On Battening Down the Hatches
I think that it is fair to say that no one’s thinking on climate change is entirely sensible. It’s too huge, too momentous, too scary. The mind cannot fully comprehend it — the scale of action required, the enormity of the potential impacts, the complexity of the environmental and economic systems at work. The brain starts to shut down and we start relying on pure instinct.
People like Pablo Ibanez Colomo, over at the Chillin’ Competition blog, would like to see less of the reactive policy-making that this mindset results in, not just in the global response to climate change but also in competition policy. But I would like to put forward the opposite argument: if you are walking down the street towards a lamp-post and you don’t swerve out of the way, you’re going to get hit in the face. Reacting to what is in front of you can be the right thing to do.
I was slightly irked by Pablo’s equivalating of those calling for change in competition policy with climate change deniers, which was the main premise of his recent article. It struck me as an odd comparison, since for people like me it is precisely the urge to prevent, reverse or mitigate climate change and other such pressing global problems that pushes me to rethink how we do antitrust.
I agree with Pablo that we shouldn’t dismiss expert evidence out of hand, nor the body of case law that has been incrementally developed over decades. But I believe the law should also be open to change and open to new ideas. This means, ideally, that competition authorities (and private parties) should be open to and able to bringing new types of cases and that us “activists” should be encouraged to “pick sides”, as Pablo calls it, and fight for causes that matter to us, as they may bring some new insight into how we should regulate markets, always knowing that the hurdle to actually change the law is, and should be, high.
Why should the hurdle be high? Why should courts pause before setting aside established precedent? Well: Trump. I want to change competition law and enforcement, and I have what I believe to be good intentions and a reasoned argument for doing so. But most people think they have one or both those things and not everybody does.
We have administrative antitrust authorities precisely to provide just the kind of flexibility that we need to show right now, and their decisions are open to judicial challenge if they go too far (and in the States some, like Commissioner Chopra, are calling for the FTC to make more use of its rule-making powers).
So I see scholars like Pablo as barriers to change, but not in a bad way. A socio-political storm is coming (or perhaps it is already here?), and they are our defences, they will uphold the rule of law, they will protect the integrity of competition as a discipline, whilst others defend against the actual storms (which are getting worse). The way I see it, this lower-c conservatism gives me the freedom to play with ideas safe in the knowledge that the system is robust enough to withstand crazy ideas and will only admit ones with enough merit. Hopefully this means that the system won’t get stuck but also that it won’t implode, always assuming there is some balance between established wisdom and new thinking.
In fact what I thought Pablo was going to write about when I saw the article entitled “The climate change challenge: lessons for competition law and policy”, although I should really have known better, was how our regulation of market power and concentration should be recalibrated given the overwhelming evidence, including from some of the papers that he cites, that we have compromised our own way of life on this planet long before we have figured out how to viably populate any others. It’s hard not to conclude when looking at this evidence that we need to reshape the global economy entirely, including, necessarily, the way we regulate markets.
Until we can agree on an alternative system of economic organisation that would be better suited to averting global catastrophe, we have to work with what we’ve got, which means market capitalism, global supply chains, global interdependence and global interconnectivity. I have heard Jeffrey Sachs, the renowned economist, talks about the difficulty in trying to achieve a 180 degree about-turn for the giant tanker that is the global economy, and I think this means we should be pulling all the levers we have available, including antitrust. [And for that matter, the same could be said for other pressing global problems like the role of AI in our increasingly technological society, the future of work, food security, geopolitical stability and so on].
So I don’t think it is radical to say that we may need to update our existing practices. This doesn’t mean doing away with our case law wholesale, but I think we should remain open to the possibility that historical cases were decided in a different era with different priorities and wholly different socio-economic realities. But open mindedness is like good policy ideas or good intentions, everyone thinks they have an open mind even when they don’t. It’s easy to be open when the debate is ongoing, but we always want to come to a conclusion, draw a line under it and move on. If we do that then we risk building on top of quicksand as later policies and ideas unwittingly internalise wisdom or biases that are not immediately traceable in current thinking.
This was my thought when I read an article giving the opinion that “European antitrust enforcers punish success”. Such a position makes sense if you assume as an obvious fact that having huge, money-making companies incorporated and operating in your jurisdiction is necessarily good. But with the debunking of trickle-down economics (see this excellent article by Joseph Stiglitz on trickle-down and monopoly power) and the increasing reticence of big corporates to engage with simple civic duties like paying taxes or hiring people into good jobs, it starts to seem absurd that we would sacrifice everything we hold dear to maintain the “right” of companies to compete until they can crush all their rivals. So I think the reinvigoration of debate in antitrust over the purpose of competition law is not a pointless exercise for hysterical ideologues. I think it is the necessary inward-reflection needed to allow us to step into the next phase of economic life in the modern era.
Personally, I think we should engage with the possibility that industrial concentration, capital accumulation and market power (not just the possibility to act unilaterally on price but to ignore external constraints more generally, including public opinion and government regulation) means that the power to determine our fate on this planet, and to act decisively to rectify the tragic mess that is climate change, is not shared in a remotely equal or democratic way. There is a lot more work to be done but I think one strand should be to find ways to incorporate values other than those we systematically project onto consumers within market regulation. For example, climate change has been shown to have a disproportionate impact on the lives of women, but we think of all producers and consumers as generically the same with no consideration of gender. Mainstream economics may struggle to find the tools and language to deal with this, but behavioural economics may have something to offer and feminist economists certainly will, along with climate systems economists and others.
I sympathise with the view that we should not throw away the sophisticated analysis we have developed in antitrust over the last few decades (we’ve worked so hard on it!) but I think it is time to animate that analysis with fresh data from the real world and reconsider some of the assumptions that lie unexamined within our analytical frameworks. These assumptions may be hindering the global fight against climate change if they give powerful companies a free pass and absolve them of their economic and moral responsibility to repair any damage they may have done and to help build a more resilient future.
