Brandeis and the Willingness to Innovate
Wednesday, March 6, 2019
Brandeis and the Willingness to Innovate
With publication of Louis Brandeis: A Man for This Season by the Colorado Technology Law Journal, Jon Sallet and the Benton Foundation are offering this new series, Updating Antitrust for a New Age, adapted from that article to demonstrate that progressive competition policy incorporated both the goals and the means that Brandeis believed would provide the strongest tools to fight against the trusts and the monopolies of his day. This series is part of an ongoing examination of how to update Brandeis—and, more importantly, antitrust—for the digital age
The connective tissue that unites Brandeis’s view of legislative action, the creation and enforcement of antitrust law, and the use of sectoral regulation is the willingness to experiment. We are well-acquainted with Brandeis’s invocation of the “laboratories of the states” but his reliance on experimentation, what we might today call innovation, runs much deeper than that well-known aphorism.
Brandeis understood the importance of industrial innovation
Criticizing trusts, Louis Brandeis concluded that a “huge organization is too clumsy to take up the development of a new idea.” He believed that the United States lagged Germany in adopting innovative approaches to steel manufacture because the U.S. Steel monopoly was insulated from the push-and-pull of competition: “With the market closely controlled and profits certain by following standard methods, those who control our trusts do not want the bother of developing anything new.” Industrial innovation was so important that he believed it deserved governmental support of the kind that had been given to American agriculture in the 19th Century.
Innovation just as important for government
In 1922, Brandeis wrote a letter to the Federal Council of Churches in America in which he stated what his biographer Alpheus Thomas Mason calls “his creed in essence” and which states, in part:
Seek for betterment within the broad lines of existing institutions. Do so by attacking evil in situ and proceed from the individual to the general. Remember that progress is necessarily slow; that remedies are necessarily tentative; that because of varying conditions there must be much and constant enquiry into facts. . . . and much experimentation.
This is a call to arms based on institutions and individual opportunity. And the words Brandeis chose: “progress,” “tentative,” “enquiry,” and “experimentation,” reflected his pursuit of “betterment” in each arena that he touched. These were the means of innovation supporting his view “that reforms could make a difference.” Brandeis’s view of experimentation was an important aspect of the Progressive Era belief that scientific analysis and experimentation would advance competition policy.
Notably, Brandeis looked for ways to create regulation that would incent beneficial conduct. For example, in 1905-06 he became heavily involved in regulatory oversight of the Boston Consolidated Gas Company and backed a plan to institute a new “sliding-scale” plan that would allow the gas company to increase its profits and raise its dividend by lowering its costs, but only if it also reduced its price to customers. It was an immediate success, which one Brandeis biographer describes as “boldness and creativity seem[ing] to produce what Brandeis wanted, a solution fair to all concerned.”
He embraced the forward-looking antitrust standards of the Clayton and FTC Acts because he understood that new economic conditions would likely bring “novel unfair methods” of competition.
Governmental experimentation runs much deeper than “laboratories of the states”
Innovation was central to Brandeis’ understanding of America as a democracy. In 1919, Oliver Wendell Holmes authored his famous dissent regarding application of the First Amendment in Abrams v. United States, in which he said:
[T]he best test of truth is the power of the thought to get itself accepted in the competition of the market. . . . That, at any rate, is the theory of our Constitution. It is an experiment, as all life is an experiment.”
Upon reviewing Holmes’ opinion, Brandeis sent him a private note saying, “I join you heartily & gratefully.” If Holmes is more Eeyore and Brandeis a bit more Tigger about the prospects for reform, here, as so often, they joined to embrace experimentation as central to American democracy. For Brandeis, as for Holmes, democracy itself was an experiment of the first order. In his dissent in New State Ice, Brandeis provided the broad perspective central to his vision of American democracy:
[A]dvances in the exact sciences and the achievements in invention remind us that the seemingly impossible sometimes happens. There are many men now living who were in the habit of using the age-old expression: “It is as impossible as flying.”
The discoveries in physical science, the triumphs in invention, attest the value of the process of trial and error. In large measure, these advances have been due to experimentation. In those fields, experimentation has, for two centuries, been not only free, but encouraged . . . There must be power in the States and the nation to remould, through experimentation, our economic practices and institutions to meet changing social and economic needs.
Jonathan Sallet is a Benton Senior Fellow. He works to promote broadband access and deployment, to advance competition, including through antitrust, and to preserve and protect internet openness. He is the former-Federal Communications Commission General Counsel (2013-2016), and Deputy Assistant Attorney General for Litigation, Antitrust Division, US Department of Justice (2016-2017).
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