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California bans algorithmic price-fixing

I'm on a tour with my new book Enshittification: catch me next in Brooklyn, New Orleans and Chicago! Full schedule here. Tune into tonight's event with former FTC chair LINA KHAN at 19hET via the Brooklyn Public Library's livestream.

As the Marxist pamphleteer Adam Smith wrote in his Leninist textbook The Wealth of Nations, "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices."

For a commie, that Adam Smith sure had a fine grasp of the business mindset. Price-fixing conspiracies are as old as the lumber barons who gouged Noah, and they're illegal as hell.

But price-gougers gonna gouge, and for most of the past 40 years, regulators have been monumentally disinterested in protecting the public from these ripoffs. All our regulators asked was of the price-gougers was that they come up with the thinnest, least-convincing comb-over and in return, these regulators would pretend not to notice the glaring bald-spot shining through.

The one weird trick that these guys have hit upon is to use industry-wide "pricing consultancies" – clearinghouses that pretend to offer individualized price advice to each seller in a market. In reality what these companies do is aggregate all the prices charged by every major seller in the market, then advise all of them to raise their prices in sync:

https://pluralistic.net/2025/06/24/price-discrimination/

When we talk about "greedflation," we don't just mean one seller – a major grocery chain, say – raising prices because they know they've got a regional lock on their market. That happens, but far more pernicious is when all the sellers get together to raise the price of goods, via a brokerage that lets them pretend (unconvincingly) that they're just getting "price advice."

Take Agri-Stats, a conspiracy in plain sight that gathers in pricing from all the major meat processors and then tells them all to jack up the price of meat:

https://pluralistic.net/2023/10/04/dont-let-your-meat-loaf/#meaty-beaty-big-and-bouncy

Then there's Realpage, a conspiracy that gathers rental prices from all the landlords in your town and "advises" them all to jack up prices. Landlords who don't obey this "advice" get kicked out of the conspiracy:

https://popular.info/p/feds-raid-corporate-landlord-escalating

These "price consultancies" are the reason you can't afford a hamburger or your apartment anymore. During the Biden administration, the Federal Trade Commission was working towards a nationwide ban on this stuff:

https://pluralistic.net/2024/07/24/gouging-the-all-seeing-eye/#i-spy

Of course, after Trump took office, his FTC canceled all that work and instead set up a snitch line where FTC employees could report on each other for being "woke." And, you know, fair: making sure that no one who works for the federal government has a pronoun is far more important than making sure you can afford to eat dinner and sleep indoors.

But (as the saying goes) the states are the laboratories of democracy. State legislatures are (sometimes) stepping in to fill the voids where Trump has failed the American people. That's what's just happened in California, the world's fourth largest economy, where Governor Newsom has just signed AB325 into law, and banned these price consultancies:

https://legiscan.com/CA/text/AB325/id/3269757

Specifically, the law makes it "unlawful for a person to use or distribute a common pricing algorithm if the person coerces another person to set or adopt a recommended price or commercial term recommended by the common pricing algorithm for the same or similar products or services."

As Matt Stoller writes, this may seem like small potatoes, but it's actually a huge ideological victory, and marks a major new milestone in the long fight to slay the political ideology that welcomes oligarchy:

https://www.thebignewsletter.com/p/how-to-overturn-an-oligarchy

Stoller recounts the history of this pro-oligarch movement, and describes how it began by rejecting earlier Supreme Court decisions that banned price coercion – like when a cartel forces its members to adopt higher prices. The Chicago School – the faction of economists who took over the world in the Reagan years – rejected any kind of politics that took account of the role that power played in the economy. They insisted that if workers accepted a starvation wage, it was because they had a "revealed preference" for going hungry – and not because they needed a union to force their bosses to pay them enough to live on.

The Chicago School replaced this kind of power-centric analysis with something they called "efficiency":

If you were coerced by a dominant supplier, but an economist showed there was no loss of output, then that was just vigorous competition. Gradually, the notion that the antitrust laws protect business from economic violence fell away. The result is an economy of coercion machines, from Amazon to pharmacy benefit managers to RealPage.

The mere existence of a law – in 2025, nearly half a century into the neoliberal era – that mentions "coercion" marks a profoud shift in ideology, a recovery of the idea that we are always under threat of "a conspiracy against the public…some contrivance to raise prices."

In a way, this just proves how right Trump is: the American way of life really is under threat from the radical Marxist ideology…of Adam Smith.

If you'd like an essay-formatted version of this post to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:

https://pluralistic.net/2025/10/09/pricewars/#adam-smith-communist

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