This third article comments several papers by Professor Viktor Vanberg. In the first part, it attempts to demonstrate that the consumers’ welfare standard does constitute a sectional divide. Such a standard favors the consumers of the relevant market at the expense of all the other consumers, as Professor Alan Meese convincingly argued. The key here is that the economist must go beyond a partial equilibrium analysis and must look at the other markets where productive factors are freed up when a restriction of production occurs somewhere else. In the second part, the article contends that the concept of consumers’ sovereignty is at best a metaphor and that, in a private law society, it should not be considered as legally binding.
Professor Viktor Vanberg is the author of many studies about constitutional economics, competition law, and the thought of Friedrich Hayek and James Buchanan.
In a series of articles, I am going to analyze Professor Vanberg’s work regarding competition.
Most of my comments will pertain to a paper entitled “Consumer Welfare, Total Welfare and Economic Freedom – On the Normative Foundations of Competition Policy.” I invite any visitor to read this paper, freely available on the internet, before reading my article.
However, I will also refer to two more general books, namely Rules & Choice in Economics (1994) and The Constitution of Markets (2001). These books are collections of papers written by Professor Vanberg.
In the first article, I have enquired whether competition law could rightly be considered to amount to a private law order, as Professor Vanberg (following Franz Böhm) argued. My finding was negative: competition law is public law par excellence unless one takes Böhm’s programme seriously, which nobody does except libertarians.
In the second article, I discussed, approved, and tried to supplement Professor Vanberg’s case against the resort to economics at the “sub-constitutional” level. I also criticized the lack of congruence that I perceived between Professor Vanberg’s theoretical criticisms and his practical judgments and recommendations.
In the present article, I am going to challenge Professor Vanberg’s statements as to the most appropriate “welfare standard” for antitrust and as to the claim that the total welfare standard deals with “sectional interests.” I will also argue that “consumers’ sovereignty” may be used as a metaphor to explain the workings of the market but cannot be given any legal force in a private law order.
For the sake of clarity, let us specify once more that a “constitutional economist” as Professor Vanberg distinguishes between the constitutional level, i.e., the level at which the rules of the games are drafted (be it in a “constitution” in the traditional legal sense of the word or in an ordinary “law”), and the sub-constitutional level, that is, the level at which rules are enforced.