Rising Corporate Power and Declining Labor Share in the Era of Chicago School Antitrust

Abstract

: Industrial concentration has led to rising profit shares, higher price markups, and a decline in business investment. In this article, we connect those phenomena to the rise of the Chicago School of Antitrust and its more lenient antitrust treatment of large corporations that parallels the decline in the labor share for U.S. workers. Our analysis of the U.S. manufacturing sector and components of the profit rate provides evidence for the rising profit shares and the slower capital accumulation in the highly concentrated sectors of U.S. manufacturing, and thus the laissez-faire bent of Chicago School antitrust toward corporate bigness during the period of declining labor shares should be recognized as another strong contributor to rising income inequality in the United States over this period.