St. Matthew's Curse

In 1968, the sociologist Robert Merton gave a name to a pattern in scientific reputation. When comparable discoveries are made, the better-known scientist tends to collect a disproportionate share of the recognition. Success accrues to those who have already succeeded.

Merton named the pattern after a line from the Gospel of Matthew: ‘For unto every one that hath shall be given, but from him that hath not shall be taken away even that which he hath.’

The same mechanism is reasserting itself in the market for corporate control.

After several years in which regulators viewed large mergers with deep suspicion, the posture has shifted. Regulators are again open to clearing ambitious combinations through remedies (sources below).

As the economist Joseph Schumpeter argued in ‘Capitalism, Socialism and Democracy’ (1942), industry concentration is not inherently at odds with economic performance. Large firms can fund risky R&D, and the threat of losing entrenched positions gives incumbents powerful incentives to keep investing in the future rather than merely harvesting existing rents.

Whether that holds in the real world has never been settled. When a firm with a dominant position earns outsized returns, is it extracting rents at the expense of customers, or simply serving them better than anyone else? Decades of research have not answered this question. And where economics is inconclusive, politics decides. Today, geopolitical rivalry favors scale and national champions.

The M&A market rewards scale. The balance sheet, the clout, the access to market intelligence, the M&A muscle, the confidence to act on a transformational initiative and the integration capabilities belong disproportionately to the large.

Thus, in the new regulatory environment, those who have scale are being offered a path to gain still more.

But Saint Matthew's line has a context that is easy to forget. It comes from the ‘Parable of the Talents’, in which a master entrusts three servants with capital and departs. Two invest and multiply it; the third, fearing loss, buries his in the ground and returns it untouched. It is the most cautious servant, not the boldest, who is punished by being stripped of even the sum he was entrusted with.

A talent, once a unit of currency, now means any asset or gift, whether capital or capability. In the parable, each carries the same duty: to be put to work. Whether read as a moral argument or an economic one, the lesson is the same.

The new global antitrust philosophy does not merely create an opportunity for large players to consider what was until recently unthinkable from an industry consolidation perspective. It creates an obligation to do so.

That is the curse of those who have. What is not put to work may be taken away.