Company: A Short History of a Revolutionary Idea by John Micklethwait; Adrian Wooldridge

Author:John Micklethwait; Adrian Wooldridge
Language: eng
Format: mobi
Tags: History
ISBN: 9780679642497
Publisher: Modern Library
Published: 2003-03-04T10:00:00+00:00

6

THE Triumph OF

MANAGERIAL

CAPITALISM

1913–1975

By the outbreak of the First World War, the big company had become a defining institution in American society: the motor of one of the most rapid periods of economic growth in history; a dominating figure in political life; and a decisive actor in transforming America from a society of “island communities” into a homogenous national community. Thanks largely to its embrace of this extraordinary institution, the American century was under way.

Different forms of company continued to sprout around the world. We have discussed Britain’s family firms and Japan’s zaibatsu; a longer book could have dwelled on the charms of France’s huge utility companies or northern Italy’s networks of small businesses. Even in America, the economy was upset by the discontinuities of war, recession, and the New Deal, not to mention continuous technological changes that provided opportunities for smaller companies to leap forward and for old giants to trip up. Who remembers Central Leather, the Nevada Consolidated Group, or Cudahy Packing?1

All the same, the most remarkable thing about the sixty years after the First World War was continuity—particularly the continued success of big American business. A list of America’s biggest companies in 1970 would have seemed fairly familiar to J. P. Morgan, who died in 1913. Yet, this very predictability, this sameness, was itself the result of one important innovation, introduced in the 1920s: the multidivisional firm.

The multidivisional firm was an important innovation by itself, because it professionalized the big company and set its dominant structure. But it was also important because it became the template for “managerialism.” If the archetypical figure of the Gilded Age was the robber baron, his successor was the professional manager—a more tedious character, perhaps, but one who turned out to be surprisingly controversial. In the 1940s, left-wing writers like the lapsed-Trotskyite James Burnham argued that a new managerial ruling class had stealthily obliterated the difference between capitalism and socialism; in the 1980s, corporate raiders said much the same thing.

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