In this episode, Maxx and Scott speak with legal scholar Sanjukta Paul about imagining alternative and more just forms of economic association in ways that denaturalize the 20th-century monopolistic firm. The key, Paul argues, is to reveal and contest the public “coordination rights” that legally structure all economic activity.
Sanjukta Paul is Assistant Professor of Law at Wayne State University. Her current research and writing involves the intersection of antitrust law and labor policy. She is currently writing a book tentatively titled, Solidarity in the Shadow of Antitrust: Labor & the Legal Idea of Competition, which will be published by Cambridge University Press.Her scholarly work has appeared in the UCLA Law Review; Law & Contemporary Problems; The Berkeley Journal of Employment & Labor Law; and The Cambridge Handbook of U.S. Labor Law.
See here for the important paper we discuss in this episode, “Antitrust as an Allocator of Coordination Rights” (UCLA Law Review, Vol. 67, No. 2, 2020).
Theme music by Hillbilly Motobike.
The following was transcribed by Richard Farrell and has been lightly edited for clarity.
Scott Ferguson: Sanjukta Paul, welcome to Money on the Left.
Sanjukta Paul: Thank you, I’m so happy to be here.
Scott Ferguson: Maybe to begin you can tell our listeners a little bit about your personal background and your scholarly training and influences.
Sanjukta Paul: Sure. One of the things I’m working on now that we’re gonna be talking about is that I really come to these questions about antitrust law and their intersection with labor from a practiced background in labor and civil rights, including time as a lawyer working pretty closely with organizing campaigns in various ways. That is an influence on me personally, even though I was not an organizer. I have learned a lot from organizers who I have worked closely with over the years. And then, more specifically, through the organizing campaign I was involved with right before I entered academia–I was doing a fellowship at UCLA law school and they worked closely with Noah Zatz who teaches there–but just before doing that, I was working on an organizing campaign of port truck drivers in Los Angeles who, since the time when trucking deregulation took place in the late 70s, early 80s, have been classified as independent contractors and also work in an industry that is in many ways characterized by destructive competition between their immediate employers and by very powerful buyers of very powerful customers, namely the big box stores and now Amazon. And the way that the antitrust question came up in that context was actually not something I was working on directly as the lawyer, but as a background condition for the whole organizing campaign.
Before my time in the late 90s and the early 2000s, there were a number of what are called wildcat strikes in the labor movement. These are labor actions that are pretty spontaneous and initiated by workers. That took place around the country and a number of them centered in the Miami area, but also in Southern California and around the L.A. Long Beach ports, which is the largest port complex in North America and also handles the highest volume of goods. Those actions by workers were met with antitrust prosecutions by private entities, by the sort of public-private hybrid entities that many of the work complexes actually are, and it also included an investigation of worker leaders by the FTC–the Federal Trade Commission itself. And so, what sort of happened in the wake of that was there were some labor organizations involved, but they were really following the lead of the workers at that point and those actions were, just to be clear, in response to temporary spikes in fuel prices, which made it so that independent truck drivers weren’t making money at all on trips. And so, they engaged in collective walk offs and things like that. This is what they were faced with. Many of them, particularly in Southern California, were immigrants and working class men. There were a large number of immigrants from Central America who were bringing traditions of labor solidarity with them, which I think is part of the reason for those spontaneous actions.
So that was how I got interested in antitrust law. Because I was doing other stuff when I was working on this from 2011 to 2013 and thereafter in other capacities while I was at UCLA, until I moved to Detroit where I live now. But when I got to UCLA, it was sort of like, you have to pick a research topic: What am I gonna research for the next couple of years? I really wanted to understand how it could be that individual truck drivers can be sued under antitrust law for engaging in collective action to make a living wage and to feed their families. That was personally how I came to these questions. And then I went down this rabbit hole that sort of opened up into a subterranean cave, which I’m still like poking my head up here and there as well. Maybe to add one more thing, I also encountered people coming to this question in other ways–people coming to the question of viewing antitrust as an affirmative tool to address corporate power, which of course, I’m invested in that project now as well.
Scott Ferguson: Just to clarify something for our audience: being not in the law space or only an interloper, when I first started wading into your work, the first thing that struck me was, when I hear antitrust, I think of 19th century monopolies and breaking them up, right? And then what you’re describing here with a deregulated trucking industry and wildcat strikes and what is keeping them back is it’s antitrust law that is being used against not big monopolies, but against the workers who are trying to minimally organize. And that’s so, from an ignoramus point of view, counterintuitive.
Sanjukta Paul: Well, I don’t think it’s ignoramus at all! It’s more accurate about what is actually happening in antitrust law today. But in any case, that is exactly what caused me to pursue this, and I’m sure that is what we’re going to be talking about for the rest of this time, but briefly, I think it absolutely is counterintuitive. I think it absolutely is not what legislators intended. And in a deeper sense, this is what I’ve become convinced of in the last couple of years of working on this stuff. It’s not just that they didn’t want this to “apply to labor.” That’s not the way to look at it. The way that the whole language of labor exemption and the question of does antitrust apply to labor or not, the way that question gets framed and the reason it gets framed that way is if you presume that the whole purpose of antitrust law is just to promote economic competition. And I do not think that’s true and do not think what legislators intended either. I think that, instead, what legislators were looking to do, and this is certainly an interpretation as opposed to something they said in these words, but it’s also what antitrust functionally does today, which is to allocate economic coordination rights.
Just to capture that intuition about competition, I think that includes the goal of promoting healthy business rivalry where appropriate. I think that is something that legislators certainly had in mind. But because you raised the question about 19th century trusts and monopolies, and that obviously raises the question of what legislative intent was, I think that legislators were concerned about a lack of competition where the trusts were concerned–in other words, where competition had been displaced by concentrated coordination rights, which is exactly what the trusts and early corporations were. So, they did not see a problem with dispersed coordination rights. In other words, it’s not just workers. And of course at that time, industrial workers were emerging as a class but had not fully emerged. It was also farmers, of which there were many more small farmers at the time, and also small producers and small proprietors of various kinds. And again we have to remember that apart from the landscape as we look at it now, over the course of the 19th century, starting in many ways with the transformation of the labor relationship and then continuing to what is really like the novel legal invention of the modern business corporation, you also had a concentration of coordination rights in the production process.
It’s anachronistic to look back and say, “Were workers exempted or not?” Well, first of all, we didn’t have the modern employment relationship in the way that we do now. In fact, the early labor movement, for example, as embodied in the Knights of Labor, was contesting the modern employment relationship itself, which is basically modeled on a master-servant relationship. We associate it with, since the 1930s, what I would call countervailing coordination rights through affirmative labor law. But that’s not what it entailed at the beginning. It entailed this right for the master to tell the servant what to do and extending that to the production process where previously most material production in the US had been–I’m generalizing a little bit here–done through the workshop mode of production modeled on traditional guild relationships. Although we didn’t really have formal guilds so much in this country, you still had the master, but it was like a master, journeyman, and apprentice. That was an arrangement which, most of the time, involved a much greater dispersal of coordination rights around production itself.
Among others who have written on this, Christopher Tomlin is a really great labor scholar and historian as well. Again, I’m using this language of coordination rights to make sense of all these things across changing law and economic circumstances, but that’s fundamentally the case. Like journeymen had the ability to make rules to impact the production process. And taking that dispersal of coordination rights away, for people who want to use this language, is what capitalism is all about. It’s about concentrating those coordination rights in a few people. Yes, it’s also about having these big machines now. That became as important as the skill intensive labor in many cases. But I think it’s really interesting what the Knights of Labor leaders said at the time, which is: “We’re not luddites. We’re not against the technological improvements. We’re not against factories per se. What we want is to co-govern the factories.” And so, what that would mean in this language is a dispersal of coordination rights in the process of production. And I think, effectively, we conflated in certain ways the technological shift to factories with the shift in the legal allocation of coordination rights, just as we do today. In the gig economy, we tend to sometimes conflate technological changes, like “Oh, there’s an app to do this now!”
Scott Ferguson: Yeah, so it’s inevitable.
Sanjukta Paul: Yeah, and there’s two different things going on. There’s a change in technology– like maybe there’s an app instead of a dispatcher or something else. Fine, that’s one change. But any change that accompanies that in the allocation of economic coordination rights is analytically separate. You can argue for or argue against it, but it’s not entailed by a factory or an app. In fact, I think there’s a real parallel here. I think that it is to the advantage of the people who are benefiting from the concentration of coordination rights to characterize those two things as all of one piece and to run them together.
Maxximilian Seijo: If I can pause there, we started this conversation off at quite the clip, and I appreciate all the detail and how we’ve already got into it, but if we can take perhaps a more bird’s eye view of this allegorical cave that we’re all working in and feeling our way around and that you feel your way around in your work. Can we maybe start to outline the way your approach breaks with the dominant so-called “Law and Economics” school that has played such an important role in shaping the neoliberal era as well? The legal studies approach that you’ve been performing and showing for us is known as the “Law and Political Economy” movement. And if you could contrast those two for our listeners, I think it could be interesting to then link up some of these more specific concepts that you’ve been talking about so far.
Sanjukta Paul: Sure, although I don’t really want to speak for Law and Political Economy as a whole. This is obviously a project and there’s people who are in charge that aren’t me. I do definitely associate myself with it. I also associate myself with “Legal Realism,” or however we want to label that. Chronologically skipping ahead a bit in the way these things have been conceptualized, the Law and Economics movement is absolutely the dominant school or paradigm in antitrust law today, and as you said, impacts law and policy thinking so much more broadly, which is one of the reasons I think antitrust is an interesting place to excavate into this subterranean cave because that subterranean cave sends up chutes in other policy areas as well. That’s why I think it’s important and valuable to deconstruct it here. So, how I would gloss it is–and many people who are dear to this will contest this and say that no, it doesn’t entail this and there’s other ways–I would say that fundamentally and globally what this paradigm has done is that it has naturalized some certain legal allocations of coordination rights and put them beyond discussion. And then we discuss the rest of the contested coordination rights purely on a frame of whether they promote competition or not. And then, but secondarily, there’s these two other norms involved: economic efficiency, which I’m sure we’ll talk about more because it’s not a very concrete concept, and also consumer welfare.
Just to put those aside for a moment and keep things as simple as possible, even if you were to take those aside, what you’re already doing is just naturalizing certain forms of economic coordination, notably coordination that takes place inside single firms or corporations, which I think is contrary to the intent of the anti-monopoly movement and legislative intent in antitrust law. It is also contrary to the entire world view of things in that 19th century milieu that we were talking about of what most people thought, whether they were left or right. I don’t think that naturalization had taken place yet. So that stuff gets naturalized and becomes sort of invisible. Then, we just talk about the forms of economic coordination that are not invisible and those, of course, include labor coordination in the form of labor unions, but they also include all kinds of other unconventional forms of economic coordination, as well as looser coordination between smaller actors of various types of co-operatives. And those are evaluated primarily under this norm of promoting competition, which of course just viewed on its face, anything that has economic coordination is a suppression of competition. And so, there’s automatically this kind of suspectness of anything that isn’t in that favored naturalized side of things. And then you have these supplementary norms of efficiency and consumer welfare, which have been constructed and conditioned in ways that I think systematically disfavor workers and smaller actors. But again, from that bird’s eye view, that’s what Law and Economics does.
Importantly, Law and Economics didn’t start these things. I think that’s really important to say. Robert Bork, I think, is a really interesting figure and at various points was really honest about what he was doing. In a way, the people who have inherited that tradition don’t always pay attention to those moments where he’s telling us what he’s doing. In his famous books that he wrote in the 1970s that had this big influence on antitrust law, he says I’m not inventing this deference to intra-firm coordination, it was already there. And he’s right, it was already there. I think that it really started in the Lochner era, which is the period of time that immediately followed the passage of the Sherman Act, which is the first federal [antitrust] statute in 1890. This [Lochner moment] is when judges really misconstrued antitrust law, and I think they took it in a direction that was not at all what legislators intended. In the bigger picture of that Lochner era of the allocation of coordination rights, there was already a foundational allocation of coordination rights that took place, which was really done by judges in certain important decisions. The way that I would put it is that I see 1970s Law and Economics–which obviously was being worked on before the 1970s–I see that movement as picking up on and retrenching those fundamental categories of economic coordination that were favored in the Lochner era but now clothing them in the language of this social science of neoclassical economics, or at least purporting to. In a way, the judges in the Lochner era were actually in certain ways more honest in that commentators at that time might just say things like, “Well, the people who know what they’re doing should run society.”
Obviously, that’s the people in the corporate boardrooms and not immigrant workers in the factories. This is not stated in any judicial decision but you get close to it in some of the commentary. Of course, you have nothing like that in contemporary Law and Economics. It’s more sanitized. And I’m making no claims about what particular people believe. I don’t think any particular person has to believe any of that for the paradigm to work. But I think that the value judgments about how we’re going to allocate economic coordination rights are just on a further remove. You have to do this additional level of excavation, and they’re still there. It’s not just that this is historically how it happened. Logically, they’re required. But ultimately, the claim that I would want to make is that a lot of the key conclusions that law and economics is taken to be–and that Bork’s work and others that have this economic analysis of antitrust law generally–are these independent conclusions of social science that are in fact embedded and hidden legal assumptions in the premises that cannot be derived from some independent reference.
Maxximilian Seijo: As we move into the Legal Realism side, in contrast to this naturalized Neoclassical Law and Economics framework, which has a longer history, I think it could be useful if, in defining and describing your approach, we could start with a relatively basic definition of what coordination rights are in the first place because at some level it’s intuitive what they are, but also at another, it could be useful to specifically suggest the break with competition and efficiency that you’re making as a product of your Legal Realist approach.
Scott Ferguson: Can I follow up here? Is it the case that you are borrowing this term from elsewhere, or is this your term? And what kind of work is that term doing for you?
Sanjukta Paul: Okay, well it is my term. I don’t really want to say it’s my term, but no, I didn’t borrow it from somewhere else. I’ll try to summarize. Yes, it really comes from a Legal Realist approach, and again I can situate that a little bit in terms of intellectual history. The Legal Realists were–and you could say that Oliver Wendell Holmes was a proto-legal realist in certain ways, although he was writing a little bit earlier–but the legal realists really come into being around the same time that the Lochner era is just fully getting going and is a response to the what’s often called the laissez-faire approach of Lochner era jurisprudence, which embeds all these unstated assumptions just as Law and Economics does now. And so, I think Legal Realism at the time was excavating those assumptions just as I’m trying to do with our legal language today. And so, to explain that frame, what I would suggest is that antitrust law, and in fact law itself, is always allocating coordination rights, so this isn’t a normative claim I’m making where I’m saying that antitrust law should allocate coordination rights instead of promoting competition.
My point is that you can say that you’re promoting competition, and this is the point of the excavation particularly in that UCLA paper, which I know you looked at, but whatever the stated justifications are–competition, economic efficiency, and consumer welfare–fundamentally what you’re doing is you’re allocating economic coordination rights for any given instance of economic coordination, whether that is coordination in production or whatever else. Most paradigmatically, we can look at coordination on prices because that’s something that is so often clearly illegal in the circumstances where it is illegal, but it’s not always illegal. That’s maybe the best way for me to illustrate it.
Actually, let me say the general claim first and then the specific claim. The general claim would be that for any instance of economic coordination, antitrust law is always either saying that it’s permitted or not. It is making that judgment and doing so in contingent ways according to particular normative criteria, which we are able to look at and decide on others if we wish to democratically as a society. That’s the general claim. And then the specific claim that helps to hopefully make that a little bit more vivid is that, if you take price coordination, which is something that is going to raise orange flags, if not red flags, under antitrust law, if you look at how that’s treated.
For example, let’s go back to those independent truck drivers. If they’re engaging in direct horizontal price coordination on the prices they charged customers–they’re not working for a firm, they’re doing that either directly or they’re doing that amongst each other in working for a trucking firm–either way, that is what raises the antitrust issue. And then, on the other hand, if that exact same group of truck drivers hold everything constant, the number of drivers in the overall market, it’s the same market share, those same number of drivers are working for a trucking company that employs them and extracts profits and also manages their work and tells them what to do, then now that firm can set prices across those truck drivers for the services they perform and there’s zero antitrust problem. And we just take this to be paradigmatic.
This is what I call the “firm exemption” to antitrust law, not because I think firms shouldn’t be able to set prices, but because I am trying to make visible something that is naturalized so that we can more clearly examine these criteria for allocating coordination rights. Just to add to that example a little bit, with employment under our current regime, under at least the New Deal regime, which of course, is not being properly enforced and there’s lots of holes and it’s extremely problematic, but in theory, those truck drivers would have countervailing coordination rights. They would be permitted to form a union that would basically engage in coordination now, not directly with customers, but with respect to their bargains with the trucking company. And so, not only have those countervailing coordination rights been undermined systematically as you both know over the last few decades even for people who are statutory employees, but also you now have with most of those truck drivers that I was talking about in the beginning and most truck drivers in general are not employees, they’re considered independent contractors.
This alone should be mind boggling to us because there’s really two points. One point is that we have allocated coordination rights to the categories of the firm and to employment, and that was done sort of implicitly but in certain ways more visibly in the decades right after the Sherman Act. And we have denied coordination rights to looser coordination, which eventually includes workers beyond the bounds of employment. But not only is it an issue that the independent contractor truck drivers can be sued under antitrust for engaging in coordination that intuitively we all, as we started this conversation, think they should be permitted to do if we think about the original purpose of antitrust law. Not only that, but it should also strike us as weird and worth thinking about that the firm still gets to set prices across that group of truck drivers who, by definition according to the theory of the firm of Ronald Coase, are not inside the firm. If you’re an independent contractor, by definition, you’re not inside the firm, so they’re now setting prices beyond the firm.
So, whatever justifications exist in law and economics for having this firm exemption that’s been naturalized certainly shouldn’t apply there. And then you go further from that. Then, we go to things like franchising and subcontracting, where prices are set by lead firms, by these more dominant firms, for smaller economic actors in their orbits–not just independent contractor workers, but also just smaller actors as such. And so, we can have that normative conversation, but my point is to just say, “Hey, let’s look at this.” Because certainly at the level of independent contractor firms, we almost don’t even see it. And it took me a couple of years to actually see that, frankly. I first just saw the truck driver problem because it is so naturalized. Like, firms set prices, yeah, that’s what they do. But what do you mean that there’s coordination within firms? Does that make sense?
Scott Ferguson: Yeah, absolutely. I feel like I could go in several directions from here. One thing I want to do is put some of your meta-assumptions into my own language and see if they resonate with you and if you feel like we’re communicating well here. So, you’ve talked about the way that Law and Economics appeals to Neoclassical economics in this Bork tradition and it naturalizes things. Maybe to speak to what’s between the lines here, is that one of the key ways that it naturalizes is that it imagines something it calls a market and something it calls a firm and something it calls employees or workers, and thus the economic is somehow prior to law or governance.
Sanjukta Paul: Yeah, that’s a great way to put it.
Scott Ferguson: And that coordination has its own kind of autonomous logics. And then law comes later and governance comes later to correct what should be always already functioning well. Does that make sense?
Sanjukta Paul: Yeah, I think so. If I could just try to elaborate on what you said in a helpful way. Yes, I think there’s two points. To take the second thing you said first, I think that is absolutely right. To me, one of the main normative implications of this way of approaching things is that, even in the kind of progressive left conversations about what antitrust and labor law should do, there’s this idea of like, “Okay, so there’s market power and we want to try to correct for that. We want balanced market power.” But that exactly suggests that this market power arises in a vacuum if you allow the market to do whatever it will do without law. And that’s totally not the case. Any and all market power relies upon and is created by law, and in particular, by these prior legal allocations of coordination rights that are often invisible. And so, the point of making them visible is ultimately so that we can openly contest them and debate about them instead of not debating about them and just assuming them.
But to put it into this language, the point of doing so is to show how law always constructs markets, which is absolutely a legal realist view. It’s also absolutely a Law and Political Economy view. So, I suppose this approach is really trying to expose how that’s happening. Specifically, just so that it’s not too abstract, corporate law, employment law, and antitrust law–and the negative spaces of those–are three areas that construct what’s conventionally considered to be the pre-legal intervention space of like what happens inside–not that people don’t study that. I’m not saying people don’t study that. But in that conventional law and economics view of the market, those are somehow held constant or given in some way, when in fact, we could totally change those rules. We could construct firms however we want. They certainly don’t have to be constructed to maximize shareholder value and with the concentrations of coordination rights that happened within firms that mirror what I was saying about the 19th century and that process that happened. That allocation of coordination rights is largely a function of both corporate law, employment law, and agency law to some extent.
So, all of those things should be up for discussion, and that doesn’t yet prove that what we have is bad. It just shows that’s part of the picture. And also, it flips the script as we like to say on that idea of law intervening to correct and to protect the powerless from the powerful. No, law is creating the powerful in the first place. So it’s not a corrective after the fact to say that if we do choose to have a more balanced allocation of coordination rights and to have a more democratic society in general, including in the economy, that it’s not changing some state of nature, it’s changing something that law created in the first place.
Scott Ferguson: Right. Two of the things I’d like to highlight: what I appreciate so much about the work that your conception and term coordination rights performs, especially from a Modern Monetary Theory point of view, is it insists that public legal mediation is primary, as we’ve been saying, but also that coordination is irreducible to the so-called “market.” What we call a market, we usually think of it in rather contracted narrow terms. And you’re talking about all kinds of social and economic coordination for production and distribution. And so, it’s not just that law conditions the market. It’s that the market isn’t what it purports to be, and what political economy actually is is irreducible to this thing called the market.
Sanjukta Paul: I think I follow 80% of that, but what do you mean by “irreducible to”?
Scott Ferguson: Well, what I mean is not reducible to. Is that what you’re asking?
Sanjukta Paul: I think so. I think what you mean maybe is it is not reducible to the Neoclassical conception of the market?
Maxximilian Seijo: Maybe this can be helpful. I was trying to think about the way we can analogize the conception of law and economics, the Neoclassical conception, with how Neoclassicism and Classicism broadly thinks about money. And it seems to me what you’re suggesting, Sanjukta, is that Law and Economics is reliant upon a barter theory of coordination where, what you’re suggesting, is a thoroughly, always-already entrenched legal theory of coordination that is constantly creating these structures of economic coordination and production and relation, and to maybe put it in Scott’s terms, that are irreducible to this concept that we call a market, which comes after a state of nature. Is that sort of what you’re suggesting?
Sanjukta Paul: Or that is a state of nature?
Scott Ferguson: Yeah.
Sanjukta Paul: I mean, yes. I just don’t think that there is a market as the state of nature, and I don’t think I’m alone in thinking that, clearly. That was like the point of Regal Realism, right? And so, when we say it that way it looks very simple, but I think this is another way into that. You’re holding some forms of coordination constant at all times. You have to be in order to have a Neoclassical model at all. You just are, and I don’t think that if you talk to a smart Neoclassical economist about this that they would really deny it. Although, I don’t know what they would do. But that is what you’re fundamentally doing. And if you do question that, they sort of have to say something like, “Well, the firm is a singularity. It’s just beyond the analysis.” If they’re honest, they would say that. But the fact is, if you change those categories of coordination, if you change these things that those models are holding constant, or I would say even more accurately, are holding constant and varying without necessarily being that clear about what they’re varying, then you see how those models are fundamentally dependent upon what are ultimately legal assumptions about what forms of coordination are permitted and what aren’t.
Scott Ferguson: One thing I was thinking about when revisiting your work this time is you describe the Bork era firm as this pretty severely hierarchical relationship. And because I’m not in law, in the readings that I’ve done around political economy in the neoliberal era, there’s so much rhetoric about the big, multinational firm–we know that story–but there’s so much rhetoric about flexibility, horizontality, and networking. And I wonder: where does that fit? It feels like there’s some friction there. Where does Borkian discourse and legal decisions and that world of neoliberal management meet?
Sanjukta Paul: Yeah, that’s a great question. Let me let me refine what my claim actually is about Bork. I’m not really making a claim about what the firm was actually doing in the 1970s at all. I’m not making an empirical, factual claim–except in a very limited instance that I’ll bracket for the moment. What I’m claiming is that Bork, and ultimately the argument that goes back to Coase and the firm exemption of antitrust law, does assume hierarchy. It fundamentally assumes that. It has to. That’s the argument for why firms are sometimes more efficient than contracts. That’s the Coase-ian idea of why there are firms in the first place, why there are these little command economies in the middle of what’s supposed to be a free market. And Bork picks up on that.
Logically, if you excavate that, it’s not a claim about what firms were actually doing in the 1970s. It’s a claim about what the assumptions of Law and Economics embeds and then magnifies. That is sort of like a premise. This hierarchy is, in some situations, more operationally efficient because it saves on transaction costs that you would have if you were contracting for these services out in the market. But I absolutely agree with you that there’s all kinds of tension with that assumption. I will say what I think the biggest tension is, which is that one phenomenon that’s happened at least accompanying if not a direct consequence of what you’re calling neoliberal management theory, is the growth of independent contracting. That’s been very much sold on grounds of flexibility and whatnot. And yet it tends to only be flexible in one direction by denying workers these countervailing coordination rights that they are entitled to under New Deal labor law, which are the things that actually provide flexibility to workers, or at least some modicum of it. So, it actually takes that away. I think in many ways, it intensifies hierarchy rather than eliminating it, even though it’s sold on the basis of eliminating hierarchy. So, that’s one point.
But then, secondly, I also think it’s contradictory on its own terms. With the truck driver cartel, the truck driver firm with employment, and the truck driver firm with independent contracting is that, even if you take out all those issues about how you’re still doing hierarchy and we know that is the case because you have independent contractors, and even if you take out all those empirical questions about whether this is actually operationally efficient, it’s still true that on your own terms, you’ve now taken away the justification for having this firm exemption to antitrust law in the first place. The implicit assumption is that, at that point firms are not different in any way from the market transaction, as a law and econ person would claim, then the market transactions that they’re saying should be subject to antitrust prohibitions on coordination, are merely engaging in direct contracts with the people who are performing services that are essential to your business. So even on those terms alone, what are the efficiencies now that are supposedly the basis for the firm?
Maxximilian Seijo: I want to take these insights and make them specific for our moment. We’re talking about independent contractors in the neoliberal era, and there’s perhaps not a more paradigmatic example than Uber and Uber drivers. Perhaps to say it this way, given these tensions, what should we be doing and how should we be thinking about Uber drivers and reforming the way we legally classify them in their coordination rights?
Sanjukta Paul: In a way, Uber drivers are like the trickiest place for me to answer that question because I think there’s a strong argument that, given the amount of hierarchy and control that actually exists in that relationship, they should just be employees under traditional labor law. And then that would solve the problem under the current categories of coordination. And there are efforts to do that, which I support. And so, I don’t want to take away from those in any way. Just to extrapolate from that and maybe broaden it, even if that weren’t true, even if there was just enough flexibility on the drivers’ side to escape what the legal definition of employment is, what I would say–and this would broaden from Uber drivers to other small players–what we should do is reallocate economic coordination rights from where they have been concentrated, which is in these big, powerful firms, of which Uber is a perfect example, where Uber enjoys these coordination rights across a market that it completely controls. It sets the prices that Uber drivers charge, even though it claims that Uber drivers are independent businesses. It’s engaging in these novel forms of economic coordination rights and meanwhile, we’re just sort of assuming that the Uber drivers themselves and on other platforms as well should not be able to horizontally coordinate because of antitrust law.
And so, I would say with antitrust law, the point ultimately is not to just have this intellectual realization, but to recognize that we’re already allocating coordination rights in all of these ways that are naturalized. Once we recognize that, I would propose reallocating them from more powerful actors to less powerful ones precisely in line with the original legislative purpose–so dispersed economic coordination rights. And then, of course, people can argue with me about that. I’m sure many people will disagree, but that would be my proposal. Something related to what you said before, Scott, when you were talking about some of the commonalities with MMT and the recognition of the public nature of this allocation, which I think is really important, is that I don’t see that as a carte blanche. It’s not just that we’re allocating economic coordination rights to large firms and then that’s bad. It’s that one of the problems with doing that and naturalizing it, is that we don’t recognize it as a public function at all. And so, we assume that the coordination that they’re engaging in is private.
I really should have said this before. This is like the second piece to it. So, not only do we not see it and not debate over it, but we also don’t recognize that it’s public. That’s why you have this very strong assumption that runs through most conventional thinking on these topics still, which is that the firm is like a private contractarian affair. It’s a private arrangement and anything that you do to “regulate” that is an intervention into a private arrangement. Once you recognize that the firm is receiving this privilege from the law, which by the way, I’m not saying we should take away. I think firms are fine. But I both think that they’re getting a privilege that should have duties and responsibilities that are concomitant with that. And specifically, this really dovetails with the whole revival of thinking of the corporation as a franchise of the state, which definitely overlaps with MMT in terms of banking as I understand it. But once you recognize that, you recognize the fundamentally public nature of economic activity, frankly. And you recognize that the public has a role in all of it.
Coming back to your point about the Uber drivers, the proposal doesn’t end with “let’s reallocate them.” Yes, that’s very important, because it is in line with the democratic purposes of antitrust law. But it’s not a carte blanche, just like it’s not with firms. I think that there should be criteria and some forms of public oversight. If we’re going to essentially legalize certain forms of cartels, which I think we should do, because I think that’s ultimately more democratic and will help encourage worker co-operatives and other more democratic forms of coordination, then there should also be accountability. We should recognize that there’s a public dimension to that, just as we should bring that public dimension into serve this existing naturalized category of coordination of the firm in the corporation.
Maxximilian Seijo: It seems like then, if we’re coming at this question from that primordial coordination allocation, if we want to call it that, the sense that law is always in the process of coordinating and producing cartels, and we really have to own that and exert oversight agency over the process to ensure…
Sanjukta Paul: Sorry to interrupt, it’s always in the context of constructing, authorizing, and not authorizing economic coordination, whether we call them cartels, corporations, or franchises.
Maxximilian Seijo: Yes, that’s a good way to put it because it includes the negative. It seems like there’s a tension with some more traditional views of antitrust that sees size and scale itself as the enemy?
Sanjukta Paul: Okay, here’s how I want to answer that question. I want to say, that project of first recognizing that there’s constantly this allocation of coordination rights going on, and by allocation, I mean to capture the positive and the negative–the economic coordination that’s being authorized and the economic coordination that’s not being authorised. So, that is an analytical move. And then, if you have established that, then the next step is to say, now that we see that this is what’s going, what the fundamental analytical question in antitrust should be is: what are the criteria according to which the law should allocate coordination rights? I don’t know if I said that straight up prior in those conversations. I think it’s important to say. And that question, transitions from the analytic to the normative and the political. That’s where I would put the size and scale stuff. I’m not avoiding your question.
So, on the question of what are the criteria according to which we should allocate coordination rights, well, one option is size and scale, but I don’t see the focus on size and scale as directly in opposition to the allocation of coordination rights approach. It’s one of the potential criteria that could then arise. Does that make sense? For other people, that’s like one set of criteria out there. It’s like, “Bigness is the big thing and that’s what we should be concerned about.” Another set of criteria is really focused on operational efficiency, or at least purports to be. That’s kind of the Borkian group. One could say that it’s not really that way. Really what it is interested in is just authorizing concentrations of power, but regardless, that’s what it purports to be. Another set of considerations could be about just wanting the lowest consumer prices no matter what. Another set of criteria could be like, we want to promote economic democracy and we want dispersed economic coordination rights. Obviously, I’m sympathetic to that.
Just to be clear about how I would answer the normative question–which I’m really not trying to avoid, I just want to situate where I think it fits–how I would answer the question of how we should allocate coordination rights is that we should do so according to the norms of of greater economic democracy, which I interpret as dispersing rather than concentrating economic coordination rights, and that we should articulate clear rules of fair competition, which to some extent can be reduced to the dispersing of coordination rights but not entirely. It’s going to potentially include some additional things. Now, people are obviously not necessarily having this debate on exactly these terms when they’re debating on Twitte,r or wherever. But in the focus on size and scale, I’m happy to have that be a criterion, because I think that among many others, it can be a proxy for greater democracy, for the dispersal of coordination rights, and those things. There’s a lot of people who would necessarily disagree with this, but there are sectors and economic functions where that’s not feasible.
And so, in there and in general, we should work to promote a democratic allocation of coordination rights in whatever the arrangement is, whether that arrangement itself is large or small, or there’s a bunch of them or one of them or whatever. And I completely agree with you that implicitly there’s this allocation of coordination rights that’s happening within whatever the thing is that you’re targeting as big or small, that is at least as important as the issue of size and scale itself. So I guess that’s how I would start to answer that. And then, the other thing that I feel like was implicit in your question, and which I am very happy to address, is that I don’t see, what hopefully will become a little bit more of an affirmative or normative picture of anti-monopoly, as standing outside left and right. That makes no sense to me at all. I see it as fundamentally a left project. Maybe there are right versions of anti-monopoly. That’s fine. I don’t associate myself with that in any way.
I see this as being allied with other specific left projects, including socialist projects, which in the 19th century, it was not so clear where anti-monopolism ends and socialism picks up because, fundamentally, socialism was also contesting that concentration of coordination rights in production. I absolutely think we should be addressing corporate power. And when you take a step back and look at this through this allocation of economic coordination rights framework, part of what you see is the public nature of all of it, and that hopefully makes space for public economic coordination itself. I should have said that more explicitly before. That should make space for direct public economic coordination where that’s appropriate in all kinds of ways–public provisioning, public price coordination where appropriate–all of that should absolutely be on the table.
Conversely though, without naming too many names or anything, I sometimes feel like there’s this unnecessary, which I don’t mean to say that if everyone just understood things that it would dissolve all disagreement, that’s not what I’m thing at all, but I’m saying that sometimes the terms of debate around this topic seem to be just off on both sides. Conversely to what I think you were kind of asking about, there can also be a little bit of a resistance among other left projects to anti-monopoly precisely because it is seen as something that is trying to reinstitute some fictive free market or something. And I just fundamentally don’t think that’s what anti-monopoly is about. Obviously that’s partly an analytical project and partly saying, “Hey, there’s a historical precedent and a legal precedent reviewing it as something very different.” It is definitely not trying to reinstitute a fictive free market. It is friendly with other left traditions.
Scott Ferguson: Yeah, I think that there’s a nice way in what you’re doing with coordination rights as a framework and as a way of setting out the conditions of possibility versus the various specific cases and specific areas of contestation that we could be talking about. It reminds me of certain MMT rhetoric, right, where it doesn’t make any sense. We always laugh when people say, “Well, has MMT ever been tried?” Or “Are you going to go do MMT now?” It’s the same thing with coordination rights: “Are you going to try out some coordination rights?”
Sanjukta Paul: Exactly! Exactly, exactly, exactly. That’s actually a really helpful analogy. Not claiming that I know all about MMT, but from what I understand about it, there’s this analytical part of the project that’s just describing what is already going on and that is saying whatever criteria you use and whether you’re honest or up front about them or not, this is already what’s happening. And then in recognizing that, we can shift through that recognition and reexamination.
Scott Ferguson: Maybe we can close: Are there specific lessons in your work for dealing with what we’re all living through right now, globally, with the virus outbreak and the economic collapse that’s coming with it? Have you given much thought to that as you’re preparing to take your classes online and do 1000 other things?
Sanjukta Paul: Of course, I’ve started to have those thoughts. I think it’s clearly true for your guys’ work in terms of the move to public provisioning. Two things that I would say, and I would not frame it in those grand terms at all, perhaps in a less direct way than is happening for public spending and public provisioning, there’s a way in which all kinds of what had been law and economics orthodoxies in the policy world are being thrown into the light and to some extent discarded. It’s kinda crazy how it started happening almost just like that. In a little bit closer to the space that I work in, direct public price coordination is on the table. So, in that sense, I think it’s really an opportunity for everyone to clearly see the contingency of these legal rules that we take for granted in economic coordination. And then, this is a really open thing to explore, like would more democratic allocation of coordination rights make us more resilient at times like this? I don’t know. I strongly suspect that the answer is yes. But yeah, I’ve been thinking about that for sure.
Scott Ferguson: Yeah, I have just one [more] closing comment. Clearly, we focus on different areas and your work is not the same as MMT. But I will say, from our perspective, we’re interested in money and what money is and what money does. What I would say is that money is not just fiscal policy. It’s not just congressional appropriation. It’s not just monetary policy. Money is coordination rights. To me, in the question of money and the question of political economy, the concept of coordination rights kind of sums it up. And fiscal policy or monetary policy are themselves just coordinations.
Sanjukta Paul: Yeah, that’s really neat.
Maxximilian Seijo: I wanted to bring it back to the allegory that we have been thematizing throughout this, which is the cave, it seems like in your answer to what preliminarily the Coronavirus can teach us is that we’re sort of letting the sun illuminate the cave a little bit and it throws all these concealed forms in into the light and we can perhaps see a bit more agency.
Sanjukta Paul: I love that. I really, really love that.
Scott Ferguson: Or maybe it’s happening. The dire nature of the situation is forcing it upon us where we have to reckon with our actual conditions of coordination and possibility rather than the bullshit ones that have been force fed to us for years and years.
Sanjukta Paul: Yes, yes, yes. Love it.
Maxximilian Seijo: Well, Sanjukta, thank you so much for coming on Money on the Left.
Sanjukta Paul: Thank you so much. I really enjoyed this.
* Thanks to the Money on the Left production team: Alex Williams (audio engineering), Richard Farrell (transcription) & Meghan Saas (graphic art).