'The Myths of Anti-trust' 40th Anniversary

0:00Tom Armantano is one of the heroes of the revival of Austrian economics, and I'll start out by saying that, but I probably don't need to say it because the reason we're here is celebrating his book and his work. In trying to make that argument, I want to cover three things as I'm talking here. First of all, I want to talk about his book, The Myths of Antitrust, as a book about antitrust. Second of all, I want to talk about it as a book in Austrian economics. And finally, I want to talk a little bit about the intellectual environment in economics at the time the book was written, because I think that it makes it a little bit more It's more impressive to think about the book along those lines.

0:54If we think about the book along the lines of a book on antitrust, I mean, you've got to say it holds up pretty darn well after 40 years. I mean, you read it, the arguments seem fresh. He goes through and discusses and dissects the antitrust cases. So the book really holds up pretty well in defending the idea that anti-trust laws are against the public interest. Now, it's interesting to consider the degree to which arguments along those lines are persuasive.

1:41When I talk to my own students, I tell my students, if you want to understand why any policy exists, don't ask why is this in the public interest. Ask yourself who benefits from this policy and how much political power do they have? So that's an argument that sort of suggests that it's interests rather than ideas that are important. And I guess as academics, we might rebel against that a little bit. And I'm thinking on the other side, there's that famous passage at the end of John Maynard Keynes's General Theory, where Keynes says, the ideas of economists and political philosophers are more powerful than is commonly understood.

2:28Indeed, the world is ruled by little else. And I try to articulate that clearly. Indeed, the world is ruled by little elves, because my former colleague Roger Garrison tells this story, he used that quotation in class, he used that quotation from Keynes in class, and then later on in an exam, he relates back that a student writes on his exam, the world is ruled by little elves.

3:06And I have to say, economics probably in general isn't that funny, and I'll say, given Roger some credit, every funny thing I know about economics I heard from Roger. So it's interesting to consider which is more influential, ideas or special interests, but I do think they go together. I live in Tallahassee, Florida, the capital of Florida. And I do interact with the state legislature now and again. And I do see the power of special interests. But I also see that, in general, on issues there are people on both sides.

3:52And I think the people who are on both sides have their own interests. But they need arguments to back those interests up. And so if we can come up with the ideas and present the ideas, sometimes that can help the interests that are on the right side. In fact, I'm remembering from my own experience having a legislator call me up, a Florida legislator call me up, because he read something that I had written. And he said, we're holding hearings on this subject and so forth, and I've got this thing that you wrote. and he starts reading me over the phone, you said this and that and that and he said I want you to come down to our committee and say that and so I did but and you know when you think about the way that academics are used in the policy process it's not that gosh here's a college professor, this guy is so smart, let's hear what he has to say, no it's not

4:54not that at all, you know, it's that, you know, here's somebody who has the appearance of neutrality because he's an academic and he's going to say something that bolsters my case and so I'm going to try to get him to come down and give an argument that works on my side. And so again, when I think about the ideas, we look at Dom's book as a book on antitrust And one of the things that Don talked about when he was giving his talk about the book was maybe he made a mistake by saying that we ought to just abolish antitrust laws. But I don't think that's the case, because if you leave the laws in place, that just opens the door for special interests down the road.

5:45So I think, really, the best thing to do is to abolish the laws. And also, I don't know how much you want to be used as a foil or something, but if you take an extreme view, that makes people who are edging toward your view look like middle of the road. But anyways, when you think about the influence of ideas, And I think the book holds up really well. When you read it, it gives good solid arguments. And so it's a masterpiece in antitrust. I want to think a little bit about the book also as a book in Austrian economics, because it definitely has a solid Austrian foundation.

6:40And if you read the Myths of Antitrust, you look on the first page of the book, and there's a footnote on the first page of the book that references some influences. And the influences are Ludwig von Mises, Murray Rothbard, and Alchin and Allard. How did those guys get in there? But, I mean, right on the first page of the book, you know, you see where he's coming from and Mises and Rothbard there, and there at the beginning of the book, let me just read a little bit out of the book, which I hope I can read because it's written in my handwriting and I'm not reading the book, but just to get a flavor for the theoretical foundation, Foundation.

7:36Dom says, in the real world, as apart from economic fantasy, competition is a dynamic process where firms, to sustain their existence, must understand and exploit consumer demand, discover and employ economic resources, and adopt and employ technological change in order to meet the thrusts of the ever-changing market forces initiated by consumers, factors of of Production or by One's Economic Rivals. Competition is an endless series of differentiations and is as far from the docile and calm homogeneity assumptions as imaginable. Differentiations of product, of service, of quality, of convenience, of advertising, of technology, of innovation, and of price are the very essence of market competition, rather than imperfections or departures from some presumed ideal equilibrium.

8:33So you see from the references of people in the Austrian school, you see this Austrian foundation in the book. But that's a small part of the book. So we start out, we have this foundation. And then in what I think is just a model of the way that Austrian economics always have to be approached, but a good approach for doing research in Austrian economics, then Dom takes these ideas to all these antitrust cases. And so the bulk of the book is really, let's look at the facts. So he's got facts about the cases, let's look at the cases, let's look at what was said about them, let's look at how these cases were actually decided.

9:19And so starting from this Austrian foundation, the book is actually looking at real public policy issues using real facts, you know, and I think sometimes there's a tendency in research in Austrian economics to be perhaps overly theoretical, you know, to say, well, you know, here's our theory and here's why the neoclassical theory is wrong, and okay, fine, but what difference does that make? And if we're talking about antitrust policy, that's what Dom's book says. Here's what difference that makes. And he's looking at actual policies to illustrate that. So I think we can look, as I first wanted to do, look at the book as a book on antitrust, but think about it as a book in Austrian economics, and when you look at it that way, it's a really good model for the way that we ought to be doing research in Austrian economics.

10:13I think that's another reason why the book has held up so well for 40 years. And the final thing that I wanted to talk about is the academic and intellectual environment in economics at the time that the book was written. And I think Roy made some reference to this, the difference between what things were like in 1972 and 1982 when the second book came out. But when you look at the evolution of the Austrian School, you go back to 1972 or back to the 60s when you started writing the book, the Austrian School was almost non-existent.

11:02I mean, I think if you get right in the middle of the 20th century, and that's probably not exaggerating too much to say there was one Austrian economist, which was Ludwig von Mises. There are other people we could talk about, Hayek was still around but he sort of moved to other things, but really Ludwig von Mises was the core of the school and maybe the Austrian school. If he wasn't there, we might not be here today. And from there, there were a few students of Mises who were doing some work in Austrian in Economics, and of course, Kirzner and Rothbard are two of the giants. So they were doing work, but they were doing work more or less in isolation. I mean, they were putting out their work, but there really wasn't an Austrian school as such. And I think, as Roy noted some of the facts, I mean, there was a big Austrian revival that started in the 1970s there was a conference in South Royalton and then the conference that Dom organized in Hartford the next year

12:13so there was really a big revival in Austrian economics so that the school starts rebuilding as we move through the 70s into the 80s and 90s to today but if you go back to when this book was written, that intellectual infrastructure wasn't there wasn't there. So there were a few books, and Murray's book was cited. So there were a few books, but there just wasn't that Austrian school that was there. And one of the things I'm kind of interested in, Dom, is how did you run across this stuff? And how was it that you were captivated by it in order to use that as a foundation for your ideas? Because I mean, at the time, when I was an economics major in college, I actually graduated from college in 1972 when the book was published, and as a college student and economics major, I never heard of any of this stuff, you know, I mean, it was never presented in class, there wasn't, you know, so I mean, today, the Austrian School is prominent enough, if you read the

13:23New York Times, Paul Krugman is criticizing this school, but go back to the 70s, nobody would have even heard of it, nobody would have made mention of it. So Dom really wrote this book, this book was published when there was pretty much a vacuum, a few works around, but not really an Austrian school as such. And so when you look at the revival of the of the Austrian School, really one of the key books in it is the myth of anti-trust. You can look at the work of people like Mises, like Rothbard, like Kirzner, they're laying the foundation, but really a model for what the Austrian School can do, what we can do as Austrian economists, that book really serves very well.

14:12And so that's one of the reasons why I was saying, you know, Dom is one of the heroes of the Austrian revival, one of the people who's put out, you know, solid work that's endured for 40 years and has served as a model for the rest of the school. And so, you know, now we look around, I mean, look at the building here, the Mises Institute, the people who are here at the conference, and I know a lot of people who are at that at South Royalton's conference, daughtering up to the stage and so on. And there's a whole new generation of Austrian scholars who are following on, but there just wasn't that kind of intellectual infrastructure at the time that Dom's book was written.

14:57So he was putting out a book that didn't really have a support group, didn't really have the intellectual infrastructure. So it was a pretty courageous thing to put out the book and to pursue this line of reasoning. So I think you can look at Dom's work at several levels, like I said, and what I've tried to do in the time that I have had allotted, think about it as a book on antitrust. Great book. Think about it as a model for the way that we should be doing research in Austrian economics. It's a great book. And think about the environment at the time when the book was written and it's even more miraculous that Don was able to come up with the book and write the book.

15:45So I'll close with that but I will say, you know, I do have that lingering question about what was it that brought this work to your attention and why is it that you decided to pursue that. Again, reflecting on my own education, especially as an undergraduate, where, you know, these These ideas were so far below water that I'd never heard of until I got to graduate school. And I will say, when I got to graduate school, I didn't hear about it from my professors either. I had some fellow graduate students who'd run across the work and was exposed by them. So thank you very much. Thank you, Dom, for the book. Thank you very much.