The Visible Hand: The Managerial Revolution in American Business
by Alfred D. Chandler Jr.
Belknap Press of the Harvard University Press, 608 pp., $18.50
America by Design: Science, Technology, and the Rise of Corporate Capitalism
by David F. Noble
Knopf, 384 pp., $12.95
Captains of Consciousness: Advertising and the Social Roots of the Consumer Culture
by Stuart Ewen
McGraw Hill, 261 pp., $4.95 (paper)
The business world creates a social landscape that envelops us completely. Business is everywhere—in the shops and office buildings and factories; in the simplest products as well as the most complicated machines; in the unending barrage of commercial noise; in the moods of anxiety, anticipation, desperation, or just plain coping we experience in daily life.
Yet we all know that this business world is a façade, that something else is going on behind its life-consuming presence. That something else consists of the silent, order-bestowing, and disorder-creating processes of capitalism. Business is the theater in which the drama of capitalism is acted out, a drama in which the players, unbeknownst to themselves, write the very script that dominates their actions. That stunning puzzle is the central challenge of economics. Economics exists to help us see the imperatives of capitalism in the turbulence of the business world.
At least, that is how I see the task of economics. I am afraid that most other economists view the matter somewhat differently. Rather than seeking to discover the invisible structures of capitalism within the goings-on of the business world, economists look for the equally invisible relationships of something called “the economy.” The difference is that whereas capitalism is inextricably mixed up with the dirty stuff of history, the economy can be considered sub specie aeternitatis. To the economist, the business world can be reduced to a collection of individuals maximizing their “utilities” subject to the constraints of a stingy nature—a description of life that presumably applies to all civilizations at all times. Thus the sound and fury of the business world, through the earphones of economics, become transmuted into the music of the spheres; and all that is immediate, tense, and vital in the business world becomes timeless, cosmological, and utterly dead.
As a result, if it is business that we wish to understand, it is the economic historian rather than the pure economist to whom we must turn nowadays. Three instances in point are the books under review, all of which have a common interest in discerning how the background workings of capitalism gave shape and direction to the foreground goings-on of business. Alfred Chandler, as his title The Visible Hand announces, wants to explain how the structure of the business world evolved from a collection of tiny enterprises—the social counterpart of a Newtonian universe—to the lopsided collection of miniscule enterprises and gigantic corporations of our own day. More precisely, Chandler wants to show how the “invisible hand” of market relationships that coordinated the Newtonian universe gave way to the visible hand of contemporary management—not in all industries but in some. Why did the congeries of small automobile firms in 1900 evolve into the oligopoly dominated by General Motors, while the business worlds of furniture or clothing or restaurants never gave rise to similar giant enterprises?
Chandler finds the explanation in two conditions necessary for the rise of giant firms. The first was the appearance of a technology …