Restructuring American Antitrust Law: Institutionalist Economics and the Antitrust Labor Immunity, 1890–1940s

Labor unions and their leaders were cast as the perennial antitrust defendants for the first fifty years of federal antitrust law, and this historic imbalance fostered a movement in economic scholarship and labor activism to restructure American antitrust law. The progressive liberal-institutionalist movement in economics played an important role in legitimizing trade unions by recasting them, not as anticompetitive cartels, but rather as a necessary corollary to the growing market power of industrial firms. Louis Brandeis, the litigator and future jurist, drew from institutionalists' work to support antitrust reform. He argued that antitrust lawwas not necessarily anathema to the interest of labor organizations, and he advocated for both the application of the rule of reason to labor association activities and the revision of antitrust laws to exempt certain labor activities. The Clayton Act of 1914 created such an antitrust labor exemption, but as soon as union activity spilled over into interstate commerce the Supreme Court insisted on antitrust liability and applied it categorically against laborers. Even after the passage of additional labor exemptions in the 1930s, the reigning Commerce Clause doctrine rendered labor's immunity from antitrust liability uncertain. This lingering uncertainty was exacerbated by a fracturing within the progressive liberal movement as some economic institutionalists, schooled in the legal realist tradition, revived the Department of Justice's antitrust prosecutions in the late 1930s. Assistant Attorney General Thurman Arnold led this renewed antitrust agenda; armed with a more expansive interpretation of federal commerce power, he targeted labor groups in several headline-grabbing cases, enraging his former allies on the Left. Arnold, however, seemed to represent a divergent institutionalism that embraced both the Brandeisian distaste for economic concentration and the Keynesian macroeconomic policies of mass consumption. Ultimately, in 1941, an uneasy settlement was reached in United States v. Hutcheson, where the Supreme Court authorized a nonstatutory labor exemption for secondary boycotts. The ruling helped establish guardrails for lawful labor union activities; however, it did not resolve this division on the progressive Left, and laborers continued to seek protective legislation and statutory immunities. Recasting antitrust law's bias against laborers as historically contingent demonstrates the moments of possibilit