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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

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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.

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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

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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

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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,

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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

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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).

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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).

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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).

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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

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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.

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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.]

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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.

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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);

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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

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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

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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-

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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.

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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).

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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.

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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.

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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.

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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.

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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.”).

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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.

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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.

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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.

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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?

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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.

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coercivepersuasionisappropriateanddesirable,butweshouldnotanticipatethat

universalmodelswillleadtofullorevensubstantialagreementonthespecific

placementofvarioustypesofeconomicbehavioronthescaleof

individualism/competitionandcollectivism/cooperation.