Image credit: zombiu26 / Shutterstock.com
Last week, as President Joe Biden signed “An Executive Order Promoting Competition in the American Economy,” he echoed the language of his predecessors. “[C]ompetition keeps the economy moving and keeps it growing,” he said. “Fair competition is why capitalism has been the world’s greatest force for prosperity and growth…. But what we’ve seen over the past few decades is less competition and more concentration that holds our economy back.”
Biden listed how prescription drugs, hearing aids, internet service, and agricultural supplies are all overpriced in the U.S. because of a lack of competition (RFD TV, the nation’s rural channel, has a long-running ad complaining of the cost of hearing aids). He also noted that noncompete clauses make it hard for workers to change jobs, another issue straight out of the late nineteenth century, when southern states tried to keep prices low by prohibiting employers from hiring Black workers away from their current jobs.
“I’m a proud capitalist,” Biden said. “I know America can’t succeed unless American business succeeds…. But let me be very clear: Capitalism without competition isn’t capitalism; it’s exploitation. Without healthy competition, big players can change and charge whatever they want and treat you however they want…. “[W]e know we’ve got a problem—a major problem. But we also have an incredible opportunity. We can bring back more competition to more of the country, helping entrepreneurs and small businesses get in the game, helping workers get a better deal, helping families save money every month. The good news is: We’ve done it before.”
Biden reached into our history to reclaim our long tradition of opposing economic consolidation. Calling out both Roosevelt presidents—Republican Theodore Roosevelt, who oversaw part of the Progressive Era, and Democrat Franklin Delano Roosevelt, who oversaw the New Deal—Biden celebrated their attempt to rein in the power of big business, first by focusing on the abuses of those businesses, and then by championing competition.
Civil War era Republicans had organized around the idea that the American economy enjoyed what they called a “harmony of interest.” By that, they meant that everyone had the same economic interests. People at the bottom of the economy, people who drew value out of the products of nature—trees, or fish, or grain—produced value through their hard work. They created more value than they could consume, and this value, in the form of capital, employed people on the next level of the economy: shoemakers, dry goods merchants, cabinetmakers, and so on. They, in turn, produced more than they could consume, and their excess supported a few industrialists and financiers at the top of the pyramid who, in their turn, employed those just starting out. In this vision, the economy was a web in which every person shared a harmony of interest.
But by the 1880s, this idea that all Americans shared the same economic interest had changed into the idea that protecting American businesses would be good for everyone. American businessmen had begun to consolidate their enterprises into trusts, bringing a number of corporations under the same umbrella. The trusts stifled competition and colluded to raise the prices paid by consumers. Their power and funding gave them increasing power over lawmakers. As wealth migrated upward and working Americans felt like they had less and less control over their lives, they began to wonder what had happened to the equality for which they had fought the Civil War.
Labor leaders, newspapers, and Democratic lawmakers began to complain about the power of the wealthy in society and to claim the economic game was rigged, but their general critiques of the economy simply left them open to charges of being “socialists” who wanted to overturn society. Congress in 1890 finally gave in and passed an antitrust act, but it was so toothless that only one senator in the staunchly pro-business Senate voted against it, and no one in the House of Representatives voted no.
Then, around 1900, the so-called muckrakers hit their stride. Muckrakers were journalists who took on the political corruption and the concentration of wealth that plagued their era, but rather than making general moral statements, they did deep research into the workings of specific industries and political machines—Standard Oil, for example, and Minneapolis city government—and revealed the details behind the general outrage.
Their stories built pressure to regulate the robber barons, as they were called by then, but Congress, dominated by business interests, had no interest. Instead, President Theodore Roosevelt and his successor, William Howard Taft, tended to rein in the trusts through the executive branch of the government, especially by legal action undertaken by the Department of Justice.
On Friday, Biden promised to use the power of the executive branch to rein in corporations, much as Theodore Roosevelt did during his terms of office. But there was more to Biden’s statement than that. His emphasis on restoring competition is from the next historical phase of antitrust action.
In the 1912 election, political language turned away from the evils of trusts and toward the economic competition so central to American life. Both Republican Theodore Roosevelt and Democrat Woodrow Wilson centered their campaigns around the idea that big business was strangling competition. Wilson called for a “New Freedom” that would get rid of the trusts once and for all and return the nation to a world of small enterprise and opportunity. Roosevelt scoffed at this idea. He talked of the “New Nationalism,” in which a large government would restore competition by regulating big businesses. (He said that if you got rid of trusts and then looked away, they would immediately spring up again.)
While their solutions were different, both Roosevelt and Wilson had reframed the stratified economy not solely as a problem, but also as an opportunity. Trimming the sails of the corporations was not an attack on the liberty of industrialists, but rather a restoration of the competition that had, in the past, enabled the country’s economy to thrive. And, once elected, Wilson managed to get key items of that agenda passed through Congress.
That positive emphasis on competition carried into the administration of the next Roosevelt president, FDR. Biden noted that FDR called for Congress to pass an economic bill of rights, including “the right of every businessman, large and small, to trade in an atmosphere of freedom from unfair competition and domination by monopolies.” And indeed, the idea of restoring a level playing field for all businesses, rather than letting them succeed or fail based on the whims of economic wirepullers, persuaded businessmen who had previously opposed regulation to line up behind the establishment of our Securities and Exchange Act of 1934.
Americans have lost this tradition since 1980, Biden said, when we abandoned the “fundamental American idea that true capitalism depends on fair and open competition.” Reframing business regulation as “laws to promote competition,” he promised 72 specific actions to enforce antitrust laws, stop “abusive actions by monopolies,” and end “bad mergers that lead to mass layoffs, higher prices, fewer options for workers and consumers alike.”
For 40 years, the Republican Party has offered a vision of America as a land of hyperindividualism, in which any government intervention in the economy is seen as an attack on individual liberty because it hampers the accumulation of wealth. Biden’s speech on Friday reclaims a different theme in our history, that of government protecting individualism by keeping the economic playing field level.
Heather Cox Richardson is a Professor of History at Boston College. This post originally appeared at her Substack, Letters from an American.