A Smithian Political Economy Approach for the Competition Law of the 21st Century

This study aims to show how a Smithian political economy approach could assist competition law in addressing the challenges of the 21st‐century economy. We revisit Smith's Wealth of Nations to provide a more nuanced understanding of his views, contrasting them with the prevailing libertarian interpretation called here ‘Chicago Smith’. This interpretation has significantly influenced competition policy, serving as the silent foundation of the Chicago School of Antitrust and the Neoclassical Competition Policy. After debunking the Chicago Smith narrative, we explore how Smith's work can inform modern competition policy. Notably, Smith's dual ideal of republican freedom and prosperity of the least fortunate could inspire a recalibration of competition law, offering alternatives to the consumer welfare standard through two new operational standards: the ‘effective competitive constraints’ standard and the ‘most vulnerable consumers’ standard. Furthermore, Smith's insights suggest that a methodological upgrading of competition law requires incorporating the concepts and tools of neoclassical economics into a broader complexity science framework. A Smith‐inspired political economy approach to competition law could enable antitrust institutions to overcome the limitations of the neoclassical competition policy and effectively promote competition amid digital transformation and green transition.