I-1.1 : Antitrust, Regulatory perspectives and Development

Antitrust, Regulatory perspectives and Development

A Neo-Structural Perspective

1. Introduction

For decades, antitrust theory has been moribund and read like an obituary. New ideas have been few and far between, and what little has come on the scene takes pride in having mere practical application, all foundational theories and justifications for antitrust having long since had their day.

In fact, the strong tendency toward simplification and doctrinal negativism has a double origin. In the first instance, they are based upon a superficial analysis of the economic landscape that leads to the belief that the effects of private economic power in society are limited to the manufacturer-consumer relationship. Economic history, both in developing and developed countries, shows that the effects of monopoly power are much more pervasive than just the consumer-producer relationship, affecting development patterns and even distribution patterns in society. In the second instance, there is a powerful and again simplistic faith in the ability of economic theory to predict results and, consequently, in our ability to identify the most efficient result in the consumer-manufacturer relationship.

Adding these two simplifications together leads to a belief in the possibility of identifying one unique theoretical objective in antitrust law, which consists of obtaining a certain economic result. This analysis is, as will be demonstrated, too simplistic.

2. Economic power and its multiple effects on the social and economic spheres

As a matter of fact, an analysis of the relationships and effects generated by economic power should originate not in mathematical assumptions about economic results but in the study of the economic history of countries in which this power is more structured and deeply rooted in social and economic structures. The reason is simple. As in all theoretical analyses, using examples with more differentiated characteristics helps to identify tendencies and demonstrate propositions. This does not mean that such results are invalid for countries in which economic power is less disseminated and less profound. It only means that the results obtained will likely be less intense.

The countries in which economic power is historically most concentrated and consolidated are former European colonies in South America and Asia. In those countries, economic power is a phenomenon which is historically part of society and, therefore, much easier to identify. This knowledge is not new, but its consequences for the economics and internal legal systems in place in developing countries were disregarded by the initial work of the structuralists and are still belittled.

There is no doubt that in the former colonies, as contrasted with today’s developed countries, economic power was made up of economic relationships that were relevant factors even for the formation of the national states. The histories of most if not all of these countries are tightly intertwined with European colonization. This is an important element to be noted. The status of “colony”, far beyond external dependence, created internal power structures that marked and still influences all aspects of development (or underdevelopment) in these societies.

This is why it appears possible to revisit the development process, starting from the structures of economic power and the structure of income distribution that follow them, which are important factors in the underdevelopment of such countries. The bonds of colonial dependence that motivated underdevelopment, even if the root cause, are not its ultimate cause. The explanation is simple, but must be well understood. The internal economic structures are what permit or inhibit, in the necessary moments, the breakthrough from dependency. As we all know, this rarely took place in the history of developing countries. Apart from rare and exceptional situations, in these countries, the bonds of dependency are rarely counter-attacked and even less frequently broken. This is due to internal power structures and income distribution that benefits, even if indirectly, from these bonds.

It is therefore on these structures that the analysis should be focused. In addition, the relationship between economic power and income distribution must be addressed in the light of historic evidence. This relationship is intense and very different from that which prevails in developed countries.

Traditional analysis tends to identify only certain superficial relationships between a monopolistic company and the consumer, to wit, essentially identifying it as the value of the monopolist’s extraordinary profit, which is extracted from consumers through the imposition of monopolistic prices. As has been shown in empirical studies, this value may not be dismissed and accounts for a relevant portion of income concentration.

The fact is that this relationship is much deeper and extensive. This is especially true of structurally concentrated economies such as the former colonies. On the one hand, the relationship is greater in the product market, affecting industrial organization itself. As well as the imbalance in relations between consumers and manufacturers, with the consequent inefficiencies in allocation and distribution, it leads to an absolute disproportion amongst economic sectors. The dynamic sector of the economy is generally concentrated in primary products or low-technology manufactured goods for export and in the durable consumer goods to be consumed internally by the high income segment of the population. These two sectors, monopolized or oligopolized, concentrate inversions and productivity gains. They therefore drain resources from the economic system either directly, through monopolistic profits obtained from suppliers, or indirectly via the siphoning of investments that would otherwise be invested in other sectors (hereafter called peripheral economic sectors).

The effects are also deeper. As well as the consumer market and peripheral economic sectors, there is also strong interference in the labor market. Thus, in many if not most of these countries, income concentration ends up becoming a fundamental condition for economic growth. This is precisely because, based on the production of primary products and simple raw materials, be it for the domestic or foreign market, productivity gains in these economies cannot be obtained only through technological improvements (which are at times insufficient in such low technology sectors). Gains in productivity that are fundamental for economic growth should be based on an increase in workforce productivity, which can be achieved through reducing real salaries or through an effective reduction in the workforce (source of the first so-called economies of scale achieved with economic concentration). This movement is only made possible, however, via a high level of monopolization in the economy, which also makes possible great monopolistic conglomerates in the labor market. As previously mentioned, this state of affairs is explained not only by the fact that competitors in the relevant sector are scarce and hardly relevant, but also because in underdeveloped economies, the colonial-monopolistic standard ensures that there is a lack of competition between economic sectors. Sectors with real economic dynamism, capable of accumulating capital and absorbing the labor force, are few and concentrated.

Only through such an absolutely concentrated growth standard is it possible to have capital accumulation and therefore productive investment that leads to growth. That said, such a growth standard requires for its own existence inverse income redistribution, with impoverishment (relative for employed workers and absolute for those who lose their jobs) of lower income groups and relative impoverishment of peripheral economic sectors.

Placing the spotlight on structures also implies that predominant sociological-individualistic explanations for underdevelopment are not accepted. These justifications are frequently incorporated into neo-institutional reasoning to explain underdevelopment and suggested solutions. Hence, with the individual motivation of colonizers of Latin America and Asia, colonial exploitation, different from that of immigrants to North America and Oceania, was reflected in the entire institutional structure of society. This kind of statement errs in being an under and overstatement at the same time. On the one hand, it exaggerates the differences in the individual spirit of colonizers. Interesting studies demonstrate that the colonial experience is richer than this distinction appears to suggest. Within the same colonies, there coexisted regions of mere exploitation with regions where colonizers considered settling and remaining. Both situations happened in colonized countries in Latin America, Asia and even Africa (South Africa, for example). In these countries, be they Argentina, Australia or India, the capitalist colonial spirit was similar[1].

On the other hand, what these sociologic-individualistic theories fail to consider is precisely the study of economic structures created by exploitive colonization. These structures, and not individual motivation, are the main factors that lead to differences between economies based on exploitive monopoly and societies in which these structures do not prevail. They end up determining economic cycles and influencing the whole of a society’s socio-economic system, superimposing the differences that regions which experienced the definitive settling of populations, as opposed to those where populations were merely exploited, could have from the point of view of the motivations of explorers. Thus, regions of similar colonial spirit like Buenos Aires in Argentina and Sydney in Australia result in countries and regions of social and economic development levels that are absolutely different.

The main hypothesis in this paper is, therefore, that structural concentration of economic power produces effects on the entire system, concentrating income between industrial sectors and between social strata. This concentration of power and income also causes economic growth patterns to change substantially. The increase is strongly based, among other factors, in productivity gains resulting from the inverse redistribution of income from workers (both employed and surplus) to the great conglomerates (and their small number of shareholders)[2].

It is important to observe as of now that this hypothesis, once explained, can help solve two apparent paradoxes of contemporary economic history, which are, in fact, directly correlated.

The first consists of reproducing underdevelopment (with absolute or at least relative deterioration of the main social and income distribution indicators) even in countries that have had important economic growth rates. The hypothesis presented here can help explain this apparent paradox. If the hypothesis for concentration of economic power as a generator of inverse income distribution in the consumer, work and inter-industrial markets in the developing countries is admitted, it is possible to understand the reason for economic growth with deterioration of social indicators. This happens precisely because of inverse income distribution, in other words, due to the fact that gains in productivity result from a loss in real salaries. The final result is the existence of constantly underdeveloped economies, in which the more economic aggregations grow, more poverty and social inequalities are produced.

The second apparent paradox is in the convergence of relative prices between developed and developing countries identified in recent empirical studies[3]. According to this research, it is possible to show a positive correlation between international convergence in prices of commodities and convergence of relative prices of production factors (principally wages and land prices, the wage-rental ratio). This convergence is followed, and thus the apparent paradox, by an increase in differences in living standards in the developed and developing worlds. Obviously it is not sufficient, as is done in these studies (see note 4), to identify technology gains to explain these results. The approximation of prices of commodities followed by an approximation in wage-rental ratios should also lead to smaller and not greater differences in living standards, even with various technologies. After all, commodity and land prices account for much of what is required to improve social and economic indicators of a region. Even with other important factors influencing these indicators, the full discrepancy can only show that there is a particular segment of the population taking advantage of the best wage-rental ratios.

In relation to different and successive economic phases typical of developing countries in which the primary products and raw materials industries are substituted for a rural economy, these results are in reality indicators of economic concentration and inverse redistribution of income and not improvements in quality of living. In these economies, in this particular historic moment of industrialization, the reduction of land prices is more than proportional to the reduction in real wages that, however, still exists. This is because the demand for land drops more in periods of industrialization than the demand for workers and also because during this period, union organization begins in most developing countries, avoiding an even greater deterioration of real wages levels. What is actually happening is a concentration of wealth in the top segments of society, which can accumulate even more capital through the purchase of land. In addition to the association of better wage-rental ratios and worse social indicators, this also explains another peculiar characteristic of developing economies. It is a fact that fifty years after the start of the industrialization process in the majority of the developing countries, we are witnessing a re-concentration of agricultural property in the hands of large landowners and the marginalization of farm workers in such countries. The accumulation of capital, having happened in an unbalanced manner, is such that only the top layers of society can take advantage of reductions in land prices. For the working classes, employed or even unemployed, there is no access to agrarian property. This explains the prevalence and endemic character of the agrarian conflicts in these economies, in spite of the relative abundance of land.

What we are saying, in fact, is that the opposing positions of the classic theory of comparative advantages and the structural theory (in the initial version by Prebish) should be revised. Even with an approximation between the values of the production factors (in a certain period of time[4]), this approximation is not relevant for the economic development of these regions. This is because the central problem of colonialism is not in the structures of international commerce, but in domestic structures of economic power (related or not to foreign economic and trade issues) whose establishment and implementation were very much favored by colonialism.

Furthermore, as mentioned above, the history of colonialism and the monopolistic structure deriving from it impacts the societies of the Southern Hemisphere profoundly, to the point of constituting social and economic structures that will affect the entire future economic development of such societies. It is for this reason that this book begins with a recapitulation of the economic history of developing countries.

Mention of social and economic structures is intentional. It is not correct to start from a unilateral predefinition of human behavior, to wit, that people are moved exclusively by economic rationality as defined by G. Becker[5] or by predominantly social motives, as was so passionately and effectively defended by K. Polanyi[6]. The definition between these two tendencies when studying development (underdevelopment) is therefore unnecessary. Both are inferred in the process and should thus be examined more deeply.

In fact, colonization deeply affects not only economic structures but also social structures. Attachment to the cultures and living standards of developed countries and a certain contempt nurtured by the upper and even middle classes for their own civilization is a common characteristic in these countries. More importantly, the monopoly of economic knowledge introduced by the colonial monopolies roots itself in social structures, creating tension amongst the classes and worsening cooperation. These beliefs and structures create great impediments to development.

In the economic field, the effect of such structures is even greater. It affects, as seen above, the accumulation of capital and the distribution of its gains. Analysis of the means of addressing such serious economic structural problems should be more detailed. It demands analysis of the structures and economic behavior present in the economic order of developing countries resulting from monopolistic structures, as well as a legal proposition capable of offering a way out of the vicious circle of underdevelopment caused by them.

A last and very important point must be made. The central importance to underdevelopment of the monopolistic structure created in the colonies does not imply that it is always the opposite of what we are looking for, i.e., the generalized existence of decentralized economic structures in the economy. It is a common and perhaps intentional mistake among neoclassic theoreticians: opposing the great monopolies with an economic structure of (inefficient, according to them) small and medium-sized enterprises.

Not even from the logical point of view are there only two alternatives. In fact, the real alternative to centralized economic power is a balanced economic structure (in terms of information and bargaining capacity) between supply and demand. To address the correct organization of supply and demand and not only the best configuration of the industrial structure is the real objective of an economic system and the laws that aim to protect it.

This also does not imply that fighting monopolies is enough, on its own, for economic development. In particular, it should be emphasized that economic structures affect structural characteristics in society and not quantitative data. Therefore, singling out monopolies is not a very effective way to explain why, amongst the developing countries, there are differing degrees of relative growth. For this, there are other decisive factors such as population growth, the importance and relative value that each country’s main product has in the international market[7], and also, if to a lesser degree, varied institutional configurations.

3. Economic Results as Legal Guidelines

Criticism of the current simplified rationale for antitrust law is not and cannot be solely internal. It is not only the understatement of the importance of economic structures for the society as a whole that should be criticized, but also the search for economic results itself must be regarded with reservations.

The problem is not in the search for these results, but in the belief that these results may be correctly anticipated. At this juncture, it is helpful to revisit the classic discussion on the possibility (or not) of theorizing economic knowledge. The initial step for this discussion is given by Hayekian studies on economics and information. Here, many of the neoclassic constructions on equilibrium are, in effect, tautologies, i.e., mere results of the presuppositions from which one started[8].

Market equilibrium (and not only individual balance) would only exist where individuals’ expectations corresponded to real data. This correspondence, however, would exist only where information is transmitted between market agents. Note that this statement implies a denial of something Hayek himself would come to say years later. Price cannot be the factor in the transmission of this information because it is a product of the information and not of its creator[9]. In other words, stating that price is the instrument for solving the information problem means a return to the tautology. In fact, price is only considered an information transmitter in a market in equilibrium or tending to equilibrium (in which price, therefore, cannot be necessary to reach it).

The same can be said in different words. In order for price to be a perfect information transmitter, everyone’s evaluations (evaluations that make up the price) on use, relative value and usefulness of the products would have to converge and adhere to reality. The fact is that in this situation, equilibrium would already have been achieved. The correct transmission of information through price is, therefore, a consequence and not the cause of equilibrium.

More recently, these statements have come to be confirmed by research undertaken by theoreticians in economics and information. These models show that information is intrinsically poorly distributed in the majority of markets, which, in many of them, purely and simply renders its functioning impossible.

Being so, the great difficulty is found in the means for transmitting information. The search for answers, here brought to light by the conclusions of information economics, should be more realistic: the issue is not believing or searching for a perfect manner of information distribution, but rather, it is about doing exactly the opposite, specifically, to ascertain that information is imperfectly distributed and that individuals know and take this fact into consideration in their analysis.

There is not and cannot be, therefore, perfect correspondence between subjective expectations and objective data. There is not and cannot be, therefore, equilibrium. What can and does exist is a constant state of friction and contrast between expectations and reality that leads to an also constant change in expectations.

Evidently what is set out for discovery here is what can be found that is constant and not relative. What is meant is that there must be something on which individuals base their decisions. This something, which helps them make forecasts of possible behavior patterns, is the existing economic structures, which are the only elements indicating how the market works from which it is possible to reach conclusions.

There is a rather simple reason for this. There is today a theoretical consensus around the fact that it is possible to predict behavior patterns in certain economic structures. Monopolistic or oligopolistic rationality is well known and does not arise necessarily from predefinitions of equilibrium situations. It simply comes from the fact that there is no economic power that is not exercised – as this would imply denying the situation of power itself.

With equilibrium being unobtainable and information rare and badly distributed, it is not to be supposed that a definition focused on results is to be trusted. In this sense, its use as a parameter for applying antitrust law cannot have a technical justification, as it is an economic policy decision – the political roots of the Chicago neoclassic theory applied to antitrust law are, in fact, very well known.

4. The Legal Approach: Antitrust Law as an Economic Procedure Model

The considerations above lead to an interesting conclusion. On the one hand, economic structures, i.e., the centers of economic power, are relevant data for the functioning of the economy, since, especially in the countries in the Southern Hemisphere, they account for important characteristics in the underdevelopment process. On the other hand, as we have observed, these structures are the only ones from which any kind of presumption can be made about the probable behavior of economic agents.

What has yet to be defined is the kind of instruments that can be used to define the orientation and behavior of these structures. As we have seen, the economic instruments are worth little as they do not supply concrete economic results that are susceptible to empirical verification. Standing in the way of the use of legal instruments, however, is the apparent difficulty in applying social policy to the economic sphere. For many years, the decisions that have affected the economic order have been left primarily to economic theories to which the discussion of values is unfamiliar. It is time therefore, for a legal theory of economic behavior. That topic will be discussed next.

Legal scholars view knowledge in a different way than social scientists. While knowledge in the social sciences is something that is eminently empirical, whether theoretical as perceived by dogmatic Marxists and neoclassical scholars, or practical as viewed by Hayek, knowledge for law scholars is something that is eminently constructed around values.[10]

The moment for addressing values, if well understood and used, is precisely what gives the law its distinctive character and capacity for social change. According to the concept as defined here, political-institutional change is only possible through a profound political discussion of norm-protected values. The transformative and propelling force of the law is found in the fact that, more than a form of defining values, it can itself be an instrument of knowledge for society. To postulate that knowledge is value-related is nothing more than stating that the values of a certain society may influence – and they do – in a determinative manner the knowledge we have of it.

This relationship of values/knowledge in a society is relatively clear in the economic field. Protecting competition and allowing choice leads to the discovery of the real utility of products and better choices for the consumer. The value of competition, therefore, influences reality, allowing every individual to know it.

Once generalized, this statement on the cognitive force of the law implies a transformation in economic law itself. It is a necessary transformation, as the law has an important cognitive role. A judicial system that foresees the right of society to correct itself must necessarily allow this society to know itself.

In a legal system so conceived, legal rules in the economic field necessarily change their nature. It is no longer possible to admit that there are only, on the one hand, rules protective of individual economic rights and, on the other, only aims-oriented norms, defining aims and objectives of the economic process. An example of the first, property law (as it is typically known in a capitalistic state), is insufficient to meet the needs of society as a whole as it currently exists. The latter, strongly being dependent upon a mediation of interests that are at times ideologically opposed (as is the case, for example, with the principles of free initiative and social justice), frequently lack practical application.

There is an urge, therefore, to acknowledge norms that incorporate values and to state that they are not merely an extension of individual rights. For such, it is necessary to admit the pluralistic origin of values from the state and the inter-individual and social relations themselves, which is the principal institutional character of these norms. Other than that, such norms must work as a way of acquiring knowledge about society and the objectives and fundamental value of economic norms, as seen above.

It is normally the case, on the other hand, that this kind of norm is instrumental for the proper functioning of an economic and social system. Only as such is it possible, on the one hand, to discard the ideological political impasse and allow its practical application, and, on the other hand, to ensure its cognitive character. When the equilibrium of economic interaction is guaranteed, individuals or social groups will “discover” their economic preferences. Therefore, these rules have to assume a clear procedural character, of real due process in the economic sphere.[11]

Rules defined by these parameters contain values that are democratically established and debated. On the other hand, they do not predefine the most convenient solution. At the same time that they give the system stability and the citizens assurances, they allow for social and institutional experimentalism. The law thus established leads “to” and does not derive “from” the fairest solution. It is a safer system – as it has safe institutions – and more flexible, as it allows for its own improvement.

It is important to observe that such a rule has a very specific character. It is not enough to ensure the correction of procedures. It is fundamental to ensure balance between the interacting parties not only in legal processes, but also in economic ones.

Thus understood, the institutional rule of due process in economics is the basis of explicit redistributive principles in the regulatory sense, such as, for example, the universalization of services for the public interest. For the principle to be truly effective, it is necessary to include a multitude of citizens who have been jettisoned from the economic process. As is well defined by the theory of the legal process itself, the rule for the right legal process implies ample participation in the process. This idea may and should be extended to economic relations and its procedures.

This concept, as applied to the field of competition, demands a redefinition of the notion of competition itself. It is this notion from now on that will be referred to as “neo structural concept of competition”.

Antitrust law, in its neo structural concept, does not impose a result or economic result, but ensures that the relationship between competitors is fair and that competition exists effectively, not being substituted for by relationships among the powerful that are typical of free markets. In this way, it aims to ensure that economic agents discover the best options, and orders economic relations in the fairest and most balanced way possible.

Effective institutional competition (and not market competition) is thus the central value of antitrust law. In its application, the State should act energetically so as to ensure the existence of competition.[12]

Confronted with such a definition of antitrust law, it is not surprising that this theory opposes the neoclassical approach. The neoclassical model assumes that it is possible to know the utility for each consumer of every product before that product is used, i.e., that a product is purchased because it has use rather than a product has use because it is purchased.

According to the theory here defined, this last statement – and not the first – is correct. It seems rather obvious, and that is exactly what competition means as a discovery process, that the more product alternatives the consumer can examine and discard, the more his choice will be full of information relative to his preferences.

Thus, if there is no alternative to the choice of a product, it is not possible to know how much utility the non-chosen alternative would bring to the consumer. And even if the alternative exists, it is only possible to know the level of utility for the consumer when this alternative is chosen.[13]

This theoretical premise is accepted by the new institutional economics itself (which, as has been seen, does not represent a total rupture with the neoclassic tradition). The limited rationality and opportunistic conduct only make the utility become more uncertain and dependant upon empirical verification.[14]

Being so, the only instrument capable of fulfilling the consumer’s need for information is the existence of competition. Only an economic system based upon competition is sensitive to variations in consumer tastes and can transform itself in response to these changes. Only competition is capable of fulfilling the great information vacuum caused by the market.

Consequently, the possibility of choice has a social value that cannot be denied and must necessarily be acknowledged by the law. The market, on the other hand, does not necessarily lead to this result. That is where the State should interfere, ensuring the former and not the latter.

On the international level, this theory finds its greatest rebuttal in the configuration of antitrust rules of the common markets.

Common markets are nothing more and nothing less than forms of overcoming the States, based on the blind trust of the legal principle of knowledge dilution. The basis of existence of a common market is exactly in the belief of a positively applied antitrust law, in the sense of effective intervention in business structures in such a way as to avoid the existence and/or advantage of use of economic power in the market. Competition assurance happens before market conformation precisely because it is believed that competition is capable of assuring equilibrium in economic relations.

5. Conclusion: the meaning of antitrust

What meaning of antitrust is being suggested? What structures allow access to individual and social choice?

Evidently the answer can only be correctly arrived at when the subject of antitrust and its interpretation are properly analyzed. For the time being, two characteristics can be mentioned.

On the one hand, it must be clear that legal structuralism, contrary to economic structuralism, does not trust the production of exact economic results. Consequently, it is not feasible to set forth, as intended by the Harvard structuralist line of thinking in the 1960s, a structure-conduct-performance model. The study of structures does not aim to ensure results, but rather the access of all to information and choice. Consequently, the structural study of antitrust will focus on ensuring choices and not on predetermined models of business dimension or economic dilution.

From here derives another characteristic. Talking about antitrust in the legal-structural perspective implies finding a balance in the relationship between supply and demand and not searching for predefined economic results (as neoclassical economists would want).

This is not only a theoretical point. Both characteristics have an important influence on the interpretation of fields of antitrust law currently overlooked, such as vertical integration and the analysis of strategic behavior such as predatory pricing.

Finally, such an analysis is also deeply important for the correct understanding of development processes, since economic concentration has profound and negative impacts on wealth distribution and dynamic economic functioning, as the economic history of developing countries demonstrates.

______________

[1] See D. Denoon, Settler Capitalism: the Dynamics of Dependent Development in the Southern Hemisphere, Oxford, Clarendon Press, 1983, p. 18, et seq

[2] For an econometric analysis of the relationship between market concentration (monopolies) and poverty in Brazil during colonial times see. C. Salomão Filho, B. Ferrão e I. C. Ribeiro, Concentração, estruturas e desigualdade – as origens coloniais da pobreza e da má distribuição de renda, Grupo Direito e Pobreza, 2.009.

[3] See J. Williamson, Land, Labor and Globalization in the Third World, 1870 – 1940, inThe Journal of Economic History, n. 62 (1), March 2002, p. 55 (68), see also previous work by the same author, Globalization, Convergence and History, in The Journal of Economic History, n. 56 (2), June 1996, p. 277, et seq.

[4] Approximation not completely shown. There is relevant data in the opposite sense – see on this issue J. Love, Economic Ideas and Ideologies in Latin America Since 1930, inCambridge History of Latin America, Vol. VI, 1, Cambridge, Cambridge University Press, 1994, p. 393 (p. 423, especially note 91).

[5] See G. Becker, The Economic Approach to Human Behavior, Chicago, The University of Chicago Press, 1976.

[6] K. Polanyi, The Great Transformation, Boston, Beacon Press, 1957, esp. p. 46.

[7] On this subject, see the interesting description of the many levels of growth obtained by Latin American countries in the 19th Century due to commodity lottery – Victor Bulmer – Thomas, The Economic History of Latin America Since Independence, Cambridge, Cambridge University Press, 1994, esp. p. 43, et seq.

[8] The best stated theoretical construction of the criticism is in the original article by F. Hayek on Economics and Knowledge, in Economica – New Series, v. 4, n. 13 (February 1937), p. 33, et seq.

[9] This statement will be made by Hayek in a later article, better known however theoretically less consistent The Use of Knowledge in Society, in American Economic Review, v. 35, n. 4 (Sept 1945), p. 519, et seq.

[10] See on this issue E. J. Mestmäcker, “Markt, Recht, Wirtschaftsverfassung”, in Zeitschrift für das gesamte Handelsrecht und Wirtschaftsrecht 137 (1973), p. 101.

[11] Here an analogy may be made to the reasoning of the more progressive lines of thinking in judicial realism which, when faced with the problem of the foundation of the judicial norm, suggest a procedural rule, which would lead to a fair judicial solution and not a material rule that would not escape political and ideological discussions Note that in the realistic line, the procedural thinking is so accentuated that it is taken for granted, where the discussion is about the best institutions in which to apply it. This is what happens with the two main lines – the Yale School and the Harvard School. The former sees in the activity of the judiciary system a political evaluation of opposing interests, and takes up again, therefore, former ideas of the interests of case law (see H. Sasswell and M. Mc Dougal, “Legal Education and Public Policy: Professional Training in the Public Interest” in 52 Yale Law Journal 203, n. 52 (1943); see also B. Ackerman, Reconstructing American Law, Cambridge, Harvard University Press, 1984). The Harvard School, which is more original, centers the discussion of law on the issue of which institution is more apt to apply it (see H. Hart and A. Sacks, The Legal Process, New Haven, Tentative Edition, 1958). More recently, the progressive realism school questions, in a way that joins the Yale and Harvard concepts set forth above, how judicial decisions may influence the public and private spheres that hold power, improving them (see O. Fiss, “The Social and Political Foundations of Adjudication” in Law and Human Behaviour n. 6 (1982), p. 121, et seq.). This procedural method approaches also the reasoning developed by J. Habermas in the political field, which places a minimum procedure (“prozeduralistischeS Minimum”) at the centre of democracy, without which it could not exist. In this minimum procedure, evidently influenced by the individualist liberalism that features the most recent phase of his scientific work, is included the principle of the egalitarian and ample participation of all citizens (Faktizität und Geltung- Beiträge zur Diskurstheorie des Rechts und des demokratischen Rechtsstaats, Frankfurt, Suhrkamp, 1998, p. 368). Note that proceduralism in the economic field is very different from that of the political field, since while equal participation could be just a formal element in the latter, any procedural idea in the former depends, to maintain a minimum level of effectiveness, on a real re-equilibrium of forces, i.e., of effective redistributive measures.

[12] This interventionist competition position, as it is institutional and procedural, may even be considered super-ideological. The historic experience corroborates this point of view. Much of the consensus around the immediate post-war German model of social capitalism is attributed to the political-ideological consensus formed around the ordoliberal ideas on competition and State interventionism achieved through antitrust law. It is in the fight against monopolies that the German democratic socialists identified the social element in antitrust law (see J. Gotthold, Neuere Entwicklungen der Wettbewebstheorie - kritische Bemerkungen zur neo-liberalen Theorie der Wettbewerbspolitik in ZRH n. 145 (1981), p. 286.

[13] See F. Denozza, who, confronted with this issue, uncovers a flaw in the neoclassical thesis and concludes: "In un impostazione che pone al centro i desideri del singolo individuo e l’utilità (o i dollari) che il singolo guadagnerà in conseguenza di certe decisioni, il valore delle cose non può essere stabilito a priori (è ben noto che esistono impostazioni diverse, le teorie c.d. oggetive del valore, come la marxiana teoria del valore lavoro, ma è altretanto noto che essi conducono verso lidi assai lontani da quelli prediletti della scuola di pensiero in esame) - Chicago, l’efficienza e il diritto antitrust, cit., p. 23.

[14] The more progressive representatives of the new economic institutionalism school already accept the difficulty and even impossibility of establishing values from economic rules, admitting that cultural and moral values have great enough influence over economic behavior and institutions to stop this kind of presumption. This tendency is particularly emphasized in the Nordic School of the new institutional economics (see T. Eggertsson, The Economics of Control and the Costs of Property Rights in Rights to Nature - Ecological, Economic, Cultural and Political Principles of Institutions for the Environment, Washington, Island Press, p. 157 (167); A. Sen, “Rational Fools: a Critique of the Behavioral Foundations of Economic Theory” in Choice, Welfare and Measurement, cit., p. 84-106).

http://www.regulatorylawreview.com/spip.php?article220

I-1.1 : Antitrust, Regulatory perspectives and Development

Related articles

your comment

Get our newsletters

I-1.1 : Antitrust, Regulatory perspectives and Development

Related articles

your comment