Information Exchange among Firms: The Coherence of Justice Brandeis’ Regulated Competition Approach

Abstract

During the 1920s, two proposals for regulated competition competed in the United States. The first, inspired by trade associations, was advocated by Herbert Hoover. This approach echoes a managerialist view of coordinated competition under state support. The second -promoted by Justice Louis Brandeis -provides an alternative view of what regulated competition should be: avoiding ruinous competition through information exchange among small firms. From his involvement in Wilson's 1912 campaign team to his dissent in the American Column ruling of the US Supreme Court in 1923 and his position against the National Industrial Recovery Act (NIRA) in Schechter Poultry in 1935, we argue that Louis Brandeis was consistent in his opposition to such a convergence between big business and big government. His intemporal coherence relies on his Jeffersonian approach advocating for a dispersion of economic power for both efficiency and political purposes. However, both the trade association movement and the NIRA experience are pertinent to Alexander Hamilton's vision of an equilibrium between the economic gains resulting from concentration or coordination and strong political control.