Before he became a federal judge, the controversial Robert Bork once labeled antitrust "a policy at war with itself." In this case, he was right. Antitrust laws are problematic. That is not, however, to say that they are without value. The problem with antitrust is that Americans have never come to terms with what business itself should be. Is it a method for delivering goods to consumers at the lowest prices? Is it a mechanism for providing employment? Is it a tool for asserting national power abroad? Is it a vehicle for building character?

Many Americans would answer yes to all of these questions. Yet, the conceptions of business that each question implies can be (and historically have tended to be) mutually exclusive. Everybody wants goods and services made available at low prices. But achieving that goal often means building large companies to capture economies of scale. This, in turn, means putting the "mom-and-pop" operations cherished in American lore out of business. Indeed, the creation of the Standard Oil Trust in 1882, which put small companies out of business and bureaucratized economic relations, was a principal reason for the passage of the Sherman Antitrust Act in 1890. Most people would like to see business provide good jobs at good wages. Yet, many successful businesses ship their jobs overseas, and some companies that have tried paternalistically to guarantee good jobs have, in the past decade, been blasted in the products markets and the financial markets.

In striving to be of benefit to American society and the economy, antitrust has succeeded in mirroring the many-faceted self-contradictions with which Americans view business. That having been said, when one looks at history, there are also arguments to be made in favor of antitrust.

A century ago, Andrew Carnegie asked a congressional committee: "Do you really expect men engaged in an active struggle to make a living at manufacturing to be posted about laws and their decisions, and what is applied here, there, and everywhere?"

Carnegie was not alone in his cavalier attitude, and that is one reason why the government found itself forced by the fears (some fantastic but others quite justified) of the electorate to act.

Firms such as Carnegie Steel, Standard Oil, and American Tobacco seemed to be monsters, archetypes of some awful economic juggernaut that was turning conventional business upside down and might end up destroying it altogether. Some people even predicted that one huge trust would come to dominate the entire American economy. This may seem funny now, but in the context of the times it did not.

At the turn of the century there was a dramatic wave of corporate consolidation. During the period 1897Ð1904 alone, 4,227 American companies were merged into 257 combinations, sometimes forcibly. By 1904, some 318 large firms were alleged to control about 40 percent of the entire nation's manufacturing assets. Nothing like this sudden concentration of economic power had ever occurred in American history.

One result was a partial disempower-ment of individual artisans. Overall, their incomes tended to rise while their sense of autonomy shrank. Other segments of American society also saw themselves as losing ground as production and marketing functions came together within the same companies and as these companies grew ever larger. Wholesalers, who had long been powerful players in the American economy, began to see their functions made obsolete as big companies started marketing directly to retailers. Retailers lost much of their own bargaining power, as producing companies became larger and more autonomous. Even producers, if they happened to be small operators of oil refineries, iron works, and cigarette factories, could not begin to compete with the new giants. So they often faced the prospect of either selling out or going under.

For all of its many flaws, antitrust policy over the years has had powerful effects in controlling collusion, stopping cartels, preventing anticompetitive mergers, eliminating resale price maintenance, and encouraging entrepreneurship. Perhaps most important, the antitrust laws have constituted a formal expression by the American government that the interests of the people come before those of any company, however powerful. Although this might seem to be an unnecessary precaution in an era of vigorous international competition, not every industry is exposed to such competition. And for many that are, the exposure is only a recent phenomenon. For most of American history, companies in the domestic economy either were protected by tariff laws or were so much stronger than non-U.S. firms that they could act pretty much as they pleased.

During the postÐWorld War II years, most national governments in western Europe passed laws resembling America's Sherman Act. The European Community in particular instituted stringent regulations designed to break down trade barriers and maximize interfirm competition within and across national boundaries. Tough antitrust laws are also on the books in Japan, although their enforcement is more casual and selective than in the United States and Europe. Even so, the most telling tribute to the wisdom and efficacy of the American antitrust system has been its widespread emulation abroad. The task of defining effective competition may be difficult, and U.S. antitrust enforcers have made a great many mistakes over the years. But in general they have managed to move toward outcomes that have been not without economic and social benefit.

Thomas McCraw and Richard Tedlow are professors at Harvard Business School.

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