In his book “The Visible Hand: The Managerial Revolution in American Business,” Alfred D. Chandler, Jr. examines the process of how large, vertically-integrated, and scientifically-managed firms of the 20th century came to dominate the modern economy. Chandler argues that advances in the technologies of communication and transportation changed the process of production and distribution which, when combined with the application of scientific knowledge to industrial technology, created the modern business enterprise (Chandler, pp. 376). Chandler shows how the size and scope of a firm’s powers evolved over time. Scientific Management made them no longer reliant on the invisible hand of the market. They were now able to determine supply and cost themselves through the visible hand of management.
In their article “Beyond Markets and Hierarchies: Toward a New Synthesis of American Business History,” the authors Lamoreaux, Raff, and Temin argue that Chandler’s thesis is flawed. They state that because many of the businesses exemplified by Chandler as fully-integrated and stable have become obsolete and closed that his linear theory of business history is inaccurate. They try to show multiple options can be taken by businesses to succeed. These options are determined by a combination of available technology, per capita income, and personal opinions. Chandler sees the time when he is writing as the peak of efficiency for this business model. However, they see the hierarchies set up within “The Visible Hand” as a product of the fact that the business model he explores worked best for the time, not because it is the natural end game of all businesses. Rather than the vertically–integrated, multinational corporations of
I appreciated the critiques of “Beyond Markets and Hierarchies” because it explains why we see specialized industries today. They are a result of the digital revolution and high per capita incomes. However I think that Chandler’s largest weakness was not in his assumption that the 1970’s was the zenith of business efficiency, but rather in who was left out of his analysis. In all of his 500 pages of writing
Chandler completely leaves out workers and worker’s unions. At one point he does mention the increase in the work force due to high birth rates, low death rates, and an influx of immigration but goes no further. It is as if the people who work in these factories have no role to play in the managerial styles which were created to control them. Even with the advances in technology, expansion on this scale could not have happened without a large work force. But the character and influence of this new work force is left out by Chandler.
Similarly, when discussing the expansion of American corporations abroad, Chandler states that industries chose to build factories abroad rather than expanding existing factories in the US “because of tariffs, high transportation costs, lower labor costs, and difficulties in coordinating trans-ocean flows” (pp. 369). This expansion abroad is said to have taken place in the years before 1914. There is no further explanation of the “lower labor costs” or situations in the
This neglect of the workers is especially problematic because
Here is a recording of one of my favorite bands, Old Crow Medicine Show, performing their rendition of a classic union ballad, “Union Maid." It is a great song and their version is a lot of fun, especially since they are a group of 20-somethings and this was recorded in 2006. I suggest you check it out.