Over time, it became clear that the best way to lower prices over the long run was in fact to allow producers to set higher prices today. That’s because doing so forces producers to compete with producers rather than retailers. And it forces retailers to compete with retailers rather than with producers. The result being that we end up with both producers and retailers doing a better job of serving the consumer.
The laws designed to restrict price predation also helped not merely to arrest the consolidation of power begun during the Plutocratic era, but to reverse the process. One result was that Americans enjoyed a truly open market for books well into the 1980s, one that delivered well-edited, provocative works priced to fit almost any budget.
So how do we restore our open market for books?
Unfortunately, the antitrust technocrats in our Justice Department are under the thrall of a dangerous ideology.
The intellectual and legal “regime” that guides enforcement of our anti-monopoly laws dates to 1981, when a strange coalition of consumer activists on the left and Chicago School “market fundamentalists” on the right joined to promote a new frame, designed in theory to promote the “welfare” of the “consumer” rather than the well-being of the citizen. The main goal was no longer competition but lower prices.
It’s not that the 1981 changes were entirely wrong; at the time, the United States was suffering from double-digit inflation. But in the three decades since, the government never readjusted this frame, even though we licked inflation long ago, and even though it is now clear that the change helped to clear the way for the most wide-ranging concentration of economic power in our history.
We need to re-empower producers to set a minimum price for their goods, just as the book publishers attempted to do with their “Agency” model—the one the DOJ found so objectionable. Doing so would help to prevent Amazon (and other goliath trading companies) from continuing to use its immense and unfair pricing power to bankrupt other retailers, to loot the profits of and capture control over their suppliers, and to manipulate the content of the product itself.
Some of the publishers quickly settled with the Justice Department. But at least one—Penguin—appears ready to continue this fight in court. Doing so will hopefully extend this debate long enough for the American people to relearn how to make a market in America that works for all books, physical and electronic. And indeed enables us to relearn how to remake our other markets as well.