The Curse of Bigness: Antitrust in the New Gilded Age – Tim Wu Book Summary

The Curse of Bigness: Antitrust in the New Gilded Age – Tim Wu | Free Book Summary

The Curse of Bigness: Antitrust in the New Gilded Age – Tim Wu

In recent decades, industrialized nations have witnessed the reemergence of an economic problem that once seemed like a thing of the past – the problem of economic concentration. This refers to the process by which industries become dominated by a smaller and smaller number of companies, which grow bigger and bigger, until just a handful of corporate giants reign supreme.

Today, the most visible giants are those of the tech industry, such as Amazon, Facebook and Google. But those are just the tip of the iceberg.

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In this book summary, we’ll look at how and why this problem first emerged in the late nineteenth century, subsided in the early to mid-twentieth century and then reemerged in the late twentieth century. While taking this whirlwind tour of economic, political and legal history, we’ll also look at the troubling consequences of economic concentration, as well as some possible solutions.

The Glided Age

Picture a time in American history where the rich got richer and the powerful only grew more dominant.

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Welcome to the Gilded Age, where economic concentration went into overdrive. It was a time where trust after trust emerged, culminating in the creation of monopolies – companies with almost complete control over entire industries.

Between 1895 and 1904, a whopping 2,274 American manufacturing companies merged into just 157 trusts, and the trend only continued.

The most powerful of these trusts became monopolists. The famous names of the era, such as John D. Rockefeller and Andrew Carnegie, became two of the wealthiest individuals in history, each worth over $300 billion when adjusted for inflation.

The Age of the Monopoly

The monopolists didn’t just see themselves as greedy capitalists out for a quick buck. No, they saw themselves as visionaries, leading the charge towards a new and improved form of capitalism.

In their eyes, competition was chaos – a never-ending battle between small, scrappy companies that was inefficient and wasteful.

Monopolies, on the other hand, were the epitome of stability and efficiency. By consolidating entire industries under a single company, they could eliminate the unpredictability of competition and achieve economies of scale, making products cheaper and more readily available for the masses.

The proponents of this view called themselves the trust movement, and they had a utopian vision for the future of capitalism. They believed that monopolies were the next logical step in the evolution of the economic system, and that their rise would bring about a new era of prosperity and order.

The Age of the Monopoly Contd.

Of course, this perspective ignores the obvious downsides of monopolies – namely, the fact that they stifle innovation and give companies unchecked power over their customers. But for the monopolists of the Gilded Age, these concerns were a small price to pay for the benefits of their beloved trusts.

In the end, the trust movement was just another chapter in the ongoing debate about the role of competition in capitalism. But it’s worth remembering that, for a brief moment in history, the idea of monopolies as a superior form of economic organization was not only accepted, but celebrated.

Social Darwinism and laissez-faire economics

The trust movement argued that monopolies were not only the natural culmination of competition, but also a superior form of economic organization. According to this view, competition led to chaos and economic turmoil, while monopolies provided stability and efficiency through centralized control and economies of scale.

The trust movement’s perspective was informed by social Darwinism, which viewed the destruction of competition and the subsequent rise of concentration and monopolies as symptoms of progress. As a result, they advocated for laissez-faire economics and resisted almost all forms of governmental intervention, even fighting against child labor bans and working-hour limits.

The trust movement’s ideology had several damning consequences, including supporting government-led eugenics programs.

The problem with monopolies

Monopolies may seem like the natural result of capitalist competition, but they come with a lot of drawbacks. Sure, big companies can benefit from economies of scale, but they also start to suffer from diseconomies of scale. As companies get bigger, they become more complex and less adaptable to changes in the market. This can result in inefficiencies that hurt everyone.

The biggest problem with monopolies is that they give too much power to the monopolist. They can exploit workers by decreasing wages and increasing work hours without fear of competition. And they can raise prices without fear of losing customers to other companies.

Theoretically, new competitors could enter the market and break up the monopoly. In reality, the monopolist can create barriers to entry, making it almost impossible for anyone else to compete.

. When companies get too big, they can use their power and resources to sway lawmakers and regulators in their favor. All of this adds up to an unfair and inefficient system that hurts workers, consumers, and competition.

Large companies in noncompetitive markets can greatly influence governments

In the Gilded Age, big companies needed the government to turn a blind eye or lend a helping hand for their dubious schemes. They used their economic power to influence the government, like when Rockefeller convinced them to withhold permits for building oil pipelines to eliminate competition.

Oligopolies, dominated by a few companies, also exert their influence by lobbying the government with aligned interests, like the US pharmaceutical industry spending $116 million to prohibit Medicare from negotiating lower drug prices and earning $90 billion per year in additional revenue. The math is in their favor – it’s easier to organize a few like-minded companies than millions of diverse citizens.

Thus, concentrated industries can convince the government to give them goodies like tax cuts or subsidies to maintain their monopolies. It takes a serious assertion of authority for the government to push back against them.

The 20th Century and the Anti-Monopoly party

In the early 1900s, economic concentration in the US led to civil unrest and the formation of the Anti-Monopoly Party. The government responded by passing the Sherman Act of 1890, but initially failed to enforce it.

However, when Theodore Roosevelt took office, he saw monopolies as a threat to democracy and filed 45 antitrust lawsuits against giants like JP Morgan and Rockefeller. Roosevelt’s successor, President William Howard Taft, continued the trust-busting policy, filing another 75 cases.

Many monopolies were broken up, including Standard Oil, which was split into 34 separate companies. The US government continued to pursue this policy throughout the twentieth century.

The last 30 years

In the late 1900s, trust-busting lost its former vigor due to Bork’s reinterpretation of the Sherman Act, and by the 2000s, monopolies and oligopolies had returned to the US economy with a vengeance. The Clinton Administration brought an antitrust suit against Microsoft in the 1990s, but the case was settled before the software giant could be broken up.

Under the Bush Administration, the Justice Department didn’t pursue any anti-monopoly cases or block any mergers in eight years, allowing giants like Verizon and AT&T to reform and grow even larger. Airlines and pharmaceutical companies also merged, creating three major airlines and just ten international pharmaceutical companies.

Technology giants like Google, Amazon, Facebook, eBay, and Apple have also swallowed up competitors with the government watching. Though it may seem hopeless, there are potential solutions to the problem of economic concentration.

The steps that can be taken

There are a few simple steps that the US government can take to combat the concentration of economic power in monopolies and oligopolies. One solution is to establish a “protection of competition test” rather than a consumer welfare litmus test, which broadly encourages and preserves competitive markets instead of just focusing on prices.

Mergers that lead to too much concentration should be outlawed, regardless of how they affect pricing. The US could also take a cue from the UK and automatically investigate industries dominated by a single company for ten or more years.

Additionally, the government should not be afraid to break up big companies as a way of introducing competition into the market. If left unchecked, the power of concentrated industries may overwhelm the power of democratic governments, which is why a return to the tradition of trust-busting is necessary.


Economic concentration arose with the trust movement of the late nineteenth century, receded with the antitrust movement of the early twentieth century and returned with the demise of the antitrust movement’s legacy in the late twentieth century.

This is a troubling development because monopolies and oligopolies have pernicious effects on the economy and society at large. The government should, therefore, return to its former tradition of trust-busting in order to safeguard democracy from the dangers of concentrated private power.

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