Despite a growing sentiment among academics and legal scholars favoring strong government regulation for Big Tech monopolies, Kacey Reeves West said the Chicago School of Economics still provides the answers concerning companies that impact every American’s life.

Hillsdale’s political economy club Praxis hosted West’s lecture, “Antitrust and Big Tech: Has the Chicago School Failed?,” on Tuesday, Aug. 30.

West, a 2018 graduate of Hillsdale College and a fourth year doctoral student in economics at George Mason University, addressed the challenges posed by the New Brandeisians, a group of academics and legal jurists who have been critical of the Chicago School’s opposition to antitrust law.

The New Brandeisians argue government regulation is essential to maintaining “perfect competition.” The Chicago School disagrees and finds government interference harmful to the competitive processes in the market.

“When you begin to study antitrust, you realize that there’s a lot of room for interpretation because antitrust is in itself very vague,” West said. “And it’s been vague since the beginning when the Sherman Act made what they call monopolization illegal. It’s a very big term that people have struggled to define over the past 100 years or so.”

West argued the New Brandeisian’s surge in popularity follows the rise of Big Tech corporations, such as Amazon, Facebook, and Google who have cornered the market on what West calls “platform companies” or “two sided markets.” 

“Platform companies essentially provide a platform like a digital space for buyers and sellers to meet,” West said. “They are unique because they actually don’t create inventory.”

Several court cases are ongoing concerning the Big Tech companies. West said Chicago’s interpretation of antitrust laws provides the surest way forward since leading Chicago School economists were appointed as judges to various district courts. 

“Robert Bork, Frank Easterbrook, and Richard Posner, who were legal academics at Chicago, were actually able to implement economic theory into the legal decision making practice because, at one point or another, they were all appointed as judges,” West said. 

The New Brandeisians also have their own legal academics: Louis Brandeis, former Supreme Court justice and namesake of the movement who died in 1941, and Lina Khan, former Yale law school graduate. In her lecture, West targeted Khan’s assertion that antitrust laws needs to be overhauled to recognize the “competitive process.”

Both the size and network effects of Big Tech frighten the New Brandeisians, West said. The size of the monopolies frightens the group because they force other companies out of the marketplace; the network effects frighten them because of the interconnectivity of platforms such as Facebook and Instagram. 

According to West, the New Brandesians’ solution to these issues is twofold: either there must be “perfect competition” between producers and consumers or legal monopolies should be codified with set price ceilings and control of who enters and exits the market. 

The reliance on this idea of “perfect competition” thwarts the idea of competition itself, West said. Competition entails the threat of a winner and a loser, with the winner facing the ever present threat of being supplanted. Khan asserted the Chicago School is guilty of relying too much on neoclassical models of supply and demand; yet these same models often describe the “perfect competition” which Khan presents as a solution to Big Tech monopolies.

Professor of Economics Ivan Pongracic said antitrust laws were guilty of helping the monopolies of Big Tech.

“Big Tech companies all understand that their main threats are coming from tiny upstarts,” Pongracic said. “And they figured out they can actually use all these oppressive antitrust laws and regulations to actually make it so expensive for all of these companies to abide by those regulations.” 

Senior Rob McClelland, treasurer of Praxis, agreed with Pongracic and West.

“So many products that are purchased today are either online entities that have no physical presence or they are physical things that are bought online,” McClelland said. “And I think that changes the whole idea of what a monopolistic or non-monopolistic pricing model is.”

West said she hopes to see more scholarship and a measured approach to antitrust laws.