Socializing Capital

Socializing Capital: The Rise of the Large Industrial Corporation in America

WILLIAM G. ROY
Copyright Date: 1997
Pages: 360
https://www.jstor.org/stable/j.ctt7szpm
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  • Book Info
    Socializing Capital
    Book Description:

    Ever since Adolph Berle and Gardiner Means wrote their classic 1932 analysis of the American corporation,The Modern Corporation and Private Property, social scientists have been intrigued and challenged by the evolution of this crucial part of American social and economic life. Here William Roy conducts a historical inquiry into the rise of the large publicly traded American corporation. Departing from the received wisdom, which sees the big, vertically integrated corporation as the result of technological development and market growth that required greater efficiency in larger scale firms, Roy focuses on political, social, and institutional processes governed by the dynamics of power.

    The author shows how the corporation started as a quasi-public device used by governments to create and administer public services like turnpikes and canals and then how it germinated within a system of stock markets, brokerage houses, and investment banks into a mechanism for the organization of railroads. Finally, and most particularly, he analyzes its flowering into the realm of manufacturing, when at the turn of this century, many of the same giants that still dominate the American economic landscape were created. Thus, the corporation altered manufacturing entities so that they were each owned by many people instead of by single individuals as had previously been the case.

    eISBN: 978-1-4008-2227-0
    Subjects: Economics

Table of Contents

  1. Front Matter
    (pp. i-vi)
  2. Table of Contents
    (pp. vii-viii)
  3. LIST OF FIGURES
    (pp. ix-x)
  4. LIST OF TABLES
    (pp. xi-xii)
  5. PREFACE
    (pp. xiii-2)
  6. CHAPTER ONE Introduction
    (pp. 3-20)

    In the first year of this century, a group of bankers led by the venerable J. P. Morgan and a group of steel men created the U.S. Steel Corporation, America’s first billion-dollar corporation. Built around the core of the former Carnegie Steel Company, U.S. Steel merged nearly all major producers of iron, steel, and coke. Public opinion at the time focused on its mammoth size and its potential monopoly power. Looking back, we recognize it as a symbol of a broader movement that we now metaphorically but appropriately call the “corporate revolution.” As in political revolutions, the economic changes that...

  7. CHAPTER TWO A Quantitative Test of Efficiency Theory
    (pp. 21-40)

    The efficiency theory discussed in Chapter 1 holds that the corporation offered a more efficient organizational structure for increasingly large-scale, capital-intensive manufacturing activity than did traditional entrepreneurial firms. My criticisms focused on logical and conceptual issues—the unrealistic assumptions about rational decision making, the functional logic that confuses causes and consequences, the lack of historical logic, and the inattention to power. But social science seeks to assess well-developed theories with empirical tests. This chapter first examines how well efficiency theory, especially Chandler’s version, explains the temporal patterns characterizing the formation of large, socially capitalized corporations from 1880 to 1913. The...

  8. CHAPTER THREE The Corporation as Public and Private Enterprise
    (pp. 41-77)

    In the twentieth century the corporation has been the preeminent institutional form of the system of private enterprise that we call capitalism. When we think of who wields private power, such corporations as Exxon, AT&T, General Electric, or USX (U.S. Steel) quickly come to mind. Even though capitalist states have, until the last decade or so, regularly intensified their intervention into the economy, the very language we use to describe this process assumes a fundamental distinction between public and private spheres. Most U.S. observers assume that production and distribution are naturally private, best administered by the enlightened self-interest of owners...

  9. CHAPTER FOUR Railroads: The Corporation’s Institutional Wellspring
    (pp. 78-114)

    No economic sector was as important to the rise of large American business corporations as the railroads. Indeed until the end of the nineteenth century, railroad companies and large corporations were synonymous. For decades, nearly all the corporate securities traded on the stock market were railroad securities. Corporate law was primarily railroad law. The corporate elite were primarily railroad leaders. In short, by the last third of the century, the corporate institutional structurewasthe railroad institutional structure.

    The importance of the railroad is unparalleled and undisputed. Virtually all accounts agree that the railroad was the dominant factor in the...

  10. CHAPTER FIVE Auxiliary Institutions: The Stock Market, Investment Banking, and Brokers
    (pp. 115-143)

    The emergence of the modern large corporation as a public institution and its subsequent privatization stemmed not just from the internal dynamics of managerial ascendancy or from the legal changes that redefined the nature of property. The corporation’s institutional origins (in contrast to its technical or legal origins) lie within a framework of investment banks, brokerage houses, and stock markets that arose to serve the state. When these institutions developed as private auxiliaries to the public sector and redirected their activities toward the private sector, the corporation itself privatized.

    Insofar as the large, socially capitalized corporation arose at the turn...

  11. CHAPTER SIX Statutory Corporate Law, 1880–1913
    (pp. 144-175)

    I have stressed throughout that the legal developments redefining the nature of corporate property and the corporate institutional structure were more than easy functional adaptations to any compelling logic of technological progress. This chapter will address the ways in which the law played an autonomous role in shaping the social relations institutionalized in the new corporate organization of property, and seeks to explain the legal underpinning of large corporations on their own terms.¹ It will elaborate three aspects of statutory law that helped redefine the rights, entitlements, and responsibilities enforced as property and show how variations among states helped determine...

  12. CHAPTER SEVEN Prelude to a Revolution
    (pp. 176-220)

    The trope “Corporate revolution,” used to describe the economic transformation at the turn of this century, is more than a casual metaphor. A revolution is a sudden change in which one group in power is replaced by the mobilization of another group (Tilly 1978). Asocialrevolution entails a fundamental transformation in social institutions, not just a new set of incumbents in office (Skocpol 1979). With few exceptions (for example, Johnson 1968), academic theories of revolution reject functional theories and follow resolutely historical logics: the revolution and its consequences are the result of long-term institutional changes that become crystallized in...

  13. CHAPTER EIGHT American Industry Incorporates
    (pp. 221-258)

    Although Chandler substantially advanced social science beyond the debate over whether the first generation of corporate leaders were robber barons or captains of industry by opening the agenda to the question of why some industries spawned large corporations rather than others, Chapter 2 showed that his predictions were not borne out by empirical tests. Large corporations were found in industries with large firms and high capital intensity, but were no more likely to be in highly productive industries than low productive industries and no more likely in quickly growing industries than stagnant ones. That chapter demonstrated the need for an...

  14. CHAPTER NINE Conclusion: A Political Sociology of the Large Corporation
    (pp. 259-286)

    Three interrelated concepts—power, history, and the state—have shaped my account of the institutions that have structured corporate property. Property, I have argued, is the major relationship connecting the intersection of state and economy. The concept of power highlights the question ofwhois determining the behavior of social actors. But power relationships that create new structures become embedded within social institutions that take on a life of their own, a process set within history, so that to understand the reasons why a system like corporate capitalism arose requires that we understand its roots as well as its immediate...

  15. NOTES
    (pp. 287-300)
  16. REFERENCES
    (pp. 301-318)
  17. INDEX
    (pp. 319-338)