Economic Law and Economic Growth: Antitrust, Regulation, and the American Growth System

By George E. Garvey; Gerald J. Garvey | Go to book overview
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that Chief Justice Hughes had evinced in the Appalachian Coals decision. The pricing mechanism, Justice Douglas explained, is too vital a part of a properly functioning free market to permit any private interference. Indeed, he asserted, the pricing mechanism is the "central nervous system of the economy."81 Pricefixing agreements could never be tolerated.

In the Court's view as expounded by Justice Douglas, neither the industry's distressed circumstances, the parties' good motives, nor even beneficial actual effects could justify price fixing. It made no difference whether prices were raised, lowered, or merely stabilized. The success of the price-fixing venture was not relevant to the issue of legality--even those who lacked any power actually to affect prices would violate the Sherman Act by agreeing to act as if they could do so.82

Because--above all else--an unrestrained pricing mechanism had to be preserved as the governor of the marketplace, the oil producers' price-fixing agreement was illegal per se. The rule of Socony-Vacuum has, until recently, been applied unswervingly.83

Socony-Vacuum began a period committed to extensive judicial development of per se rules--rules intended to enhance certainty and free courts from the difficult task of complex economic analysis. A per se rule ideally results in swift, unquestioned condemnation--the conduct is illegal regardless of the actor's purpose or the act's actual effect. Conduct characterized as per se illegal is by definition so undesirable that the benefits of certainty and judicial economy outweigh any lost efficiencies.

The announcement of the per se rules of the early 1940s set the stage for a new era in American economic law. The political-economic context of that era, together with its dominant policy themes and their animating theories, furnish the main subjects of the next chapter.

Albert Rees, Real Wages in Manufacturing, 1890-1914 (Princeton, N.J.: Princeton University Press, 1961), 116ff and chap. 5. And see at p. 125, where Rees analyzes his finding that during the period, output per man-hour worked--i.e., worker productivity--actually increased at a higher rate than did real hourly wages in manufacturing.
On a 1958 baseyear of 100.
See Bureau of the Census, U.S. Department of Commerce, Historical Statistics of the United States, Colonial Times to 1970, 2 vols. ( Washington: Government Printing Office, 1975), 1:224, 165; see also Louis M. Hacker, The World of Andrew Carnegie, 1865-1901 ( Philadelphia: Lippincott, 1967), 157-60.
See Jonathan R. Hughes, American Economic History, 2d ed. (Glenview, Ill.: Scott Foresman, 1987), 320.
Robert Cochrane and William Miller, The Age of Enterprise ( New York: Harper's, 1942), 71ff.
Anthony Wallace, Rockdale ( New York: Norton, 1972), 101, 163-68,220-22.


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