe
ReaganRevolutionintheearly1980’s,andintheso-calledWashingtonConsensus67
anditsprojectionofuniversalisticrulesfornationaleconomicdevelopment.Amore
culturallyattentivelearningopensthewayforalternativemodelsthatlegitimize
deviationsbasedinculturalheritage,includingethicalaspectsofsocialcapital.68For
example,Section5oftheFederalTradeCommissionAct69prohibits“unfairmethods
ofcompetition”buttheneoclassicalworldhasessentiallypressedthedeletebutton
thiscanonlybeapart,notthewhole,ofanysatisfactorytheoryoftrust,because“Withoutpositingthathumanbeingsseektrustinginteractionsoutofmoralconsiderations,wewillnotunderstandthefullpotentialityoftrust.”Id.at37.Inexplainingtheneo-classicviewofpricetheory,astandardtextputsforththattheassumptionthatmanisgreedy“meanssolelythathewantscommandovermoreratherthanlessgoods…Itisnotassumedthatheisoblivioustootherpeopleornotsolicitousofotherpeople’swelfare…Whatismeantby‘selfish’manisthathewantstherighttochooseamongoptionsthatwillaffecthisensuingaffairs.”ARMENA.ALCHIAN&WILLIAMR.ALLEN,EXCHANGEANDPRODUCTION:THEORYINUSE26(1964,1969ed.)66TheChicagoSchoolfocusedonachievingeconomicefficiencyasthehighestvalue,tobeobtainedthroughminimalgovernmentalinterventioninfreelyoperatingmarkets.OnthehistoryoftheChicagoSchool,includingitsearlierpre-Friedmanversions,seeJOHANVANOVERTVELDT,THECHICAGOSCHOOL,especially287etseq.(2007);KENNETHM.DAVIDSON,REALITYIGNORED,HOWMILTONFRIEDMANANDCHICAGOECONOMICSUNDERMINEDAMERICANINSTITUTIONSANDENDANGEREDTHEGLOBALECONOMY(2011);andRobertPitofsky(ed.),HOWTHECHICAGOSCHOOLOVERSHOTTHEMARK,THEEFFECTOFCONSERVATIVEECONOMICANALYSISONU.S.ANTITRUST(2008).Althoughsomehavearguedthattrustisarationalactivity,itisalsotiedintoemotional,non-rationalaspectsofhumanbehavior.SeeAKERLOFANDROBERTJ.SHILLER,supranote63.67SeeJOSEPHE.STIGLITZ,GLOBALIZATIONANDITSDISCONTENTS(2002).68AsRoscoePoundwrote,”Ingenerallawcannotdepartfarfromethicalcustomnorlagfarbehindit.”ROSCOEPOUND,LAWANDMORALS122(1924).6915U.S.C.sec.45.
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on“unfair,”ineffectsubstitutingtheideathatefficiency-producingmethodsof
competitionare—oratleastshouldbe--legal.Butfairnessisameaningfulconcept,
albeitdifficulttoquantifywithprecision,whichgrowsoutofasociety’scultural
values.Arguably,itdeservesanexplicitplaceinthedeterminationofwhattypesof
competitionorcooperationaretobebolsteredorprohibitedbygovernment
interventioninthemarket.
Inthenextsection,tofurtherillustratetherelationshipbetweencultureand
economics,Iwilldescribeseveralcurrentindustrialorganizationissuesthatwillbe
particularlyinfluencedbytheroleofaparticularculturalvalue,trust.
VI. THEINTERNETANDTRUST:THREEEXAMPLES
Changesintechnologyinteractwithculture,economics,andregulatory
policies.Trustwilllikelyplayacentralroleaswedevelopantitrustandregulatory
policiestowardtheInternetgenerally.Herearethreeillustrations(B2Cretailing
systems,theemerging“sharingeconomy”andblockchaintechnology)—ofwaysin
whichtrustaffectseconomicpoliciestowardtheInternet.
TheInternethaschangedsomuchofmodernsocialandeconomiclifethatit
isdifficulttooverestimateourdependenceonit.70Business-to-Consumer(“B2C”)
commercialinteractionsontheInternetdependontheconsumer’strustthatgoods
andservicespromisedwillbedeliveredinaccordancewiththeagreementandthat
thepaymentsystemwillfunctioncorrectly.Asaretailjewelerintheearly1990’s,I
couldn’timaginethatpeoplewouldactuallybuyontheInternetsomethingassmall,
70FERGUSON,supranote8at28-31(Westilltrustinpapermoneyandcoinsasancientsymbolicstoresofvalue.What’snew?“Evenmoreamazingly,wearehappywithmoneywecannotevensee.Today’selectronicmoneycanbemovedfromouremployer,toourbankaccount,toourfavouriteretailoutletswithouteverphysicallymaterializing.Itisthis‘virtual’moneythatnowdominateswhateconomistscallthemoneysupply…[Whatmustbeunderstood]isthatmoneyisamatterofbelief,evenfaith…Itistrustinscribed.”)
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expensive,orsubjecttofraudasdiamonds;today,however,theydo(instillmodest
numbers)andapparentlydoitwithahighdegreeoftrustbasedonafamiliarity
withtheInternetandavarietyofinstitutionalinventionsoradaptationsofbrick-
and-mortarpromises,suchasinsuredandfreesecureshipping,discreetpackaging,
freereturns,competitivepriceguarantees,professionalappraisals,lifetime
warranties,etc.Diamondmerchantsaswellastheircustomersneedtohavetrustin
theabsenceofface-to-facedealings.Howcantheymaketheircustomersfeel
comfortablethattheyaremakingtherightpurchase?Howcantheyminimizerip-
offs?Insuranceisalargepartoftheanswer,butthatmerelypushestrustquestions
backontotheinsurers.Howsecureisallthistrusttoattack?
Inallon-linetransactionstrustisincreasinglyvulnerable.TheInternetis
highlydependentonanetworkofusersandoperators,anyoneofwhomcan
potentiallycreatescams,viruses,privacybreachesandpaymentabusesthat
challengethetrustworthinessoftheentiresystem.Whethersecurityandprivacy
canbeprotectedandfrauddeterredwillaffectpeoples’willingnesstoutilizethe
webforcommercialtransactions,andthushavealargeimpactontheInternet’s
abilitytocontinuetoreshapeoureconomy.
Withtheseconcerns,companiesarehardatworktryingtobuildand
establishtrustforInternet-basedcommercialactivitiesthatcreatenewefficiencies
andthreatenthestatusquo.Antitrustissuescouldpotentiallyarisedependingon
howInternetServiceOrganizations(ISO’s)andothersintheindustryattemptto
worktogether—throughstandard-setting,jointventures,orotheralliances--to
fashioneffectivecybersecuritystandardsorpracticestobuildorpreservethe
public’strustinthesystem.
ManyoftheInternet’spotentialefficienciescanbefoundinwhatiscalledthe
sharingeconomy.ConsidertheroleoftrustindeterminingUber’sfutureby
comparingwithtaxiservicethecustomer’schoicebetweenhailinganUber—thatis,
aprivatelyownedcaroperatedpart-timeforafeebyitsowner,whoisgenerating
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incomebysharingwhatwouldotherwisebeanunderutilizedasset(bothtimeand
car).(Keepinmindthatinformertimesthetaxidriverhadanadvantageoverother
cardriversbecauseofsuperiorknowledgeoftheurbanmap.Thisadvantage
disappearedwiththeadventofGPSandInternettrafficandnavigationapplications
suchasWaze.)Trustplaysaroleonboththedemandandsupplysides.Fromthe
passenger’sperspective,trustisgainedinthestandardtaxibecausethetaxi
companyisheavilyregulated,resultinginwhatisprobablyperceived,rightlyor
wrongly,ascarefullyscreened,experiencedprofessionaldriverswhoaretypically
employedbycompaniesthatmustprovideinsuranceandhaveanobvious
investmentinreputationtoprotect.Onthesupplyside,thetaxidrivermusttrusta
strangerpickeduponthestreettopay,addatip,andnotcommitacrimeagainst
thedriverorharmthecar.
TheUbercompany,ontheotherhand,hasabusinessmodelthatassumes
minimal,ifany,governmentregulation.Itsdriversmayormaynotbelessexpert
thanstandardtaxidrivers.Theircarsareprivatelyownedandmaintained.The
putativepassengercontemplatingsteppingintoastranger’scarmayworryabouta
fraudulentchargeoranunsafe,perhapscriminallydangerousdriver.Thedriver
mayworryaboutpassengerswhoareunknownandpossiblycriminals,whethera
passengermightdamagethecar,whetherthetripwillbepaidforandwhether
therewillbeatip.Thebusinessmodelthusfarcouldinvolvealargetrustdeficiton
bothsidesofthetransaction.
Uber’strust-buildingstrategyonthesupplysideis(1)tousepre-committed
paymentviatheInternettoassurethedriverofpayment71withoutrisktoeither
partyofmoneyphysicallychanginghandsinthecar;and(2)toassurethatthe
passengerwillberatedbythedriver,providingthepassengerwithanincentiveto
behave,attheriskofnotbeingpickedupbyUberdriversinthefuture.Todevelop
71WhetherUberdriversreceive(orareallowedtoreceive)tips,iscontroversial.StephanieRosenbloom,ToTiporNottoTipYourUberDriver,N.Y.TIMEShttps://www.nytimes.com/2016/05/22/travel/uber-taxi-tipping.html?_r=0
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thepassenger’strust,Uber(1)notifiesthecustomerofthepriceinadvance;(2)
providesthedescriptionofthecaranditslicensenumbertorelieveanxietyabout
whothedrivermaybe;(3)specifiesalmosttotheminutewhenthecarwillarrive,
withthedriver’sprogresstothepickuppointtrackedonacellphoneapplication;
and(4)requeststhepassengertoratethedriver,givingthepassengersome
additionalleverageovertheservice.ThemodelrestsontheInternetinmany
respects.Theentiresystemisdesignedtoestablishmutualtrustofdriverand
passengerinwaysthatUberhopeswillprovesufficientlytrustworthythat
passengerswillreturnand,perhapsmoreimmediatelyimportanttoUber’sbusiness
model,localtaxicabregulationwillbeavoidedorminimized.(Theminimal
regulationmodelprovidesapriceadvantageoverstandardtaxis,buttaxicompanies
canreplicatetheconvenienceadvantagesoftheInternet.)
CentraltoUber’sstrategyisthemutualcreationofreputationsthroughthe
feedbackmechanism,whichisusedsimilarlybyAirbnb,inabusinesswheremutual
mistrustmaypreventpeoplewhohaveexcessresidentialspacetorentfromsharing
theirspacewithpotentialrenters.Saystheowner:“Hereisaphotoofmyavailable
spacethatyoucanviewontheWebandyoucanseehowothervisitorshaverated
myoffering.”Repliestherenter:“Youcanseehowotherhostshaveratedmeasa
guestandbecomfortablethatIamnotahome-wrecker.”Noneofthisisfoolproof,of
course,butitislikelythatmutualratingsystemswillonlyimprovewithexperience.
WelcometotheemergentworldofInternet-basedtrustbuilding.72
72Thereisnothingnewaboutbusinessesinventingwaystopromotethepublic’strust.WhenIwasaretailjeweler,weofferedextensivewarrantiesasawayofguaranteeingthatourwatchesandgemswerewhatwepurportedthemtobe.Forwatches,wepromisedfreelifetimereplacementofbatteries—apotentiallyvaluableadditionthatreducedtheneedfordiscountingwatchprices.Thesetypesoftrust-buildersareespeciallyimportantwherethereisaninformationalasymmetrybetweenbuyerandseller.Additionally,theymayoffercompetitivealternativestoasingularstrategicfocusonprice.
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Itcomesasnosurprisethattheestablishedtaxiandhotelindustriessee
thesesharingeconomyentrantsascompetitorswhooughttoberegulatedtothe
samedegreethattheincumbentsareregulated.Inthisregard,Section1ofthe
ShermanActcouldpossiblybeinvokedinatleasttwodifferentways.Uber’ssystem
mightbeconsideredaformofpricefixingiftheirdrivers(Uberarguestheyare
independentcontractorsratherthanemployees)aredisabledbythebusinessmodel
tocompetewitheachotheronprice.Additionally,iftaxicompaniesorhotelgroups
weretocreatesometypeofboycottaimedatexcludingtheiremergingon-line
rivals,thiscouldbeanunreasonablerestraintoftradeunderSection1.
Notethatantitrustauthoritiesfunctionascompetitionadvocatesaswellas
lawenforcersandtherebybecomeinvolvedinwaysotherthanlitigation.For
example,althoughthemembersofanindustryhavetheFirstAmendmentrightto
workjointlytolobbyregulatorsforregulatorydecisionsthatareanticompetitive,
theFTCortheDOJaswellasstateantitrustofficialsmaytrytoinfluencethe
competitionpoliciesofstateregulators.Generally,thefederalauthoritieshave
advocatedthattaxiregulatorsandhotelregulatorsshouldnotsidewithincumbents
againstinnovations,providedthepublicsafetycanbeadequatelyprotected.Inthe
competitionpolicyprocessofbalancingbetweenthevalueofcompetitionandthe
valueofcooperation,theeffectivenessoftheprivatetrust-inducingmechanisms
maybeadeterminingfactoronhowmuchregulationisrequired.
Nextconsideracutting-edgecomputersoftwareadvancementthatcan
transformmanypartsoftheeconomy,startingwiththefinancialsector.
BlockchaintechnologyunderliestheBitcoinphenomenon.Blockchainisa
distributedledger,anonlinerecordoftransactionsthatissharedandauthenticated
throughaseriesofcryptographicsteps.TheEconomistcallsblockchain“thetrust
machine”73becauseofitspotentialforfixingsomeeconomicinefficienciesthat
73TheTechnologyBehindBitcoinCouldTransformHowtheEconomyWorks,THEECONOMIST,Dec.3,2015,availableathttp://www.economist.com/news/leaders/21677198-technology-behind-bitcoin-
34
respondtotheabsenceoftrust.Atrustedregisterhasthepotentialtocutfraudby
verifyingwhoactuallyownsanasset,whetheritbea“wodge”ofdigitalcurrency(as
inBitcoin)oraplotoflandorluxurygoodsorworksofart.TheEconomistreports
that80%ofbankswillhavestartedworkonblockchain-relatedprojectsin2017.74
Blockchainhasthepotentialofrevolutionizingindustriesthatcreated
institutionsforthepurposeofestablishingmutuallevelsoftrust(e.g.banks,
clearinghouses,governmentalunits).Thecreationofblockchainswithinindustries
willlikelyrequirecoalitionswithinanindustryorindustry-widestandard-settingto
agreeuponthenecessaryrulesforcooperation,raisingantitrustquestionsabout
theextenttowhichthereshouldbelimitsonsuchcooperation.75
Inaglobalizedworld,somecountrieswilladoptsharingeconomiesand
blockchaintechnologymoreorlessquicklyandextensivelythanothers,asaresult
could-transform-how-ecconomy-works-trust-machine(“Theblockchainletspeoplewhohavenoparticularconfidenceineachothercollaboratewithouthavingtogothroughaneutralcentralauthority.Simplyput,itisamachineforcreatingtrust.”)74THEECONOMIST,THEWORLDIN2017126(2017).75ForewordbyVitalikButerin,inWILLIAMMOUGAYAR,THEBUSINESSBLOCKCHAIN:PROMISE,PRACTICE,ANDAPPLICATIONSOFTHENEXTINTERNETTECHNOLOGY(“M]anyindustries…aredecentralizedinaninefficientway—awaythatrequireseachcompanytomaintainitsowninfrastructurearoundmanagingusers,transactions,anddata,andtoreconcilewiththesystemsofothercompanieseverytimeitneedstointeract.Consolidationaroundasinglemarketleaderwould,infact,maketheseindustriesmoreefficient.Butneitherthecompetitorsofthelikelyleadernorantitrustregulatorsarewillingtoacceptthatoutcome,leadingtoastalemate.Untilnow.Withtheadventofdecentralizeddatabasesthatcantechnologicallyreplicatethenetworkeffectgainsofasinglemonopoly,everyonecanjoinandalignfortheirbenefit,withoutactuallycreatingamonopolywithallthenegativeconsequencesthatitbrings.”)https://books.google.com/books?hl=en&lr=&id=X8oXDAAAQBAJ&oi=fnd&pg=PR9&dq=blockchain+and+antitrust&ots=jd-_w-0P2D&sig=slFc31xsLqnAmKalvrrRj-PT06U#v=onepage&q=blockchain%20and%20antitrust&f=false.
35
ofculturalvariationsreflectedinattitudestowardcooperationandcompetition.The
nextsectionexploreswhatweknowaboutsuchvariations.
VII. CROSS-CULTURALDATA,TRUST,ANDCOMPETITIONPOLICIES
Whenitcomestohowanationdecidestostriketheappropriatebalance
betweencompetitionandcooperation,cross-culturalsurveysrevealtherangeof
attitudesonvariousfactorsthatmayenterthatcalculus.Unlikesomeofthesurveys
abouttrustthatdirectlyquestionedhowmuchpeopletrustedthegovernmentor
eachother,76thistypeofcross-nationalreportingisindirect.Itwouldbeinteresting
tohavecross-nationalsurveysthataskdirectquestionssuchas,“Onascaleofone
toten,ratehowfavorablydisposedareyouto
monopoly/oligopoly/cartels/mergers,etc.”Ihaven’tcomeacrosssuchasurveyand
wouldhardlyknowhowtoevaluatetheresponsesiftheycamefromnon-experts.
Rather,availablematerialstendtoseekoutattitudestowardcertainculturalvalue
dimensionsthatmay,invaryingways,relatetothecompetition/cooperationscale.
Onepossiblesourceistheadvicethatinternationalbusinessesaregivenon
howtonegotiateinvariousculturalcontexts.Forinstance,hereareinternational
businessconsultantDavidLivermore’ssevenculturaldimensionscalesforclusters
ofstatesdemonstratingsimilarprofiles:77
*Individualism/Collectivism:Individualism(“Individualgoalsandrightsaremoreimportantthanpersonalrelationship”);Collectivism(“Personal
76FUKUYAMA,supra,notes53,54andaccompanyingtext.77DAVIDLIVERMORE,EXPANDYOURBORDERS(2013)(describingtendifferentculturalclusters,e.g.,NordicEurope,Anglo,LatinEurope,etc.forbusinessexecutivesencounteringinternationalmarkets);RICHARDD.LEWIS,WHENCULTURESCOLLIDE,LEADINGACROSSCULTURES(3rded.2006).SeealsoGERTHOFSTEDE,CULTURE’SCONSEQUENCES(1980)(AnthropologistGertHofstede’sinitialinfluentialcontributiontotheculturedimensionsmodel).
36
relationshipsandbenefitingthegrouparemoreimportantthanindividualgoals”).*LowPowerDistance/HighPowerDistance:LowPowerDistance(“Statusdifferencesareoflittleimportance;empowereddecision-makingisexpectedacrossalllevels”);HighPowerDistance(“Statusdifferencesshouldshapesocialinteractions;thosewithauthorityshouldmakedecisions”).*LowUncertaintyAvoidance/HighUncertaintyAvoidance:LowUncertaintyAvoidance(“Focusonflexibilityandadaptability;tolerantofunstructuredandunpredictablesituations”);HighUncertaintyAvoidance(“Focusonplanningandreliability;uncomfortablewithunstructuredorunpredictablesituations”).*Cooperative/Competitive:Cooperative(“Emphasisuponcooperationandnurturingbehavior;highvalueplaceduponrelationshipsandfamily”);Competitive(“Emphasisuponassertivebehaviorandcompetition;highvalueplaceduponwork,taskaccomplishment,andachievement).*ShortTermTimeOrientation/LongTermTimeOrientation:ShortTerm(“Valuesimmediateoutcomesmorethanlong-termbenefits(successnow)”);LongTerm(“Valueslongtermplanning;willingtosacrificeshorttermoutcomesforlong-termbenefits(successlater)”).*LowContext/HighContext:LowContext(“Valuesdirectcommunication.Emphasisonexplicitwords);HighContext(“Valuesindirectcommunication.Emphasisonimplicitunderstanding”).*Being/Doing:Being(“SocialCommitmentsandtaskcompletionareequallyimportant;diffuseboundariesbetweenpersonalandworkactivities”);Doing(“Taskcompletiontakesprecedenceoversocialcommitments;clearseparationofpersonalandworkactivities”).78
Althoughtheconceptoftrustisnotdirectlyaddressed,itseemspossibleto
extrapolateculturaldimensionsinwhichhighlevelsoftrustwouldbemorelikelyto
befound.Forinstance,inculturescharacterizedbyCollectivism,trustinthegroup
wouldprobablybehigh.InculturescharacterizedbyCooperation,therewouldbe
highlevelsoftrustwithinthein-group.WherethereisLowUncertaintyAvoidance,
risk-takingwouldberelativelylow,becausechoosingrisktendstorequiretrust.78LIVERMORE,supranote77at101.Anationmaybecharacterizedbymultipleculturaldimensions.
37
WhereHighPowerDistancecharacterizesaculture,ahighleveloftrustinthose
withauthoritywouldbeexpected.IftheculturewerecharacterizedbyLongTerm
Orientation,itwouldmanifesttrustinthefuture.
Towhatextentcanwegeneralizefromtrusttoculturaleffectson
competitionandcooperation?Itcanbearguedthatmarketswilllikelybemore
popularinculturesassociatedwithIndividualisminthatindividualismsuggeststhat
individualcompetitiveadvantagemustbesought.Competitiveculturesareby
definitionmorecompetitive.CulturescharacterizedbyLongTermTimeOrientation
wouldprobablybemorefavorablydisposedtopatientinvestmentandtomore
speculativepredictionsofcompetitiveeffectsinantitrustcases,bothofwhich
requirestrustintheabilitytoforecastthefuture.Aggressivegovernmental
interventioninmarketsmayreflectHighPowerDistance,whichimpliestrustin
governmentalauthority.HighUncertaintyAvoidancewouldindicateacompetition
policythatispredictable,withrulesonecouldtrust.
Asenticingasthesespeculationsmaybe,theyleavetoomanyquestions
unanswered.First,ofcourse,therearequestionsaboutthevalidityofnational
stereotypes.Whilestereotypesusuallycontainatleastsometruth,thetypesof
generalizationsdiscussedabovetendtobemoresubjectivethanobjective.
Moreover,theyassumethatnationshaveoneculture,whereasmostnationsare
composedofdiversepopulationswithamixtureofculturalbackgrounds.
AreallAmericansequallycompetitive?Wouldtheyallwantthesamedegreeof
competitiontoapplyineducationandrecreationaswellasincommercialmarkets?
Wouldtheyallhavesimilaropinionsaboutregulatorypoliciesaimedatmonopolies
andresearchjointventures?No.Andgiventheprevalenceofsubgroupswith
varyinginterestswithinanation,whichsubgroups’opinionswouldweconsider
mostrelevantincharacterizinganationalculture?
Second,theseareonlygeneralizations,polarscales,whereasinthereal
worldcultureswillnormallybesomewherebetweenthepoles,not“either/or”.
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Theremaybeinconsistenciesinhownationalculturesareplacedwithinthevarious
scales.We’vealreadyseen,forinstance,thatcompetitionandcooperationco-exist
withinthefirmandwithinmarkets,makingitdifficulttostereotypeevenahighly
capitalisticeconomy.Americansareremarkablejoinerswhoarecharacterizedby
theireagernesstoparticipateincommunityendeavors,buttheyalsobelievethat
businessesshouldcompeteaggressively--thatMacyshouldn’ttalktoGimbels(at
leastpriorto1987whenGimbelspassedaway).DoesthismakeAmericansmore
competitiveormorecooperative?(DoesBenFranklin,theiconicentrepreneurand
creatorofprojectstobenefitthecommons,standforcompetitionorfor
cooperation?)Weneedtothinkofcompetitionandcooperationlessasoppositesand
moreassimultaneouslypresentbutinvaryingproportions.
Inthisregard,notethatindividualismmaybetypicalofmarket-driven
economies,butindividualismcanalsocharacterizeahighlycooperativeculture.For
example,LivermoreplacestheNordicclusterofnationswithintheextreme
IndividualismendoftheIndividualism/CollectivismscalealongsidetheAngloand
Germaniccultures,buthealsoplacestheNordicclusterwithintheextreme
CooperativedimensionandtheextremeBeingOrientationdimension,whereasthe
AngloandGermanicclustersarenotonlylocatedwithintheextremeCompetitive
endoftheCooperative/Competitionscale,butalsointheDoingextremeofthe
BeingOrientation/DoingOrientationscale.Theinterplayofvaluedimensionsis
complex,atbest.
Third,whileculturalvaluesaregenerallyslowtochange,theydochangeand
notallvalueschangeatthesamepace.Generationsmaygrowupwantingto
purchaseacar“thatisnotyourfather’sOldsmobile.”Changeinoneareamayimpact
onotherareas.LawrenceRosenarguesthatlawisaculturaldomain.79Lawis
79LAWRENCEROSEN,LAWASCULTURE,4-5(2006).SeeCOLINWOODARD,AMERICANCHARACTER,AHISTORYOFTHEEPICSTRUGGLEBETWEENINDIVIDUALLIBERTYANDTHECOMMONGOOD(2016)foratreatmentoftheriseandfallofdominantculturalvaluesthroughAmericanhistory.SAPOLSKY,supranote13,at266-77,providesauseful
39
enactedthroughpoliticsandpoliticalpowercanshiftratherswiftly,through
election,coup,orconquest.Lawalsoaffectsotherculturalvalues.Placingnationson
cross-culturalscalesmustkeeppacewithchangingvaluesandtheirchanging
interactions.
Wheredoesthistakeus?First,whennationsaregroupedintocultural
clusters(e.g.,Germanic),thecross-culturalmethodologyispremisedontheidea
thatculturaldimensions(e.g.,individualism)varyfromoneculturalclusterto
another.Second,placingagivencountry(or,evenworse,itsculturalcluster)ona
givenculturaldimensionscaleishighlysubjective.Third,whenappliedtoa
particularcountry,differentculturaldimensionsmaypointincontrarydirections,
makingitdifficulttoascertainwhichdimensionprevailsinthebattleofmultiple
aspectsofculturetoinfluenceanation’sinstitutions.Fourth,becausetrustisnot
brokenoutasaculturaldimensionintheLivermoreapproach,itsroleinanyofhis
sevendimensionscanonlybespeculated.Fifth,itwouldappearthattrustcanbean
aspectofeachofthesevencategories,andthusnoteasilyassignableasacauseof
anyparticularpoliciestowardcompetitionorcooperation,muchlesstoward
antitrustpolicy.Andfinally,itisnotclearthattheroleoftrustinagivensocietyis
thesamewhenonefocusesoneducation,recreationortheeconomy,sohowtrust
wouldberankedinacross-culturalcontextwillrequirespecificationofhowitis
beingdefinedandmeasured.Allinall,averytallorder.
Canwecomeclosertodescribingarelationshipbetweentrustandvarious
manifestationsofantitrustpolicy?
discussionofcross-nationaldataondifferencesbetweenindividualisticandcollectivistcultures.Heseesnothingresemblinggeneticdestinyhereandemphasizesthatcultureschangeovertime(e.g.,“Ingeneral,ittakesaboutagenerationforthedescendantsofEastAsianimmigrantstoAmerica[representingcollectivistcultures]tobeasindividualistasEuropeanAmericans.”277).
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VIII. TRUSTANDANTITRUST
Itisatruismthat“businessrelationshipsarebuiltonafoundationoftrust.”80
Marketexchangeistypicallyviewedasawidespreadformofvoluntarycooperation
amongmore-or-lessself-regardingindividualsthatprovidesmutualbenefits.
Marketexchangeisgovernedbyavarietyofinstitutionalformsintheworld,suchas
antitrustandsectoralregulationlaws,whichreflectpolitical,historicalandcultural
factors.Trustisonlyoneoftheculturalfactorstrackedbyculturalanthropologists
thatcontributetotheseinstitutionalforms,81butitneverthelessplaysarolein
competitionpolicy.Thefollowingdiscussionshighlighttrustwithinseveralareasof
competitionpolicy:verticalintegration,cartels,mergersandacquisitions,
dominanceandfirmsize,roleofthestateandthe“missingmiddle,”orientation
towardgrowth,andtrade.
A. VerticalIntegration
Let’sstartwiththequestionofwhetheraneconomicentityshould
manufactureaninputorpurchaseitinthemarket—the“makeorbuy”decisionthat
helpsdeterminethesizeandscopeofafirmandtherangeofindependentplayersin
themarket.LedbyNobel-winningeconomistsRonaldCoase82andOliver
80Leslie,supranote6at547.Leslierecognizesthattrust,thoughgenerallyseenasavirtue,canalsoserveevilends.“Theissue,then,iswhenshouldsocietyencouragetrustandwhenshoulditfosterdistrust.”Id.81Seegenerally,GEERTHOFSTEDE,GERTJANHOFSTEDE,&MICHAELMINKOV,CULTURESANDORGANIZATIONS:SOFTWAREOFTHEMIND:INTERCULTURALCOOPERATIONANDITSIMPORTANCEFORSURVIVAL(2010).82SeeCOASE,supranote61.
41
Williamson,83thestrictlymicro-economicanalysistendstoansweron“makeor
buy”questiononthebasisoftransactioncosts.84Theanalysisgoes:ifacommercial
entitycantrustthemarkettoprovidethedesiredinputreliablyatareasonable
price,withoutunduecostsofcontractnegotiation,monitoring,orenforcement,and
therisksofaunilateral“holdup”arenotaconcern,itwilllikelycontracttobuythe
inputinthemarketplace.85Ifthisleveloftrustinsuppliersisnotpresent(for
examplebecausethereisonlyonesupplierorasmallnumberofsupplierswhoare
perceivedtobecapableofcolluding),theentitymaychoosetomaketheproductin-
house,whereitcanreduceoreliminatethecostsandrisksoftransactions.Afirmis
composedofthosefunctionsthatanentityperformsbyitself.
Theunderlyingassumptioninthistheoryofthefirmisthatvertical
integrationoccurswhenthefirm’smanagementhasahigherleveloftrustinitsown
future,viamoreinternalcooperationandoverallefficiency,byimposingits
hierarchicalandcorporateculturalinfluencesonthosewhobecomepartofitsin-
group.Sincemostfunctionsassociatedwithafirm’sbusinesscanbepurchased
outsideorincorporatedinside,governmentregulationcantiltthebuy-or-make
decisionthroughitsimpactontransactioncosts.Totheextentgovernment83SeeWILLIAMSON,supranote62.84Transactioncostshavebeensummarizedas“searchandinformationcosts,bargaininganddecisioncosts,policingandenforcingcosts.”COASE,supranote61at6.85Onemightquestionwhetheritisaproperusageoftheword‘trust’tosaysomeonecan‘trustthemarket’.Ithinkonecantrustaninstitutioninthesamesensethatonecantrustthesuntoriseintheeast.Itisamatterofconfidenceinapredictionofhowaperson,agroup,anorganization,aninstitution—willbehaveundercertaincircumstances.Inthecaseof“themarket,”wearereallytalkingaboutconfidenceinhowanumberofindividualpersonswhomwemaybutmorelikelydonotknowpersonallywillactinagivensituation.Abusiness,however,mayhavesubstantialexperiencewithhowthemostrelevantothers,suchasalimitedgroupofsuppliers,tendtoactinsimilarcircumstances.Itroutinelymakesdecisionsbasedonwhethersomeone,somegroup,orsomeinstitutionisworthyoftrust.Trustofindividualsand/orinstitutionsmaybefullyrationalorbebasedonconsiderationsthatincludevaluesandemotions.
42
increasestransactioncosts,itprobablycontributestothesizeoffirmsandthe
reductionofthenumberofindependentfirmswithinaproductmarket.
AnadditionallightisthrownonverticalintegrationbythelateRobertL.
Steiner,whopersuasivelyarguedthattheout-groupsupplierandthefirmtowhich
itwantstosellin-putsarenotonlycooperatorswithinthesupplychain,buttheyare
also“verticalcompetitors”whoarecompetingfortheshareofprofitthatcanbe
derivedfromtheultimateconsumertowhomthefirmsjointlyexpecttoselltheir
product.86Ihaveneverunderstoodwhythiswell-documentedinsighthasreceived
solittlerecognitionintheU.S.antitrustworld.Byshowingthatcompetitioncan
occurinaverticalaswellashorizontalplane,itraisestherelevanceofvertical
transactionstoahigherlevelthantheChicagoSchoolparadigmhaspermitted.87
IhadanillustrativeexperiencewhenIwasCEOofachainofretailjewelry
stores.Wetypicallyhiredanoutsidecompanytosupplyspecial“re-mounting”
eventswithinourstores.Are-mounteventisintendedtobeatrust-buildingtactic.
Thespecialtycompanywouldprovideastockofblankringsanddiamondsthatcan
beselectedtofitintotheblankorupgradeanoldringprovidedbythecustomer.
Manycustomersareafraidthatiftheirdiamondleavestheirsight,thejewelerwill
substitutealowerqualitygem—ornon-gem.Beingabletowatchthere-mount
86SeeGregoryT.Gundlach&AlbertA.Foer,CombiningHorizontalandVerticalAnalysisinAntitrust:TheAmericanAntitrustInstitute’sRoundtableontheImplicationsoftheWorkofRobertL.Steiner,49THEANTITRUSTBULL.821(winter2004).87Apparently,EastAsiansprocessinformationdifferentlyfromWesterners.Theformerhaveamoreholisticasopposedtofocusedmanner.E.g,typicallyWesterners’eyesfirstlookatapicture’scenter,whileEastAsiansscantheoverallscene.SAPOLSKY,supranote13,at276(Sapolskyinvitesustoconsideramonkey,abear,andabanana.Whichtwogotogether?“Westernersthinkcategoricallyandchoosethemonkeyandbear—they’rebothanimals.EastAsiansthinkrelationallyandlinkthemonkeyandbanana—ifyou’rethinkingofamonkey,alsothinkoffooditwillneed.”)Thisdistinctionmaybeusefulinourdiscussionofdifferentwaysantirustenforcersviewverticalrelations.AspecificexamplewillbeexploredinmydiscussionofAbuseofSuperiorBargainingPower,infratextatnote123.
43
specialistandtheringatthesametimeisdesignedtoeliminatethismistrustand
therebytoencouragecustomerstoupgradethatwhichtheyalreadyown.
Thecontractingre-mountcompanyalsoprovidedanexperiencedre-mount
jeweler,appropriateequipment,securetransportationforthejewelerand
equipment,andinsurancefortheevent.Weworkedthenumbersanddetermined
wecouldmoreprofitablyrunourownre-mountingeventsin-house.Couldwego
intocompetitionwithoursupplierthroughverticalintegrationofthere-mount
function?
Itallsoundedgood.Aftersubstantialplanning,wesearchedforand
employedare-mountspecialist,purchasedanunmarkedvantrucktotravelfrom
oursecurecentralofficetothestores,plusstock,equipment,andinsurance.We
advertisedscheduledproprietaryre-mountingeventsinourstores.Atfirstthiswas
asuccessstory,butproblemssoonemerged.Thein-houseexpertwehiredturned
outtohaveadifficultpersonalitythatclashedwithotheremployeeswhoreported
shecouldn’tbefullytrustedinherinteractionswithourcustomers.Shecouldn’tbe
replacedwhenshewassick.Securityprovedmuchmoredifficultthanwehad
anticipated.Werealizedthatatourscalewedidnothavetheback-upresourcesto
keepavailableareplacementre-mountjewelerwhenproblemsarose.The
incrementalprofitswerelessthananticipatedandnotworththeextraaggravation
wewereexperiencing.Afterayearwedecidedtogiveuponverticallyintegrating
andreturnedtocontractingre-mountingeventswithanoutsidespecialistcompany.
Thetrustfactorparticularlymanifesteditselfinthelargerscaleoftheoutside
company,whichallowedittoexecuteitscommitmentsreliablyandtoreplace
expertre-mounterswhenevernecessaryandonshortnotice.Inthisvertical
competitionbetweenretailerandre-mountsupplier,thesupplierwassomewhat
chastenedbyourtemporaryrevolt,butnonethelessvictorious.88
88Retailersoftencompeteagainsttheirsuppliersbyusingtheirownproprietarybrandsforinsightintothecostsoftheirsuppliersandasalevertohelpkeepsupplypricesascompetitiveaspossible.
44
Whenantitrustpolicymakersconsiderverticalrelationships,itisassumed
thattherelationshipbetweenbuyerandsupplierisinfactprimarilyvoluntaryand
cooperativeanddoesnotforecloseasubstantialamountofcommercebyprecluding
adownstreambuyerordealerfromdealingintheproductsofarivaltothesupplier
imposingtherestraint.Byignoringthecompetitivestrugglebetweenlevelsinthe
supplychain,U.S.antitrustenforcerscanbeviewedasoverly-trustingofthe
cooperativemotivationsandbehaviorofbuyerandsupplier.InalatersectionIwill
focusonproblemsthatariseintheabsenceofanantitrustdoctrinefordealingwith,
“abuseofsuperiorbargainingpower”.89
B. Cartels
Anobviousissueoftrustarisesinthenatureandoperationofcartels,which
maybeformedbyexplicitcollusionortacitcollusion.90Acartelcanbeviewedasa
limitedformofhorizontalintegrationinwhichindependentcompetitorsagreewith
eachothertofixprice,allocateoutput,orotherwisemoveimportantelementsof
tradefromthecompetitionzoneintothecooperationzone,forthepurposeof
maximizingthejointprofitsofitsmembers.91Todaymostoftheworld’smarket-
basednationstakeitforgrantedthatcartelbehaviorisundesirableforthesociety,
butonestudentofcartelhistoryremindsus,
89Seetextatnote123infra.90Explicitcollusionis“anagreementamongcompetitorsthatreliesoninterfirmcommunicationand/ortransferstosuppressrivalry.”ROBERTC.MARSHALL&LESLIEM.MARX,THEECONOMICSOFCOLLUSION,CARTELSANDBIDDINGRINGS,ix(2012).Nofansofcollusion,theeconomistauthorsneverthelessrhapsodize,“Thesuccessfulsuppressionofcompetitionisathingofeconomicbeauty.”Id.91JOHNM.CONNOR,GLOBALPRICEFIXING,21(2ded.,2007).
45
InthefiftyyearsbeforeWorldWarII,theworldbackedawayfromtheideathateconomiccompetitionnecessarilypromotedthecommongood.Theretreat,althoughgradualatfirst,becameheadlongwiththeoutbreakofWorldWarIin1914.Amongthechiefmanifestationsofthistrendwastheexpansionofcartels,whichplayedanever-growingroleindomesticandinternationaltradeandby1939hadbecomeamajorfactorintheworldeconomy.92
Duringthisperiod,WyattWellspointsout,“Someobserversevensawinternational
cartelsasthebasisforanewworldorder,offeringaninstitutionalframeworkfor
cooperationthatby-passedgovernments…”93Putanotherway,atvarioustimesand
invariousplaces,theproblemhasnotbeenperceivedbymanyasoneoftoolittle
competition,butratheroftoomuch“cutthroatcompetition”whosepropermedicine
wasprescribedtobemorecooperationamongrivals.Indeed,untiltheeraafter
WorldWarII,cartelswereprobablythedefaultmechanismincapitalistcountries
otherthantheU.S.,andeventheoutlierU.S.succumbedtothecooperationsolution
duringthefirstNewDeal.94
92WYATTWELLS,ANTITRUSTANDTHEFORMATIONOFTHEPOSTWARWORLD,4(2002).SeealsoConnor,supranote90at46-51(providinginformationontheearlyhistoryofcartels,goingbackto17thcenturyHolland.)”Before1914,effectiveinternationalcartelsexistedinthesteelrail(forrailways),explosive,andsyntheticalkaliindustries,amongothersectors.”Wells,supraat5.Betweentheworldwars,theLeagueofNationsendorsedcartelsand“governmentsaroundtheworldactuallyorganizedsomeinternationalcartelsthemselves,mostnotablyforsugar,rubber,andwheat.”Id.at10-11.93WELLS,id.at10.94ELLISHAWLEY,THENEWDEALANDTHEPROBLEMOFMONOPOLY(1966);RUDOLPHJ.R.PERITZ,COMPETITIONPOLICYINAMERICA,115-144(1996);ALANBRINKLEY,THEENDOFREFORM,31-47(1996).Section1oftheNationalIndustrialRecoveryActof1933includedthislanguage:“ItisherebydeclaredtobethepolicyofCongresstoremoveobstructionstothefreeflowofinterstateandforeigncommercewhichtendtodiminishtheamountthereof;andtoprovideforthegeneralwelfarebypromotingtheorganizationofindustryforthepurposeofcooperativeactionamongtradegroups…”
46
Cooperationisthesinequanonforcartelsuccessbecauseeachmemberhas
toovercomeanincentivetocheatonthecartelbysellingbelowthefixedpriceor
producingmorethanitsallottedshare,inordertogainadvantageoveritsnon-
defectingrivals.95Thecartelthereforetriestoerectdeterrencestrategiesfor
detectingandpunishingitsowncheaters.96Thegovernment,understandingthe
dynamicsthatcanleadtocheating,triestounderminethetrustofthecooperating
communitybypromotingtheprocessofwhistleblowing.ThroughitsCorporate
LeniencyPolicy,theDepartmentofJusticesince1993hasofferedfullamnestyon
finesforcompaniesthatarethefirsttoalerttheagencyaboutacartel.97Thishighly
successfulpolicyhasbeenrevisedfromtimetotimeandisnowpopularin
enforcementregimesaroundtheworld,butitalwaysreliesonaPrisoner’sDilemma
dynamicofintentionallygeneratingdistrustwithinthetrustingcartelcommunityby
providingtheearliestconfessorsstrongincentivesto“turnstate’sevidence.”
Whileprice-fixing(“collusion”)isdeemedperseillegalintheU.S.,thereare
othertypesofhorizontal“collaboration”thatarepermittedandevenencouraged,
whetherbystatuteorpolicy.Theseareevaluatedunderamoredefendant-friendly
“ruleofreason”test.Forexample,becauseitissovaluableforadvancingnew
technologies,industry-widestandard-settingisencouragedbystatuteandlimited95Leslie,supranote6(describinghowtrustisbuiltupwithincartels).96Leslie,supranote6at622(“Althoughantitrustlawisnotgenerallythoughtofasamethodofsowingtheseedsofdistrust,itoftensucceedsbydoingjustthat.”)Lesliediscussesvarioustechniquesforcurtailingtrust-facilitatingdevices,aswellasleniencyprogramsinwhichtherewardsstructureofthegovernment’sprogramcreatesaracetoconfess.Id.at640.Thelatterhedescribesascreatingdistrustaboutconfessing.LeslierecommendedincreasinguseofwhathecalledTheDistrustModelthroughoutantitrust,especiallywithregardtotradeassociationsandjointventures.Today,thedistruststrategy,althoughstillnotoftenrecognizedassuch,hasgrowninimportance.97TheDOJprogrambeganin1978.Leniencyisconditionedonthecompanynothavinginitiatedthecartelandthatnogovernmentinvestigationwasalreadyinprogress.CONNORsupranote91at71.Mostoftheeconomicallysignificantmarketeconomiesintheworldhaveadoptedsimilarleniencyprograms.
47
byantitrustenforcersonlyinthefaceofextraordinaryabuses.98Unlesscompanies
withastakeinanewtechnologyarepermittedtomeet,communicate,andformally
agreeoncommonstandards,theymayindividuallylacktheincentivetoinvestin
thedevelopmentofthenewtechnology,sothatthecommoninterestofthe
stakeholders(and,presumably,thepublic)willbethwarted.Ontheotherhand,
trusthasitslimits.Agovernmentalcompetitionpolicyencouragingcompetitorsto
meet,shareinformation,andreachagreementsoncommoninterestscanbe
dangeroustosociety—anabuseofthepublic’strust--soantitrustoccasionally
intervenesinstandard-settingtodeteritfrombeingusedforfixingprices,allocating
marketshares,oreliminatingfuturecompetitors.
C. MergersandAcquisitions
Facingagovernment’sstrongandconsistentoppositiontocartels,
companiesoftenlooktoothermeansforcooperatingwiththeirrivals.Thesimplest
means,atleastinsomerespects,istoacquireormergewiththerival,thereby
convertingan“out-group”intoaconstituentofthe“in-group”.Thosewhoformerly
competedwillnowcooperate;bythemagicofM&A,trustingcooperationthatwould
haveoncebeenillegalbecomesblessedbycompetitionpolicy.99Sometimesthisis
easiersaidthandone.Governmentalregulationovermergerscanstandintheway,
usuallyintheformofaClaytonActantitrustinterventioniftheeffectsofthemerger
arelikelytobeanticompetitive.100InrecentU.S.policy,antitrustinterventionhas
beenmostprobableifthetransactionwillreducethenumberofactiverivalsinthe
relevantgeographicandproductmarkettothreeorfewersignificantplayers.98SeegenerallyMICHAELA.CARRIER,INNOVATIONFORTHE21STCENTURY,HARNESSINGTHEPOWEROFINTELLECTUALPROPERTYANDANTITRUSTLAW,323-44(2009).99CopperweldCorp.v.IndependenceTubeCorp., 467U.S.752(1984)(holdingthataparentcompanycannotcolludewithawhollyownedsubsidiarybecausetheyarenotseparateeconomicentities).10015U.S.C.sec.18.
48
Anissueofeconomicimportanceiswhetherthetwocorporateculturesof
mergingfirmscanactuallybemeldedefficiently.Antitrustanalysisofamerger’s
legality(includingthegovernment’sdiscretionarydeterminationofwhetherto
issueacomplaint)oftenincludesevaluatingpredictionsofefficiencygainsthat
mightoffsetanyharmduetothepost-mergerreducednumberofcompetitors.I
doubtthatthefollowingquestionsrelatingtocultureandtrustareconsidered,but
onoccasionperhapstheyshouldbe:Howdifficultwillitbefortheemployeeswho
arebroughttogetherunderonelegalrooftodeveloptrustforoneanother,toadopt
commonattitudestowardbothfellowinsidersandoutsiders,toacceptcommon
proceduresandstrategies?Thiscanbeparticularlydifficultwhereemployeesofthe
twoformerlyindependentcompaniesdonotsharethesamelinguistic,religious,or
otherculturalheritagessuchasattitudestowardhierarchy,althoughthelargest
culturaldivergenceistypicallydifferentcustomarypractices,whichisathinnerand
morechangeableaspectofculture.101Trust,asonereflectionofculture,therefore
playsaroleinwhetherorhowsoonprojectedefficiencygainsactuallyoccur.Itis
conceivablethatanefficiencydefensecouldfailbecauseacourtdiscreditson
culturaldivergencegroundsthemergingparties’argumentthatthemergerwill
produceaparticularmagnitudeoffutureefficiencieswithinareasonabletimeframe.
Amergermayalsohaveinterestingimplicationsfortheleveloftrustthatwill
affecttheentireindustryafterthemerger,ifforexamplethemergereliminatesa
101HOFSTEDE,HOFSTEDE,&MINKOV,supranote81at341-77.Thisworkdifferentiatesnationalculturesfromorganizationalcultures(e.g.,“Nationalculturesarepartofthementalsoftwareweacquiredduringthefirsttenyearsofourlives,inthefamily,inthelivingenvironment,andinschool,andtheycontainmostofourbasicvalues.Organizationalculturesareacquiredwhenweenteraworkorganizationasyoungornot-so-youngadults,withourvaluesfirmlyinplace,andtheyconsistmainlyoftheorganization’spractices—theyaremoresuperficial.”Id.at346).SeeMargaretM.Blair&LynnA.Stout,Trust,Trustworthiness,andtheBehavioralFoundationsofCorporateLaw,149U.Pa.L.Rev.1735,1738(2001)(“Inparticular,wearguethatthebehavioralphenomenaofinternalizedtrustandtrustworthinessplayimportantrolesindiscouragingopportunisticbehavioramongcorporateparticipants.”).
49
maverick,i.e.afirmthattendstodeviatefromthenormsoftheindustry,tacit
collusionmaybeeasiertoaccomplish.102
Whenagreementstolimitcompetitionarenotmadeexplicitly,typicallyin
highlyconcentratedmarkets,collusionmayneverthelessoccurtacitly;i.e.,the
competitorscometounderstandandtrusteachothersufficientlythatexplicit
agreementissimplynotnecessary.Incasesofparallelbehaviorbyfirms,thelaw
requiresthat“plus”factorsindicativeofanagreementmustbepresent.This
requirementisvagueandcontroversialinapplication.RichardPosnerhas
suggestedthatexplicitagreementneednotbeproved,butshouldbefoundbasedon
certainobservableeconomiccharacteristicsoftheindustrythatmakecollusion
likely.103ChristopherLesliehasgonenearlyasfar,advocatingthatthepresenceof
trust-facilitatingdevicesshouldbeconsideredasplusfactors,therebymakingit
easiertoproveagreement.104Thesestructurally-orientedproposalshavenot
generallybeenfollowedbutwhetherthecompetitorsareactingindependentlyor
interdependentlymaybeeasiertodetermineifthedynamicsoftrusting
relationshipsisconsidered.Fornow,tacitcollusionamongoligopolistsremainsa
difficultnutforantitrusttocrack.
102 SeeJonathanB.Baker,Mavericks,Mergers,andExclusion:ProvingCoordinatedEffectsUndertheAntitrustLaws,77N.Y.U.L.REV135(2002)(“Theconceptofamaverickisnotnewtoantitrustlaw;itappearsinthegovernment'sMergerGuidelines,whereamaverickfirmisdescribedasonewith‘agreatereconomicincentivetodeviatefromthetermsofcoordinationthandomostof[its]rivals.’'TheMergerGuidelinesprovideasanexampleafirmthathasan‘unusuallydisruptiveandcompetitive’influenceinthemarket,buttheconceptofmaverickalsoencompassesfirmsthatconstraincoordinationfrombecomingmorelikelyormoreeffectivewithoutnecessarilystartingpricewarsorotherwiseappearingobservablydisruptive.”)103RICHARDA.POSNER,ANTITRUSTLAW69-100(2NDed2001).104Leslie,supranote6at675.
50
Jointventuresareoftenthoughtofasincompleteorpartialmergers.They
maybehorizontal,vertical,orconglomerateinnature.Likeamerger,theyfacilitate
cooperationwithinalimitedareabetweencompaniesthatmaypresentlyor
potentiallycompete.Becausejointventurersknowthattheventureisneithera
completeintegrationnornecessarilypermanent,mutualtrustmustbeestablished
withregardtonottakingadvantageofinformationgainedduringtheventure.The
antitrustanalysisofsuchcollaborationsisaccomplishedundertheruleofreason;
whethereffectswillbeanticompetitiveiscomplex,butgenerallybiasedinfavorof
permittingcooperation,ifsomespecificbenefits(often,thedevelopmentofanew
productorservicenotpresentlyinthemarket)canbeascribedintheabsenceof
identifiableanticompetitiveeffects.105Asinmostotherareasofantitrustanalysis,
theoutcomedependsonacomparisonofthebenefitofcooperationagainsttheloss
ofcompetition.
D. DominanceandFirmSize
Attitudestowardconcentratedeconomicpowerandthesizeoffirmsvary,
leadingtodifferentantitrustpoliciestowardmarketdominance.Fukuyamapointed
outthatbothGermanyandtheU.S.alwayshadstrongpopulardistrustof
concentratedeconomicpower,despiteeachhavingaproclivityforcreatinglarge
privateorganizations.Germany,hesays,didnottendtodistrustsizeperse,inpart
becauseitwasnotasanti-statistastheU.S.106Thistypeofgeneralizationpresents
difficulties.OntheU.S.side,forinstance,TheodoreRooseveltwashardlyanti-statist,
believingthatbigcorporationswereinevitableandthatgovernmentneededtobe
105TheNationalCooperativeResearchAct,15U.S.C.A.sections4301-4304,providesthatresearchjointventuresshouldbeevaluatedundertheruleofreasonratherthantheperserule.Onjointventuresgenerally,seeofHERBERTHOVENKAMP,FEDERALANTITRUSTPOLICY,CH.5(1994).106FUKUYAMA,supranote6at215.
51
biggerandstrongerinordertoregulatethem.Hisstatistview,itistrue,didnot
prevailovertheprogressiveWilson/Brandeisideathatcompetitionandantitrust
ratherthanregulationshouldcontrolbigbusiness,butstateregulationdidwinthe
dayinanumberofkeysectorsoftheAmericaneconomy.107OntheGermanside,the
Ordo-Liberalviewthatfavoreddecentralizationofbotheconomicandpolitical
powerprevailedinthepost-Hitleryearsandhasattimesstronglyinfluencedthe
EuropeanUnion’sstandagainstabuseofdominance.108
Historyandgeography,whichhelpdefineanation’sbordersandinternal
regions,canbeparticularlyimportantinexplainingnationalattitudestowardfirm
size.Forexample,asmallmarketmayonlyhaveroomforasinglemonopolistwho
canachieveminimumscaleofefficiency,implyingthattheremaybeachoicetobe
madebetweenhighconcentrationandsubstantialinefficiencyinasmallmarket.109
Inbothsmallandlargenations,thereisoftenarecognizedlinkagebetween
economicpowerandpoliticalpower,capturedbythefamousobservationofLord
Actonthatpowertendstocorruptandabsolutepowercorruptsabsolutely.
Corruptioninitsvariousformsunderminesamarketeconomybyproducing
allocationdecisionsthatarenotbasedoncompetitivesupply-and-demand,making
itdifficultforbothproducersandconsumerstotrustthemarketmechanismorthe
peopletheydealwith.Inthiscontext,considerthreepossiblecompetitionpoliciesa107JAMESCHACE,1912:WILSON,ROOSEVELT,TAFT&DEBS—THEELECTIONTHATCHANGEDTHECOUNTRY,167(2004)(reviewingtheclashofviewsabouthowtocontrolbigbusiness).AnexampleofstateregulationofakeysectorwastherailroadindustryundertheInterstateCommerceAct.108SeeDAVIDJ.GERBER,GLOBALCOMPETITION167-71(2010);PeterBehrens,TheOrdoliberalConceptof‘Abuse’ofaDominantPositionanditsImpactonArticle102TFEU,https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2658045(critiquingGerber).109MICHALGAL,COMPETITIONPOLICYFORSMALLMARKETS27-35(2003).WOODARD,supranote79,chapter5,describestheriseandfalloflaissezfaireintheU.S.between1877and1930,astheeconomyandthegovernmentgrew.
52
governmentmighttake.(1)Agovernmentmighthaveself-preservationmotivesto
keepprivatepowerfragmented,usingcompetitionpolicyasashieldagainstprivate
concentrationofcountervailingpoliticalpowerwithintheeconomy.(2)A
governmentmaywanttoextenditspoliticalpowerthroughcronyalliancesby
favoringselectedprivatefirmswithopportunitiesforgrowthorprofit,inwhich
campaigncontributions,inducementofemployeestobevotersandcampaign
workers,lendingofcorporatejets,andevenoutrightbribescanbeexchangedfor
specialtreatmentsuchasapprovalofeventhemosthighlyconcentratingmergers.
Or(3)amorepublic-spiritedgovernmentmaywanttooperateinascrupulously
rule-basedandneutralway,minimizingtheroleofpolitics.
Thefirstpolicycouldbecorruptifthegovernmentusesitspolitical
discretiontoserveitsowninterestsratherthanthepublicinterest;butifitfollows
universallyapplicablerules,themotivationwouldbelessimportantthanthe
economicandsocialeffects.Thesecondpolicyisplainlycorrupt,basedonquidpro
quobribery.Lackingobjectiveandtransparentstandards,itcouldresultinthe
creationofverylargeandpowerfulcompanies;however,itcouldalsoor
alternativelyincludelimitationsonthesizeofrivalsofcronies.Thethirdpolicy
wouldbetransparentanduniversal.Itcouldimposealimitonfirmsizewithout
discriminationinfavororagainstanyparticularfirmandpresumablyintend
neutrallytomaximizeoverallopportunitiesforcompetitivebehavior.Herethe
questionisnotoneofcorruptionbutofaculture’sattitudetowardconcentrationsof
power.Evaluationofsuchapolicywouldpresumablyrecognizethatlargesize
createscertaininefficienciesandsociallynegativeeffects,thecostofwhichmightbe
estimatedandcomparedtosomelossofefficiencythatwouldarguablyflowfrom
sizelimitations.
Culturesvaryintheregardwithwhichtheyholdthosewithpoweraswellas
attitudestowardcorruption,andthereforemightvaryintheirattitudestoward
largecentersofpowerorwhethertheydifferentiatebetweenpowerheldprivately
andpowerheldbythegovernment.Cross-culturalsurveyssometimesreporton
53
attitudestowardhierarchy,oftenintermsofapowerdistancescale.110Hofstedeet
al.concludefromthesesurveys,“Inasocietyinwhichpowerdistancesarelarge,
authoritytendstobetraditional,sometimesevenrootedinreligion…Mightprevails
overright…Insuchculturesthepeoplewhoholdpowerareentitledtoprivileges
andareexpectedtousetheirpowertoincreasetheirwealth.”111Insmall-power-
distancecountries,bycomparison,“Theuseofpowershouldbesubjecttolawsand
tothejudgmentbetweengoodandevil…Power,wealth,andstatusneednotgo
together—itisevenconsideredagoodthingiftheydonot.”112Onemighttakefrom
thisthatattitudestowardcentralizedanddecentralizedpoweraretosomeextent
culturallybased,withlow-power-distanceculturesmorelikelytosupport
competitionpoliciesintendedtofosterdecentralizedeconomicpower.
Sizelimitationrequiressubstantialgovernmentinterventionintheeconomy.
Ahighleveloftrustingovernmentanditscivilservantemployeesislikelytobe
associatedwithahigherpublicregardforregulationofbusiness.In2001,boththe
U.S.andE.U.competitionauthoritiesreviewedaproposedmergerbetweenGeneral
ElectricandHoneywell,coming,ratherunusually,toblatantlydifferentconclusions.
TheU.S.approvedthemerger,notfindingadirectoverlapofmarkets.TheE.U.
rejectedthemerger,focusingonwhatitsawaslonger-termproblemsinvolvingthe
financialadvantagesofthemergedcompanythatcouldlaterbeusedtoconsolidate
110Powerdistanceisdefinedas“theextenttowhichthelesspowerfulmembersofinstitutionsandorganizationswithinacountryexpectandacceptthatpowerisdistributedunequally.”HOFSTEDEET.AL.,supranote81at61.E.g.,LIVERMORE,supranote77at101,makesthedistinctionbetweenculturesthatvalue“lowpowerdistance”(statusdifferencesareoflittleimportance;empowereddecision-makingisexpectedacrossalllevels)andthosethatvalue“highpowerdistance”(statusdifferencesshouldshapesocialinteractions;thosewithauthorityshouldmakedecisions).111HOFSTEDEETAL.,supranote81at77.112Id.at78.WouldtheU.S.bedescribedashighpowerdistanceorlow?Atwhatpointintime?ComparetheadministrationsofpresidentsTrumpandObama.Howquicklycanthisculturaldimensionchange?
54
controlofcertainmarkets.Ibelievetheconflictingoutcomesarefoundedincultural
differences:intheE.U.thereisgenerallymoretrustintheinstitutionsof
government,lendingtheantitrustenforcersgreaterconfidenceformaking
predictionswhichintheU.S.areconsideredtoospeculativeforagovernment
enforcer.Theremayalsobeagreaterconcernaboutcorporatesize,perse,inthe
E.U.,whichresultsinadefinitionofdominance(asin“abuseofdominance”)that
hasalowermarketsharethresholdthanintheU.S.definitionofmonopoly.113This
statementassumesarelationshipbetweenmarketshareandabsolutesize,whichis
onlysometimesthecase.Unfortunately,thereisnotmuchdataavailableoneither
theeffectsoforsurveyattitudestowardaggregateconcentration.
Infact,competitionpolicyintheU.S.(andinmostothercountries)hasnot
placedlimitsonfirmsize,apartfromoccasionalexplicitstatutoryandregulatory
limitationswithinspecifickeysectorssuchasbanking.Whilefull-blown
monopoliesinidentifiable“antitrustrelevant”marketsarerareintheU.S.,markets
characterizedbysmallnumbersoflargeoligopolistsarecommon,asarehuge
conglomerates.Tosomeextentthisstructurecanbeexplainedbyobservingthat
trustingovernmentbureaucratshastendedtorunlowintheU.S.,whereastrustin
businesspeoplehastendedtobegreater.Forthisandnodoubtadditionalreasons,
onquestionsofcorporatesizelimitations,theU.S.generallygivestheedgetosize
ratherthangovernmentally-imposedlimits.
113Althoughtherearenoabsolutethresholdnumbersineitherjurisdiction,itisoftensaidthata40%marketshareinEuropecanbeenoughfordominance,whilea60-70%shareisneededintheU.S.SeeMichaelElliott,TheAnatomyoftheGE-HoneywellDisaster,TIME,July8,2001,http://content.time.com/time/business/article/0,8599,166732-2,00.html(lastvisitedMay3,2017).TheE.U.’s2017decisionagainstGooglemayimplyconcernaboutsizeorpower,butitcanalsoreflectthatGooglewasfoundtoholdamuchhighermarketshare,90%,inEuropethanitheldseveralyearsearlierintheU.S.,whentheFTCcloseditsinvestigationofGoogle.ThedecisionofU.K.voterstoleavetheE.U.mayhavereflecteddistrustinthelargeandevermorepowerfulBrusselsgovernmentortrustinBritain’sabilitytogoitalone,oravarietyofmotivationsincludingstronganti-immigrationsentiments.
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E. RoleoftheStateandtheMissingMiddle
TrulyindividualisticsocietiesarebelievedbyFukuyamatohavelittle
capacityforassociationaldevelopmentinthecivilsociety“middle”spacebetween
thefamilyandthestate.Iflargeprivatebusinessesaretohavespacetogrow,it
mustbewithinthismiddle.Mostculturesplaceahighvalueonfamily,although
whatthismeansinpracticevariestremendously.Inthecategoryofso-called
familistsocieties,trustisparticularlystrongwithinthefamily.Thereareonlyweak
voluntaryassociationsbetweenunrelatedpeople,hencethereislittlebasisfor
trustinganyoneoutsideoftheimmediatefamily.Economicentitiesinfamilist
societiesconsequentlytendtobeownedandoperatedassmallbusinesses.These
businessesfrequentlyhavedifficultyinmakingthetransitionfromfamilyto
professionalmanagement,whichlimitstheirpotentialfordurabilityandlong-term
growth.Smallbusinessescanbeverysuccessful,asinHongKong,Taiwan,and
Singapore,butbeingsmalltheyusuallycannotcompetewellglobally.114Other
Asiancountrieshavedevelopednetworkingmethodsofgrowinglargeprivate
organizations,e.g.,theKeiretsuinJapanandChaebolinSouthKorea,whichhave
sometimesbeenplaguedbyfamilymanagementsuccessionproblemsbutuse
idiosyncraticconglomerateformstoscaleuptointernationalsize.
The“MissingMiddle”istypicalofConfuciansocietiesthatpromotefamily
bonds,leavinglarge-scaleorganizationtothestate.InChina,forexample,state
interventionwasoftentheonlyavenuebywhichthenationcouldbuildlarge
industries.Wasitfamilistculture,imperialpolitics,orCommunistideologythat
hollowedoutthespacebetweenChina’sfamiliesandthepowerofcentraland
114Familistnationssometimesstipulatethatonthebusinessentrepreneur’sdeath,ownershipshareswillbedividedequallyamongheirs,whichalsocontributestothe“missingmiddle”.
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peripheralgovernments?Wewillseewhethertherelativelyrecentadventof
“socialistmarkets”andprivatizationovercomestheConfuciantradition.115
Italyisanon-Confuciansocietywithsimilarfamilistlimitations.Societies
withahighdegreeoftrustandsocialcapitallikeJapanandGermanyarereportedto
bebetterabletocreatelargeorganizationswithoutstatesupport.116Consideration
oftheMissingMiddlehelpsusunderstandthedynamicinterplayofculture,
includingtrust,andeconomicorganization.
F. GrowthOrientation
Itisoftenrepeatedthatthegoalsofantitrustarecompetitiveprices,choice,
andinnovation.Innovationproducesgrowthsothataneconomygainsalargerpie
thatcanintheorybedistributedtothesociety,butinnovationisallaboutchange.
Differentculturalattitudestowarduncertaintywouldseemtoinfluenceoutlooks
towardchange.Whyisitthatsomenations,suchastheUnitedStatesandIsrael,are
characterizedbyinnovationandgrowth,whileothersareessentiallystagnant?
Essentially,thisdifferenceisabouttrustinthefuture,whichmayalsohavereligious
and/orpoliticalaspects.
InJoelMokyr’sstudyoftheoriginsoftheIndustrialRevolution,he
emphasizesthat“culturescanbebackward-orforward-lookinginthesensethat
somemayholdtheknowledgeandlearningofpreviousgenerationsinsuchhigh
115SeeThomasJ.Horton,ConfuciansimandAntitrust:China’sEmergingEvolutionaryApproachtoAnti-MonopolyLaw,47INTERNAT.LAWYER193(2013),https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2488181.116FUKUYAMA,supranote6at28-9,56.IfinditdifficulttosaythattheJapaneseKeiretsulacksstatesupport,giventhecreditandotheradvantagesthatflowedfromthegovernment.Evenapassivetoleranceofcartelsandkeiretsus,however,wouldimplystatesupport.
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esteemthatnovelideasrunaseriousriskofbeingviewedasapostasy.”117Hestates,
“Acriticalculturalbeliefthatdriveseconomicgrowthandcomplementsthebeliefin
the‘virtuousnessoftechnology’isabeliefinprogress,andspecificallyineconomic
progress.”118
Negativeattitudestowardprogressmayhaveculturalrootsinuncertainty
avoidance,definedbyHofstedeetal.as“theextenttowhichthemembersofa
culturefeelthreatenedbyambiguousorunknownsituations.”119Theydifferentiate
this,adiffusefeeling,fromriskavoidance,whichrelatestosomethingspecific.“The
stronguncertainty-avoidancesentimentcanbesummarizedbythecredoof
xenophobia:‘Whatisdifferentisdangerous’…theweak-uncertaintyavoidance
sentiment,onthecontraryis:“Whatisdifferentiscurious.”120
Avigorous,dynamiccapitalistmarketsystemplacesahighvalueon
innovationandthegrowththatinnovationfacilitates.Moretraditionalculturesmay
beleeryofgrowthbecauseitgeneratesuncertaintybyupsettingthestatusquo,
creatinglosersaswellaswinners.
117MOKYR,supranote11at19.118Id.AlsoseeBENJAMINM.FRIEDMAN,THEMORALCONSEQUENCESOFECONOMICGROWTH(2005),whicharguesthateconomicgrowthmakesasocietymoreopen,tolerant,anddemocratic.Friedmanstates,“Itisnotsurprisingthatmanycultures,especiallyWesternsocietiesinthemodernera,havedevelopedmoralpresumptionsinfavorofpreciselythoseaspectsofpersonalbehaviorthatleadtogreaterproductivityandeconomicgrowth,”i.e.,hardwork,diligence,patience,disciplineandasenseofobligationtofulfillourcommitments,aswellasthriftinessandeducation.Id.15-18.119HOFSTEDEETAL.,supranote81at191.120Id.at201.ThedifficultyinreachingsuchgeneralizationsispointedoutinanemailtotheauthorbyThomasCheng(May16,2017),whonotesthatasasocietyJapancannotbemoreuncertaintyavoiding,butitisalsoaveryinnovativecountryandthesamemaybesaidofKoreaandGermany.Onceagainwehavetheproblemofstereotypingcultures.
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Capitalisminitsvariousmanifestationsisnowtheprincipaleconomic
structureofmostoftheworld’scountries,includingsomewhichhadhistoriesof
communism,colonialism,orauthoritarianismnotsomanyyearsago.Mostofthese
market-orientedcountrieshaveantitrustlaws,butbecauseoftheirvaryinghistories
andculturalvalues,theydonotnecessarilysharethesameeagernessforinnovation
andgrowth.Inshort,theyarenotallequallydynamic.Schumpeteremphasized
“galesofcreativedestruction”121astheessenceofadynamiccapitalismdedicatedto
creationofnewproductsandservices,includingnewjobs,evenasitoftendisplaces
thosewhobenefitfromthestatusquo.
Thisstormyprocesscreatesanxietynotonlyinthosewholoseincomeand
status;indynamiccapitalismnobodycanbecertainheorshewillnotbecomethe
nextvictimofchange.Theprocesscanalsocauseresentmentagainsttheoneswho
benefitfromchange.Onnet,dynamiccapitalismseemstobenefitthesociety,butthe
inherentdownsideentailmentofanxietyandresentmentcangeneratepolitical
supportforundulyanticompetitivepoliciesaimedatprotectingthestatusquoor
restoringthestatusquoante.Thusmanycapitaliststateshavedevelopedatleast
somewelfareandsafetynetcomponentsdesignedtoeasethesituationforlosers
andtohelpthemtransitionintodifferentjobs,whileatthesametimereducingthe
anxietyofeveryonelivinginaneconomythatisunderstoodtocreatelosersaswell
aswinners.
Findingtherightbalancebetweenstate-providedwelfareandsafetyneton
theonehandandincentivestoworkefficientlyandtakerisks,ontheother,isa
politicaltaskofthefirstorder.Thatbalanceaffectsandisaffectedbythelevelsof
trustinthecommunity’sintentionandabilitytorespondtoindividualdistress.
121JOSEPHA.SCHUMPETER,CAPITALISM,SOCIALISMANDDEMOCRACYCH7(3ded.,1950);THOMASK.MCCRAW,PROPHETOFINNOVATION:JOSEPHSCHUMPETERANDCREATIVEDESTRUCTION(2007).Foranin-depthexplorationofwhatmakesthenationofIsraelsoremarkablyinnovative,seeDANSENOR&SAULSINGER,START-UPNATION(2009).
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G. Trade
Asnotedearlierinthisessay,afunctioningeconomydependsheavilyon
trust,particularlyinregardtotaxrevenuesandpaymentsystems.Anotheraspectto
considerisinternationaltrade.Whentrustishighbetweencountries,tradeislikely
toflourish.In2014,Hoskingpublishedthischillingdescriptionofwhathappens
whenapolity’strustiseroded:
Whensocialtrustbreaksdown,ittendstoreconfigureatalowerlevelcollective,whichthenerectsrigidboundariesarounditself.Thuswhentrustinthestateisweakened,ittendstorefocusonapoliticalparty,areligiousmovement,anethnicgroup,aregionalortriballeader,amilitarystrongman,oraneconomicallypowerfulfigure.Inacrisisoftrust,politicalleaderswilloftentrytodrawtighterboundariesaroundthecommunityandprojectdistrustacrossthem.122
Asanationalisticin-groupredefinesitseconomiccommunityfromglobalto
nationaltheresultmaybeprotectionofdomesticmarketsandareductionof
internationaltradeandcross-borderimmigration.Barriersagainsttradelikely
decreasecompetitionwithinthedomesticmarketandimmigrationlikelyreduces
competitionforin-groupjobs.Eachofthesepoliciesdiminishesawell-known
contributortoeconomicgrowth.Anotherwayofdescribingprotectionistpoliciesis
thatcooperationwithout-groupsisreducedinthenameofprotectingthein-group
fromoutsidecompetition.
Theimportantthingtonoteabouttradeisthatovertimesovereignnations
haveadoptedawholerangeofpolicies,fromcompletelyopenmarketsto
completelyclosedmarkets,withmanystoppingpointsalongtheway,including
tariffs,subsidies,quotas,biasedenforcementoflawsandregulations,andother
formsofgovernmentintervention.123Eachofthesepoliciesmaybeviewedasa
122HOSKING,supranote2at201.123AhistoryofgovernmentalinterventionininternationaltradeispresentedinCHANG,supranote52.EconomistChangwrites:“[H]istorytellsusthat,intheearly
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politicalassignmentofhowmuchcompetitionorcooperationwilloccuratagiven
pointintimewithrespecttoaparticulartrade-relatedbehavior.
IX. ImportanceofTrustinAssigningRolestoCompetitionand Cooperation:TheExampleofASBP Howmighttheconceptoftrustfitintoanation’sdecisiononwhethera
desiredendresultshouldbetreatedassubjecttocompetitionorcooperation?Let’s
examinethecaseofabuseofsuperiorbargainingposition(“ASBP”).124
ThroughmostofAmerica’santitrusthistory,retailcompanieswererelatively
smallandtheirmarketsfragmented,whereasmanufacturerstendedtobemuch
largerandmorepowerful.Consequently,itwastheconceptofmanufacturer
monopolythatreceivedprimaryattentionfromantitrusttheoristsandenforcers.
Thegrowthofthepowerbuyer,suchasWalMartorAmazon,isofrecentvintage,
withthepowerbuyernowfrequentlyinthesuperiorbargainingposition.125While
theconceptofmonopolyonthesellersidehasbeenappliedtothebuyerside
throughtheconceptofmonopsony,whichisusuallyportrayedasthebuyer-side
mirrorimageofmonopoly,alargebuyerwhodoesnotqualifyashavingenoughstagesoftheirdevelopment,virtuallyallsuccessfulcountriesusedsomemixtureofprotection,subsidiesandregulationinordertodeveloptheireconomies….Unfortunately,anotherlessonofhistoryisthatrichcountrieshave‘kickedawaytheladder’byforcingfree-market,free-tradepoliciesonpoorcountries.”Id.at61.124 SeeAlbertA.Foer,AbuseofSuperiorBargainingPosition(ASBP):WhatCanWeLearnfromOurTradingPartners?,AM.ANTITRUSTINST.WORKINGPAPERNO.16-02(2016),http://www.antitrustinstitute.org/sites/default/files/AAI%20Working%20Paper%20No.%2016-02.pdf.InthissectionIwilloftenbequotingfromorparaphrasingthispaper.125Chainstoresareanintermediatedevelopment.ConcernabouttheA&PSupermarketchainledtopassageoftheRobinson-PatmanActduringtheGreatDepression,withcertainpartsoftheActaimedatcontrollingBuyerPower,butultimatelyhavingrelativelysmallimpactinthisregard.
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marketpowertobedeemedeitheramonopolistoramonopsonistcanoftenhavevery
substantialadvantagesoversmallersuppliers,andthereisamplereasontorecognize
thattheseadvantagesareoftenabused.Themodernimbalancebetweennon-
monopsonypowerbuyersandtheirsuppliershasbeenrecognizedbylawin
Austria,Bulgaria,France,Germany,Italy,Japan,Korea,theSlovakRepublic,and
Taiwan,butnotintheU.S.126
TheInternationalCompetitionNetwork(ICN)issuedafactualreportonwhat
isknownasAbuseofSuperiorBargainingPositioninconjunctionwithits2008
conference.127Ofthe32jurisdictionsrespondingtoasurvey,sevenreported
specificlegalprovisionsrelevanttothequestionnaire’sdefinitionofASBP.128Our
126SeeMasakoWakui&ThomasK.Cheng,RegulatingabuseofsuperiorbargainingpositionundertheJapanesecompetitionlaw:ananomalyoranecessity?J.ANTITRUSTENFORCEMENT,2015,1-32(2015),10.1093/jaenfo/jnv022;MitsuoMatsushita,AbuseofSuperiorBargainingPosition–intheContextofDifferentAntitrustPhilosophies-,presentedtothe2015ASCOLAconferenceinTokyo,Japan,tobepublishedinaforthcomingASCOLAbook(textinauthor’sfiles),slidepresentationat http://ascola-tokyo-conference-2015.meiji.jp;YeeWahChin,WhatRoleforAbuseofSuperiorBargainingPositionLaws?,256N.Y.L.J.,July6,2016;IoannisLianos&ClaudioLombardi,SuperiorBargainingPowerandtheGlobalFoodValueChain.TheWutheringHeightsofHolisticCompetitionLaw?https://www.ucl.ac.uk/cles/research-paper-series/research-papers/cles-1-2016(dealingwiththefoodsectorandalsoreviewshowtheauthoritiesintheE.U.,Italy,Germany,Spain,andtheU.K.definebargainingpower).PeterCarstensendevotesachapter(six)to“marketregulationandotherstrategiestoremedyabuseofmarketpower”inhisforthcomingbook,PETERCARSTENSEN,COMPETITIONPOLICYANDTHECONTROLOFBUYERPOWER:AGLOBALISSUE.TheauthorthanksThomasChengforpointingoutthatalthoughASBPmostoftenarisesinthecontextofbuyerpower,undersomenationalstatutes(e.g.,JapanandKorea)theabusecanalsocomefromapowerfulseller.127ICNTaskForceforAbuseofSuperiorBargainingPosition,ReportonAbuseofSuperiorBargainingPosition,April14-16,2008,www.internationalcompetitionnetwork.org.128TheICNTaskForce’squestionnairerequestedrespondentstoprovidetheirowndefinitionofASBP,butofferedthefollowingguidanceinAppendixEoftheReport:
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majortradingpartners--Germany,JapanandKorea--employedsuchprovisionsas
partoftheircompetitionlawwhilefourothersemployedASBPinothercontexts
suchasprotectinglocalsuppliersinruralareas,tortliabilityunderacommercial
code,aprivatecivilremedystatute,andasanadministrativeregulationofretail
chains.TheReportsimplyconveysthesurveyresultswithouttakingapositionand
althoughtherewasdiscussionoftheReportattheconference,noactionwastaken.
OfparticularinterestherewastheconflictbetweenJapaneseandU.S.
representativesthatwasrevealed.
TheeminentJapaneseantitrustprofessor,MitsuoMatsushita,after
comparingtheJapaneseandU.S.viewsthatwereadvocatedattheICN,explained
thedivergenceinthecontextofdifferingphilosophiesofthepurposesofantitrust
law.129HesummarizedtheJapaneseviewinthisway:
Abuseofsuperiorbargainingpositioninfringesthefoundationofthefreecompetitionwherethepartiestotransactionsdeterminetransactiontermsorconditionsbasedontheirfreeandindependentbusinessjudgment.Incaseswhereapartyinasuperiorbargainingpositionovertheotherparty,byusingthatposition,restrainstheindependentbusinessactivitiesoftheotherpartyandforcestheotherpartytoacceptdisadvantagesthatitwouldnotacceptifthecompetitionworkedproperly,itsconductpreventstheotherpartyfromcompetingfreelyandindependently.Theotherpartyonwhichthedisadvantagesareimposed
Thisquestionnaireseeksinformationontheanalysisandtreatmentof“abuseofsuperiorbargainingposition”inbusinesstobusinessrelationsinICNmemberjurisdictions.Injurisdictionsthatregulate“abuseofsuperiorbargainingposition,”theconcepttypicallyincludes,butisnotlimitedto,asituationinwhichapartymakesuseofitssuperiorbargainingpositionrelativetoanotherpartywithwhomitmaintainsacontinuousbusinessrelationshiptotakeanyactsuchastounjustly,inlightofnormalbusinesspractices,causetheotherpartytoprovidemoney,serviceorothereconomicbenefits.(Forexample,actssuchasrequestforprovisionofsupplier’slaborwithoutcompensationandcoercivecollectionofcontributions,exercisingbuyingpower,areconsideredabusiveinJapan.)Apartyinthesuperiorbargainingpositiondoesnotnecessarilyhavetobeadominantfirmorfirmwithsignificantmarketpower.
129Matsushita,supranote126.
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wouldbeinthedisadvantageouspositionintermsofconditionofcompetitionwithitscompetitors.Ontheotherhand,
thepartyimposingdisadvantagesontheotherpartywouldbeintheadvantageouspositionintermsofconditionofcompetitionthroughthedifferentmeansfrompriceandquality.
AndhesummarizedtheU.S.view:Theconceptofanabuseofsuperiorbargainingpositionisveryvague,and
…anyregulationofsuchabuseislikelytointroduceagreatdealofuncertaintyintothemarketregardinghowbestandmostefficientlytonegotiatecontractswithsmallercounterparts.Substantialuncertaintyisinherentbothindeterminingwhenapartyisinasuperiorbargainingpositionparticularlywherethereisnomarketpowerrequirement,andinassessingwhenparticularcontracttermswouldbedeemedtobeabuse.Theseuncertaintiesarelikelytoraisethecostsofcontracting,tothedetrimentofpartiesandultimatelyconsumers.
ThereareanumberofreasonswhyASBPdoesnotfitintotheprevailing
ChicagoSchoolheritageintheU.S.Forstarters,ASBPisnotaboutmonopoly.Rather,
itisaboutrelativepositionsofpowerwithinaverticalchannel.If“competition”is
viewednarrowly,ASBPthereforedoesnotreducecompetition.Indeed,theChicago
Schooltendstoviewverticalrelationshipsasessentially“cooperative”,sincethey
aretakenasbasedinvoluntarilyarrivedatcontractsanddonotreduceoutput.130
Mostimportantly,ASBPdoesnotfitintotheChicagoconditionthatcompetition
policyshouldhaveasingle-mindedobjectiveofpromotingefficiency.131
130AccordingtoJudgeFrankEasterbrook:“Thegoalofantitrust…ispreventingtheallocativelossthatcomesaboutwhenfirmsraisepriceoverlongrunmarginalcost,andthusdepriveconsumersofgoodsforwhichtheyarewillingtopaymorethanthecostofproduction.Thisimpliesaprogramforantitrust:lookforsituationsinwhichfirmscanincreasetheirlongrunprofitsbyreducingoutput.Cartelsareoneandmergersendinginsubstantialmarketsharesareanother.Verticalrestrictionsdonotfitthiscategory.”FrankH.Easterbrook,WhenIsItWorthwhiletoUseCourtstoSearchforExclusionaryConduct?2003COLUM.BUS.L.REV.345,46(2003).131ButseeAlbertA.Foer,OntheInefficienciesofEfficiencyastheSingle-mindedGoalofAntitrust,60ANTITRUSTBULL.103(2015).
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Manycountries,includingJapan,andmanyadvocatesofantitrustdonot
sharethefullcupofU.S.devotiontoefficiency.ProfessorMatsushitapointsoutthat
inJapantheeconomicstructurehaslongbeencharacterizedbythedominanceof
largebusinessesoversmallbusinesseswithinseveredependencystructures,allof
whichrequiresoversight.InGermany,thepost-warOrdo-Liberalphilosophyheavily
influencedemergenceofasocialmarketeconomy,verydifferentfromtheNazi
periodwhereindividuals’freedomwassuppressed.Ordo-Liberalsfavor
unconcentratedmarketsbecausetheyareconducivetofreedomanddemocracy,
arguingforprivateeconomicpowerstobecontrolledbylawwhile,inother
economicareas,thedirectstateinterventionshouldbekeptataminimum.132
Recognizingfreedomtocompeteasastartingpointforcompetition,theytendtobe
moresuspiciousofpotentiallyexclusionaryverticalrestraintsthantheU.S.
ThusthecontroversyoverASBPsignificantlyreflectscultural,political,and
historicaldifferencesamongnations.ProfessorMatsushitaobserves:
ASBPisoneofthemostinterestingareasinantitrustlawtoseehowmuchharmonizationandconvergenceshouldbepursuedamongnationsandhowmuchindigenousfeaturesshouldberetained.Inotherwords,howmuchdiversityshouldbekeptindiversitywhenlegislatorsofantitrustlawsintheworldseekfor“unityindiversity”.133
TowhatextentmaywesaythesedifferencesbetweentheU.S.andJapanon
ASBPcanbeattributedtoadifferingtrustfactor?TheU.S.positionseemstoreston
atrustinthemarketsystemtoprovideefficientoutcomesthatoutweighinjuryor
injusticethatmayoccuroutsideofthemostdirectcompetitiverelationship,i.e.
132GERBER,supranote108at167-75(“Thecoreideawasthatthelawshouldpreventdeviationsfromwhattheordoliberalscalled‘completecompetition,’i.e.competitioninwhichnofirmhassufficientpowertomanipulatepricesorotherconditionsofcompetition.”).ProfessorBehrensnotesthattheNazisevenforcedwholeindustriestocartelizeonasectorwidescale.These“imposedcartels”werebrokenupbythepost-waranti-cartellegislationenactedbytheAmericanoccupationforces.E-maildatedMay18,2017,onfilewithauthor. 133E-mailfromProfessorMatsushita,onfilewiththeauthor.
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outsideofhorizontalcompetition.134Bycategorizingthebuyer/supplier
relationshipasessentiallycooperativeratherthanbothcooperativeand
competitive,itavoidshavingtodealwithabusesnotcausedbymonopolyor
monopsony,effectuallyholdingthatnothingbutverysubstantialmarketpower–-
poweroveranentiremarket’spricingstructure--cancauseremediableharm.While
thisreflectsanAmericantrustintheabilityofbusinessestoprotectthemselves
throughvoluntarilyenteredcontracts,itignoresthefactthatsomefirmsare,to
paraphraseOrwell,muchmoreequalthanothers.Isuspect,however,thatthe
underlyingrationaleisreallyoneofdistrustintheabilityofgovernmenttomake
betterdecisionsthanbusinesses.135
Appropriately,theU.S.doesnotwantatypeofASBPlawthatwouldlaunch
intolitigationanavalancheofprivatecontractdisputes.Ifantitrustenforcerswere
seriouslytoconsideradoptingaformofASBP,lineswouldhavetobedrawnto
clarifywhenacontractcouldbechallengedandwhennot.Thisisaregulatorytask
forwhichtheU.S.canlikelylearnmuchfromforeignexperiences,althoughitseems
134Here,again,therearecomplexities.ThomasChengpointsoutthatinJapansupplierrelationshipsareoftendeeperandmoreintegratedthanintheU.S.,withsuchrelationshipsoftenlastingfordecades.Hespeculatesthatitisbecausethereissuchahighdegreeoftrustthatthetrustisabusedbythemorepowerfulparty.E-mailfromProfessorChengdatedMay16,2017,onfilewithauthor.135E.g.,FrankH.Easterbrook,WhenIsItWorthwhiletoUseCourtstoSearchforExclusionaryConduct?2003COLUM.BUS.L.REV.345,350(2003).(“Justasweallinsisttodayonproofthatagivenpracticeisbadforconsumers,'sowemustinsistonproofthatagivenlegalregimenimpliedbyaneconomicmodeldoesbetterthantheunregulatedmarket.Topointtoacompetitivefailureisnottoshowthatregulationisbetter.ThatistheNirvanaFallacy.Governmenthasitsowncostsanderrors,whichmaybeworse(andhardertocorrect)thantheproblemsofmarkets.Donotinvokeatheoryofmarketfailureunlessyoualsohaveatheoryofregulatoryfailure-andawaytoshowthatthecostsoftheformerexceedthecostsofthelatter.”)Icomment,inkeepingwithmythemethatculturalvaluesarerelevanttoantitrust,thattheconceptofmarketfailureshouldnotbetiedonlytoinefficiency;itshouldalsobeconsideredamarketfailurewhenamarketfailstosatisfyourstrongsenseoffairnessandjusticeformarketparticipants.
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thattheprevailingU.S.culturepreferstoshunregulationwheneverpossible.The
periodicallyhighleveloftrustforbusinessexecutivesintheU.S.comparedtolow
trustforgovernmentlikelytiltsthebalanceagainstadoptingASBPinthenearterm.
Onemayask,however,whetherwhatIhavereferredtoas“theprevailingU.S.
culture”isculturallythickorthin.136Isthismoreamatterofpoliticsorofculture?
Orarethetwo,politicsandculture,deeplyintertwined?Ifprimarilyculturalinthe
thicksense,whatprevailstodayislikelytoprevailtomorrow;ifprimarilypolitical,
relativelevelsoftrustcouldchangeassoonasthenextmajorpoliticalorbusiness
scandalordisplayofintolerableincompetence,
Ontheothersideofthecoin,acountrythatadoptsASBPmayreflectgreater
culturaltrustingovernment;itmayesteemhierarchyintheformofcivilservants,
includingjudges,morethanAmericansdoandhavegreaterconfidenceintheir
abilitytodrawlines,makepredictions,andexecutewithcompetence;itmaytendto
distrustprivatebusinessesthathaveleverageoverotherlesspowerfulentities.
Ultimately,andnotignoringthatculturalandotherfactorscanshiftwith
timeandpoliticaldynamics,differentcountriesarelikelytodisagreenotonly
whetherASBPisneededandpoliticallyfeasible;eveniftheydoadoptitinprinciple,136SeeAndrewI.Gavil,CompetitionandCooperationonShermanIsland:AnAntitrustEthnography,44DEPAULL.REV.1225,1226-27(1995)(“Morethanjustaneconomicpolicyreflectedintheantitrustlaws,competitionisapervasivecomponentofthefabricofAmericanlifethatemergesindiscussionsofallaspectsofpolitical,socialandeconomicinstitutions.Asacategoryofhumanrelations,however,competitionexistsonlyinrelationtoothernorms.‘Cooperation’and‘individualism’areasmuchapartoftheAmericancultureasis‘competition,’andatthesourceofeachare‘relationships’-social,economic,andpolitical.Wedefineourselves,ourfamilies,ourgovernments,evenourcivilizationsintermsoftheserelationships;bethey‘competitive,’‘cooperative’or‘individualistic.’Eachoftheseconcepts,however,masksacomplexofassumptionsabouthumanbehaviorandcharacter,theroleofgovernmentandthecharacterofbusiness.ThoseassumptionsaredeeplyrootedintheAmericanhistoricalexperience,indeedinthebroaderhistoryofthedevelopmentofwesterncivilizations,andareinacontinuingstateofevolution.”[footnotesomitted]).
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theymaydisagreeonwheretodrawthelinesforenforcement,e.g.,shouldASBPbe
handledwithinthecompetitionlawframeworkorthroughothermeanssuchas
contractortortlaw;shouldtherebedetailedcodifiedrulesthatattempttodefine
howvirtuallyeveryconceivablesituationshouldberesolved;howshouldsufficient
dependencybedefined,tobringtheconceptofsuperiorbargainingpositioninto
play;whatlevelsofcoercionmustbedemonstrated;whatsafeharborsmightbe
designatedtoreducethefrequencyofchallenges;shouldtherebeprivaterightsof
actionoronlycasesbroughtbythegovernment?
Noneofthisistoclaimthattrustistheonlyfactorthatwillbeconsidered
whenagovernmentallocatesbehaviorsalongthecompetitionorcooperationscale.
Farfromit:decision-makerswilllikelyalsoweighpoliticalpressures,the
competenceofparticulargovernmentalinstitutions,estimatesoftheseriousnessof
theproblem,predictedconsequencesofvariousremedies,andotherfactors.137
X. CULTUREANDCOMPETITION:ABASKETOFCOMPLEXITIES Todaythereareapproximately130jurisdictionsintheworldthathave
market-orientedeconomies,someformofantitrustlaws,andwhosegovernment
competitionauthoritiesaremembersoftheInternationalCompetitionNetwork
(“ICN”).TheICNiscommittedtoreachingouttoitsmemberstatestohelpthem
develop“competitionculture”.Asourdiscussionhasdemonstrated,theprospect
forconvergingtowardauniversalagreementontherulesforcompetitionand
cooperationrequiressomecomplexbalancing.Thefollowingaresomeofthe
principalissuesthatemergefromtheforegoingdiscussion.
137Indeed,asProfessorBehrenshaspointedouttome,onecouldmakeanargumentinfavorofASBPthatisnotbasedonaculturalsenseoffairnessbutbybuildingontheabsenceofworkablecompetitionthatwouldbepresentwhenapartyissodependent,duetoabsenceofarealisticalternative,thattheelementofchoice,soessentialtoacompetitivesystem,ismissing.Supranote132.
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A. TheMalleabilityofCulture
Weknowthatculturesgenerallychangeslowly,butwealsoknowthat
variousaspectsofculturecanberelatively“thick”or“thin”withthinneraspects
beingsusceptibletofasterchange.138Howmalleableareculturaltraitsrelatingto
competitionandcooperation?Doesitmatterwhetherwearetalkingaboutmergers,
collusions,ormonopolization?Howquicklycantherelevantculturalheritagebe
changedas,e.g.,majorpoliticaloreconomicbreakswiththepastoccur?
B. MulticulturalNations
Moststatescontainmorethanoneculture.139Withinthenationstatemaybe
regional,ethnic,religious,professionalandgenerationaldifferences,forexample,
andeachofthesesubculturesmaybesimilarwithregardtosomeculturalvalues,
suchaspunctualityorpowerdistance,butmaydifferonattitudestoward
competitionandcooperation.Theso-callednorth/southdivide,sometimesseen
withinasinglecountrylikeItalyorBrazil,oftencreatesvariedlifestylesthatmay
accommodatedifferentattitudestowardcompetition.Multiplecultureswithina
singlestatemayrequirecompromisesontheextenttowhichparticularvalueswill
bereflectedinlawsandtheirenforcement,ormaybethebasisforsubstantialshifts
inpolicyasmajoritycoalitionsorrulingpartieschange.
138CHANG,supranote52at196,arguesthatculturechangeswitheconomicdevelopment,pointingtoexamples(stereotypessuchas“lazyJapanese”and“thievingGermans”)of“apparentlyunchangeable‘habitofnationalheritage’…transformedquitequicklybychangesineconomicconditions.”139SeeERNESTGELLNER,NATIONSANDNATIONALISM,53,64-71(1983).
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C. CultureandInstitutions
Ultimately,aculturalattitudetowardcompetition/cooperationexpresses
itselfthroughinstitutionalmodalitiessuchasthepassageoflegislationandthe
mannerinwhichthelegislationisimplemented.IntheU.S.,theantitrustandmany
oftherelatedsectoralregulationlawsoriginallyreflectedapopular,democratic
rebellionagainstavarietyoflarge-scalechangessuchasthedevelopmentofthe
powerfulnationalcorporation,broughtonbytheindustrialrevolutionand
disadvantagingdiverseinterestgroups.Inmostothercountriestheestablishmentof
competitionpolicyhasbeeninitiatedmorefromthetopofgovernment,perhaps
propelledbycertainprivateelitessuchasacademiceconomistsasinChile,orasthe
resultofpressurestojointheE.U.orobtainassistancefromtheWorldBankor
I.M.F.,subjecttoaconditionofcommitmenttoeffectuatinganantitrustregime.140
Fromthetopittypicallymoveddownward,ratherthanbubblingupfrompopular
demand.
Differentpolitieshavedifferenttransmissionbeltsforthetranslationof
culturalattitudesintopolicyandenforcement.Indigenousculturalandpolitical
subdivisionsarelikelytocreatedifferentmixesoflegislationmarkingofflines
betweencompetitionandcooperation—evenifthelegislativeframeworksof
differentnationsaregenerallysimilar.Andwecannotignorethatinstitutionsalso
canchangeculturalvalues.141
140SeeJulianPena,TheLimitsofCompetitionLawinLatinAmerica,236etseq.,inIoannisLianos&D.DanielSokol(eds),THEGLOBALLIMITSOFCOMPETITIONLAW(2012).141LAWRENCEROSEN,LAWASCULTURE,xii(1941)(“[Lawis]constitutedbyculture,andculture(innosmallway)bylaw.”).
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D. Generations
Thepaceofculturalchangemaybeafunctionofgenerationalchange.We
hear,forexample,aboutgenerationssuchastheso-calledboomergenerationofthe
post-WorldWarIIera,havingtheirdistinctivecultures.Andwegenerally
understandthatolderpeople,whohaveimbibedtheirnationalcultureforamuch
longerperiod,arelikelytobemoreembeddedinanoldersetofvaluesthanthe
youngergenerations.Thissuggeststhateffortstostereotypenationsashavinga
particularculturemusttakeintoaccounttheprospectofgenerationalchanges
outdatinggeneralizations.Forexample,theJapanesegovernment’streatmentof
cartelsandotheraspectsofantitrustchangeddramaticallyfromtheeconomic
miracleyearstothepresent.
E. Economics,Education,andRecreation
Aneducator,AlfieKohn,wroteacontroversialbookin1986thatargued
againstwhathedescribedastheAmericanobsessionwithcompetition,findingin
Americaanextremepositionamongnationsineconomics,education,and
recreation.142Anopenquestioniswhetherthesethree,andotherpossiblerealmsof
activity,arenecessarilyrelatedintermsoftheirtreatmentofcompetitionand
cooperation.Withinagivenmodernculture,themixofcompetitionandcooperation
islikelytovaryineachoftherealmsidentifiedbyKohn;culturedefinitely
influenceslegalandotherinstitutions,buttheseinstitutionsalsoinfluenceculture.
Theinstitutionsofeducationandrecreationareverydifferentfromeconomic
142ALFIEKOHN,NOCONTEST,THECASEAGAINSTCOMPETITION,WHYWELOSEINOURRACETOWIN(reviseded.,1992).(“Differentculturesdependoncompetitiontodifferentdegreesinstructuringtheireconomicsystemorschoolingorrecreation.Atoneendofthespectrumaresocietiesthatfunctionwithoutanycompetitionatall.AttheotherendistheUnitedStates.”Id.at.1-2.)“Ihavebecomeconvincedthatcompetitionisaninherentlyundesirablearrangement.”Id.at9.
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institutionsandtheircustoms,culture,andpoliticscanbeassumedtoevolve,at
leasttoalargeextent,separately.
Countriescompetewitheachotherinsports,economics,andwar,butthey
alsocooperatebyprovidingfora(suchastheOlympicsandtheUnitedNations),
tradingblocs,andrules(e.g.,oftradingorofmilitaryconflict).Bringingthe
discussionbacktoantitrust,insomecountries,aswe’venoted,itmaybetraditional
forprivatebusinessestocoordinatetheiractivitiesveryclosely,inwhatmaybea
cartel-likeatmosphereoraverticalalliance,thebettertocompeteinaglobal
marketplace,withtheresultthatthecompaniesarecooperatinginsomeimportant
ways,butsimultaneouslycompeting.Weneedtoholdopenthepossibilitythat
cross-culturalsurveyswhichdonotfocusspecificallyoneconomicissuesmaybe
misleadingconcerningcompetitionpolicy.
F. TheCompetition/CooperationSpectrum
Ibeganwritingthispaperthinkingthatcompetitionandcooperationaretwo
polesonaspectrumandthatthefunctionofantitrustorcompetitionpolicyisto
authoritativelydeterminewherevarioustypesofcommercialactivityaretobe
alignedonthespectrum.Forexample,thepositiveattitudeoftheU.S.toward
cartelsduringtheearlyNewDeal,encouragingthecooperationofbusiness,labor,
andgovernmenttoreachindustry-by-industryanti-Depressionagreementswould
havebeenplacedtowardthecooperativepole,butinrecentyearssevereanti-cartel
policies,includingincarcerationandtrebledamageclassactionremedieswouldbe
muchnearerthecompetitivepole.Placementwouldreflecttheprevailingculture,at
leastofdecisionmakers,atthesedifferentperiods.Itisnowtimetoask,how
helpfulisthisrathersimplisticcompetition/cooperationspectrum?
Themetaphorthatcompetitionandcooperationexistatoppositeendsofa
spectrumisofsome,butlimited,usefulness.InabookwiththecatchytitleCo-
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opetition,YaleprofessorsBrandenburgerandNalebuffobservethatbusinessisboth
warandpeace.“Businessiscooperation,”theysay,“whenitcomestocreatingapie
andcompetitionwhenitcomestodividingitup.”143“Co-opetition”isacuteword
thatlendslinguisticemphasistoonewaythetwopolesofthe
competition/cooperationscalemayinteractnearthemiddleofthespectrum.But
weshouldnotcarrythemodelofatwo-dimensionalculturalscaletoofar.Itwas,
afterall,notgeneratedbyculturalanthropologistsforthepurposeofguiding
antitrustpolicies.
Howfarshouldwecarryit?Forsometypesofbehavior,the
competition/cooperationscaleseemstoofferareasonablyclosefitforantitrust
analysisandmayhelpusmakecross-culturalcomparisons.Forinstance,insome
countries,tradeassociationsplayacoordinatingroleamongcompetingbusinesses,
withcompetitionlawdefiningthelegalrelationshipbetweencompetitionand
cooperationbyholdingthatitmaybelegitimateforbusinessestocometogether
cooperativelytodiscusstechnology,healthandsafety,ortoshareaggregated
historicbutnon-currentinformationaboutpricesoroutput,oreventoagreeonan
industrystandard--buttheymustnotcooperatetotheextentofdiscussingcurrent
orfuturepricesoragreeinguponkeytermsoftrade.Therulesineachcountryfor
eachtypeoftradeassociationactivitycanpresumablybedisplayedalongthe
spectrum,facilitatingacomparisonofnationalpolicies.
Inotherareasofantitrust,itislesseasytoapplythe
competition/cooperationscale.Forinstance,whenamonopolistabusesits
dominance,theextrememonopolistbyU.S.definitionisnotcompeting--becauseit
istheonlyplayerintherelevantproductmarket,andthushasnodirectrivals
againstwhomitcancompete.Duringthestructurally-orientedgenerationsbefore
theChicagoSchoolrevolution,placementonthescalewouldhavebeenbasedon
marketsharewithinacarefullydefinedgeographicandproductmarket,withthe143ADAMM.BRANDENBURGER&BARRYJ.NALEBUFF,CO-OPETITION4(1996).ThisisalsotheviewofSteiner,textatnote86supra.
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highestmarketsharesdisplayedatthecooperativeendofthespectrum,toindicate
relativelystrongenforcementinthefaceofreducedcompetition.Todayinpractice,
monopolyisdefinedmoreintermsofafirm’sabilitytoignorethecompetitive
effectsofafringeofsmallrivalsortoexcluderivalsfromthemarket.Thusthe
measureisnowmarketpowerratherthanmarketshare.Marketpowercanonlybe
recognizedbycomparisontothepowerofothersbothinandoutsideoftherelevant
market,suchassuppliers,customers,fringerivals,andpotentialentrants.While
thereissomecomplexityindefiningmarketpower(justastherewasinthekeystep
ofdefiningarelevantmarketinthestructuralanalysis),itisatleastpossibleto
comparetherelativedegreeofmarketpowervariousnationsrequireastheir
thresholdsforenforcementconcern.Forinstance,theU.S.isgenerallythoughtto
requireamoreeffects-basedshowingforamonopolizationclaimthantheE.U.does
foranabuseofdominanceclaim,andthuswouldbeplacedclosertothecooperative
polethantheE.U.,withrespecttounilateralactivity.144
Butarewecomfortableenvisioningmonopolyasanexampleof(ortending
toward)cooperation?145Letmediscussthisfirstinreferencetoprivatemonopolies
andtheninreferencetostatemonopolies.EventakingintoaccounttheCopperweld
caseintheU.S.,whichisinterpretedtosaythatinternalsubdivisionsofafirm
cannotillegallycolludewitheachotherbecausetheyarepartofthesameeconomic
entity,146bothunderU.S.andforeignlawtherecanatleastintheorybesomefirms
144 EleanorFox,Monopolizationandabuseofdominance:WhyEuropeisDifferent,59ANTITRUSTBULL.129,130(2014);EINERELHAUGE&DAMIENGERADIN,GLOBALANTITRUSTLAWANDECONOMICS254(2007)(“E.C.[EuropeanCommission]caseshaveallowedadominantpositiontobeprovenwithsmallermarketsharesthanthosenecessarytoprovemonopolyunderU.S.law.Ontheotherhand,U.S.lawrequireslessthanmonopolypowertoproveaclaimofattemptedmonopolization,pricediscrimination,oraviolationoftheFTCAct.ThusthepowernecessarytoshowadominantpositionunderE.C.lawmayliesomewherebetweenthesevariousshadesofmarketpowerrequiredbyvaryingU.S.laws.”). 145SeeEasterbrook,supranote39andaccompanyingtext.146Note99supra.
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thatrepresentthepurestdegreeofmonopoly,thatis,thecompleteabsenceof
meaningfulcompetition,whetheroftheexternalorinternalvariety.Thiswould
seemtoplacethemattheextremeoppositeofcompetition,anditiscommon
parlancetosaythatcooperationistheoppositeofcompetition.Abetterarticulation
maybetorecognizethatcompetitionatitsextremeiscomposedofhighly
fragmentedunits(e.g.,farmfamiliesandsmallfarms),themainpointbeingthat
theseatomicunitsactindependentlyand(attheextreme)engageintheminimum
amountofcooperationwithrivaloutsiders.Thiscanbedeemedindividualism.The
oppositeofindividualismintheparlanceiscollectivism.Itisprobablymore
comfortabletosaythatamonopolyrepresentsacollectivizationofallofthe
horizontalproductionwithinthedefinedmarket,ratherthantheperfectionof
cooperation.
Thisleadsmetosuggestaslightrevisionofthescale,sothatwelabel
individualism/competitionatthefragmentaryendandcollectivism/cooperationat
theunitaryend.Thisbettercapturestherangeofcategoriesofeconomicbehaviors
andgovernmentalpolicyresponses,anditimportantlyhelpsustoavoidhavingto
defendsayingthatthestateistheultimateincooperation,whichmaybetruein
somesensebutsoundsweird.
Theultimateincollectivismisthestate.Astateisabletoholdamonopoly
overtaxcollection,violence,or,forpurposesofourdiscussion,areasofcommerce,
therebyfulfillingapolarroleonthescale.Onecouldarrayvariousnationalpolicies
towardstatemonopolyatvariouspointsonthecollectivism/cooperationendofthe
spectrum:e.g.,comparehavingdoctrinesofessentialfacilities;ornetwork
neutrality;orpriceregulation;orentryregulation;orstateownershipof
monopolisticcommercialenterprises;orstatepoliticalcontroloverprivatelyowned
monopolies.
Similarly,theindividualism/competition:collectivism/cooperationscalecan
beusedtoproduceacross-culturalarrayofnationalpolicieswithrespectto
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mergersandjointventuresorotherhorizontalorverticalorconglomerate
collaborations,accordingtotheirstringencyorleniency,takingintotoaccountboth
stateinterventionsandcivilremedies.Inshort,Ithinkitcanbeuseful,butnot
withoutcomplications,toplacevariationsofcompetitionpolicieswithrespectto
specifictypesofcommercialactiononaindividualism:
competition/cooperation:collectivismscale.
G. StrikingaBalanceBetweenIndividualism/Competitionand
Collectivism/Cooperation
Thereareseveralbenefitsofusingtheindividualism/competition:
collectivism/cooperationscaleasawayofvisualizingcompetitionpolicy.
First,asinmanysocialsciencemethodologies,althoughthereareunavoidable
subjectiveelementstoassigningagivencategoryofeconomicbehaviortoitsproper
placeonthescale,theassignmentisbasedonempiricismratherthanideology.
Second,itcanbeusedtoarraycomparativepoliciesofvariousnationsorcultural
groups.Andthird,itcanbeusedtotracechangesinpolicyovertime.Most
important,itpointstoanessentialfunctionofcompetitionpolicy,whichistostrike
therightbalanceforanyparticularnationataparticulartime.Inthisitemphasizes
thatitisthestate(activelyorpassively)thatisthedriverandnotnecessarilya
particulareconomictheory.Thestatemayandshouldtakeeconomictheoryinto
account,butthedecisionwhetherorhowtohandleacategoryofbehavior,whether
tolegislate,regulate,orpassivelyacceptcustomarypracticeisatbaseapolitical
issueandassuchcanbeexpectedtoreflectcultural,historical,institutional,
economicandpoliticalperceptions.147
147Beinhocker’scomplexityeconomicsrecognizesthestate’sroleinenablingsocietiestostrikeabalancebetweencompetitionandcooperation:“[T]heantigovernmentfreemarketersforgetthateconomiesdon’texistinisolation.TheeconomicevolutionarysystemisconstructedoutofavastarrayofSocialTechnologies,manyofwhichrelyongovernment.Market-basedevolutionrequiresacarefulbalancebetweencooperationandcompetition,andgovernmentsplaya
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XI. Conclusion
Thefieldofcompetitionpolicyisatcoreabouttheauthoritativeallocationof
economicactivityintocategoriesofcooperationorcompetitionor,morelikely,a
mixtureinvaryingproportions.Theallocationismadeonthebasisofavarietyof
impreciseinputs—cultural,political,historic,economic,andinstitutional--in
additiontoneoclassicaleconomictheory,withtheresultthatuniversalagreement
amongthemarket-orientednationsshouldnotbeanticipated.
Explicitandimplicitevaluationsofwheretrustiswarrantedandwhere
distrustshouldbegeneratedbygovernmentpolicieswillplayaroleinthebalancing
thatoccurswithinsovereignstates.Trustisbutonecomponentofthecultural
influencesatplay.
Trustparticipatesinthedevelopmentofeconomicinstitutionssufficientlyto
beembeddedinanaptobservationbyaSouthAmericanantitrustexpert,Julian
Pena,whichcanbeextendedwellbeyondanyLatinAmericanculturalgrouping:
“CompetitionlawsinLatinAmericaintheorylookidenticaltothoseofdeveloped
countriesbuttheirenforcementdifferssubstantiallygivendifferenteconomic,
vitalroleinenablingtheirsocietiestostrikethisbalance.SocialTechnologiessuchascontractlaw,consumerprotectionregulations,workersafetyrules,andsecuritieslawallservetoengendercooperationandtrust,whileantitrustregulationsservetomaintainhealthylevelsofcompetition.”BEINHOCKER,supranote24at425.Beinhockerusestheterm“complexityeconomics”asanumbrellatermtodescribeanewparadigmforeconomics,incorporatingworkotherwisedescribedascomputationaleconomics,agent-basedmodeling,socialdynamics,evolutionaryeconomics,behavioralgametheory,theSantaFeschool,andinteractionseconomics.Hesaysthisisstillmoreofaresearchprogramthanasingle,synthesizedtheory.Id.at96.
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political,institutional,andculturalenvironments.”148Evenwherethewordsarethe
same,themusicwilllikelybedifferent.
Onemaypredictthatculturalimpedimentstouniversalagreement,similarto
thosedescribedinrelationtotheexampleofAbuseofSuperiorBargainingPosition,
willapplytotreatmentofwhattheU.S.calls“monopoly”andtheE.U.calls“abuseof
dominantposition,”aswellastothestandardsandapplicationofmergercontrols.
Withrespecttocartels,thereistodaysubstantiallymoreagreement(notnecessarily
irreversible,however)onthenegativenatureofcartels--morethaneverexistedin
thepast.Nonetheless,evenwithcartelpoliciesthereareculturaldifferences
keepingnationsapartonquestionsofprocedure,149remedy,150andpenalty.151
Finally,withintherealmsofinternationaltradeandsectoralregulation,the
differencesbetweensuccessiveAmericanadministrationswouldappearto
emphasizehowboththepoliticalandculturalshiftsthatcanoccurwithinasingle
nationarecapableofmovingcompetitionpolicies.152
IfthehistoryofcompetitionpolicyintheU.S.reflectscontinualreadjustment
ofprevailingpoliciesinviewofourowndynamicsofcultureandpolitics,whatcan
wesayaboutinternationalconvergence?Itisastretchtobelievethattheworld’s
market-orientednationswilldependuponuniversalisticeconomicmodelsofhow
marketsoughttowork.Thequestforharmonizationorconvergencethroughnon-
148Pena,supranote140at237.149E.g.,arethereanyformsofcollusionthatshouldbedeemedperseillegal?Underwhatcircumstancesshouldthegovernmentbeabletoobtaindocumentsortestimonyfromacompanyunderinvestigation?Whattypesofcollusionshouldbeexemptfromtheantitrustlaws?150E.g.,shouldafinebebasedoninjuryorpercentageofthedefendants’revenues?Whatcivilremediesareavailable?Shouldtherebecivilclassactions?151E.g.,shouldpricefixingbeacriminaloffense?152See,e.g.,Woodard,supranote79.