Business history and socialist history

Working on the relation between government and business in the United States. As part of this reread Alfred Chandler’s exceptional Strategy and Structure and The Visible Hand. One interesting point is that although the 1930s are a time when theories of ‘monopoly capitalism’ gain major following and Gramsci develops the concept of ‘Fordism’, it is also a time at which there is actually a move back towards reliance on the market to some extent. In the interwar years General Motors and Du Pont began a shift away from unitary, or U-form model of corporate enterprise where the activities of a firm were allocated into functional divisions towards the multi-divisional, or M-form, in this model the activities of the firm were decentralised to competing divisions that made goods for the final market: GM’s hierarchy of different brandsĀ  etc. The aspiration was that transactions between the divisions would be at market prices. The overall affairs of the enterprise were to supervised by a central executive whose members were not to be representatives of individual divisions. Ford, which remained a highly centralised enterprise failed to respond to changing patterns of consumer demand and its market share collapsed. After 1945 most major American firms adopted this model, the major exception were firms that produced largely homogeneous goods for a producer market, such as steel. The multidivisional enterprise underpinned the glory days of the American industrial system when its productivity was the envy of the world as nicely represented by the video. If the rise of corporate capitalism involved the introduction of elements of socialism into American capitalism (as argued by Martin Sklar here and here) the rise of the M-form perhaps represented a drift back towards capitalism. A noteworthy parallel between this and the debates about the economics of socialism in this period, the Oscar Lange model of market socialism involved a similar emulation of the market. The idea that the central executive would act on behalf of the corporation as a whole recalls Marxist ideas about the state acting as a collective capitalist that could overrule individual capitalists. Could we also argue that the eventual replacement of the M-form by the Multi-level subsidiary form (MLSF), well described by Harland Prechel, mirrors the decline of Hungarian-style market socialism (well described by Nigel Swain)? In both cases the formula of ‘markets in the present, planning for the future’ was not viable in the long-term?

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