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The role of large-scale business enterprise--big business and its managers--during the formative years of modern capitalism (from the 1850s until the 1920s) is delineated in this pathmarking book. Alfred Chandler, Jr., the distinguished business historian, sets forth the reasons for the dominance of big business in American transportation, communications, and the central s The role of large-scale business enterprise--big business and its managers--during the formative years of modern capitalism (from the 1850s until the 1920s) is delineated in this pathmarking book. Alfred Chandler, Jr., the distinguished business historian, sets forth the reasons for the dominance of big business in American transportation, communications, and the central sectors of production and distribution. The managerial revolution, presented here with force and conviction, is the story of how the visible hand of management replaced what Adam Smith called the "invisible hand" of market forces. Chandler shows that the fundamental shift toward managers running large enterprises exerted a far greater influence in determining size and concentration in American industry than other factors so often cited as critical: the quality of entrepreneurship, the availability of capital, or public policy.


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The role of large-scale business enterprise--big business and its managers--during the formative years of modern capitalism (from the 1850s until the 1920s) is delineated in this pathmarking book. Alfred Chandler, Jr., the distinguished business historian, sets forth the reasons for the dominance of big business in American transportation, communications, and the central s The role of large-scale business enterprise--big business and its managers--during the formative years of modern capitalism (from the 1850s until the 1920s) is delineated in this pathmarking book. Alfred Chandler, Jr., the distinguished business historian, sets forth the reasons for the dominance of big business in American transportation, communications, and the central sectors of production and distribution. The managerial revolution, presented here with force and conviction, is the story of how the visible hand of management replaced what Adam Smith called the "invisible hand" of market forces. Chandler shows that the fundamental shift toward managers running large enterprises exerted a far greater influence in determining size and concentration in American industry than other factors so often cited as critical: the quality of entrepreneurship, the availability of capital, or public policy.

30 review for The Visible Hand: The Managerial Revolution in American Business

  1. 5 out of 5

    Lobstergirl

    At first glance (the cover, really) I thought this was going to be a book about how markets are imperfect. The invisible hand is a myth; markets really work by manipulation, or government intervention, or whatnot. It's actually nothing like that. It's a straightforward business history (though Chandler was saying something new in 1977, that had not been written about before) explaining the connection between large, modern business enterprises and their managerial structure (layers of middle and At first glance (the cover, really) I thought this was going to be a book about how markets are imperfect. The invisible hand is a myth; markets really work by manipulation, or government intervention, or whatnot. It's actually nothing like that. It's a straightforward business history (though Chandler was saying something new in 1977, that had not been written about before) explaining the connection between large, modern business enterprises and their managerial structure (layers of middle and top management). The "invisible hand" implies that markets, supply and demand, coordinate business activity. Chandler hypothesises that beginning at some point after 1840, and particularly with the rise and growth of the railroads, a completely new profession - that of the manager - coordinated the business activity of an enterprise, allocating resources, constructing supply chains, aligning production and distribution. Interesting features of the argument: certain types of enterprises were more likely to develop those managerial layers than others; large-scale mergers were much more successful when the resulting enterprise was able to integrate vertically. This is a seminal historical work, winning both the Pulitzer and Bancroft prizes. But it is very dense. I suspect that unless you are extremely interested in business history, or the history of capitalism or railroads, this book will not send a thrill up your leg. There were chunks that were quite fascinating, and other chunks that nearly put me to sleep.

  2. 5 out of 5

    Michael

    Excerpted as "The Coming of Mass Production and Modern Management" in Gary Kornblith, ed., The Industrial Revolution in America (1998) Chandler describes the process through which mass production necessitated the emergence of bureaucratic forms of management and the emergence of a professional managerial class. For Chandler, modern management "contains many distinct operating units and it is managed by a hierarchy of salaried executives." (p. 141) In the metal-making and metal-working industries o Excerpted as "The Coming of Mass Production and Modern Management" in Gary Kornblith, ed., The Industrial Revolution in America (1998) Chandler describes the process through which mass production necessitated the emergence of bureaucratic forms of management and the emergence of a professional managerial class. For Chandler, modern management "contains many distinct operating units and it is managed by a hierarchy of salaried executives." (p. 141) In the metal-making and metal-working industries of the latter half of the 19th century, the drive to mass production required "concentration on the development of systematic practices and procedures of factory management." (p. 142) In metal-making this meant the co-location of blast furnaces, forges, and rolling and finishing mills in one geographic location. In the 1860s and 1870s, the Bessemer process for steel making was implemented by Alexander Lyman Holley who regarded "the design of the works and the quality of the management as important as machinery in increasing the velocity of throughput." (p. 143) Arguing for rational placement of machinery within a plant, he also championed redundancy to ensure high levels of throughput. In the construction of Andrew Carnegie's Edgar Thomson Works, Holley had the opportunity to put his ideas into practice. Located at the junction of three railroads, the plant was built around the transportation system to ensure maximum throughput. Steam and electric power were increasingly used to replace human labor until by the start of the 20th Century, a dozen workers could roll as much steel in a week as it took a whole plant a year to produce in 1850. It took tremendous management effort to make this transition. Each of the component parts of the steel mill were run by foremen whose activities needed to be coordinated with the activities of other foremen. This required strong management oversight. The model adopted for this management was taken from the railroads. All Bessemer plants had ties to the railroads and the transmission of management techniques from railroads to steel mills was therefore a rather straightforward process. Carnegie, for instance, appointed the railroad executive William P. Shinn to serve as general manager of the ET Works. Shinn focused on the use of statistical data for coordination and control. He introduced the voucher method of cost accounting, whereby each subunit had to account for the cost of the step that subunit performed before passing the product on to the next step. These cost sheets became Carnegie's obsession and they served as his primary means of control of the mill. Carnegie's focus on cost accounting allowed him to beat the competition in the market place and amass a legendary personal fortune. Response to Industrialization: Accumulating America Chandler, Alfred D. The Visible Hand. Introduction and Chapters 3-8. In the introduction to this book, Chandler states his major thesis clearly. During the second half of the 19th century modern business enterprise took the place of market mechanisms in coordinating the activity of the economy and allocating its resources. In many sectors of the economy the visible hand of management replaced what Adam Smith referred to as the invisible hand of market forces. (p. 1) Examining the revolutionary transformation in production and .' distribution which accompanied the shift from urban to rural America between 1840 and 1920, Chandler's focus excludes any "attempt to assess the impact of modern business enterprises on existing political and social arrangements." (p. 6) Historiographically, Chandler is filling a void left by progressive historians (and progressive economists?) who had neglected the study of "big business." He goes beyond such facile labels as "monopoly power" in describing the rise of the modern business enterprise known as the corporation. Many previous economists and historians, themselves clinging to the teachings of Adam Smith, had assumed that the decline in competition attendant with the rise of the corporation meant that "the American economy had achieved its success despite its structure," Chandler makes a good case for the opposite proposition. Reading Chandler one comes away believing that it was because of the structure of managerial capitalism that the American economy succeeded. With Chandler, one can thus get beyond irony. (To?) In Part II, "The Revolution in Transportation and Communication," Chandler takes the reader step by step through the changes in the railroad industry. In this part of the book Chandler ably illustrates his conclusion that the visible hand of management replaced the invisible hand of market forces where and when new technology and expanded markets permitted a historically unprecedented high volume and speed of materials through the processes of production and distribution. (p. 12) The railroads are paradigmatic for this revolutionary transformation. In Chapter 3, "The Railroads: The First Modern Business Enterprises, 1850s-1860s," Chandler explains the change in management which took place within the railroad industry before the Civil War. The railways victory over the canal system was the result of organizational as well as technological superiority (p. 87). During this time ownership and management separated in the railroad industry. This is the key distinction between a pre-modern and a modern business enterprise --a modern business enterprise is run by a class of professional managers who had little to no capital invested in the business they managed. It was the need to assure safety of passengers and employees on the new, high-speed mode of transportation that made the Western Railroad the first American business enterprise to operate through a formal administrative structure manned by full-time employees." (p. 98) Other railroads followed in the Western Railroad's tracks. In Chapter 4, "Railroad Cooperation and Competition, 1870s-1880s," Chandler describes the initial attempts in the immediate post-Civil War period to expand the volume and speed of through traffic. Before attempting "system building" in the later 19th century, individual railway companies attempted to form cartels to maximize efficiency and stabilize rates. .Cartels might have worked, had they received legal sanction, but they didn't. Popular opposition to the formation of cartels was one major factor in their failure which Chandler only hints at. Chapter 5, "System-Building, 1880s-1890s," highlights the role of the railway speculator in the formation of the major railway systems. Jay Gould serves as the major catalyst to the self-defensive reaction of railway consolidation in the last two decades of the 19th century. Gould's ventures in speculation forced railways in the east and west to develop self-sustaining systems, in which centralized management structure prevailed. Chapter 6, "Completion of the Infrastructure," examines the impact of railway advances on other parts of the American infrastructure. Urban mass transit adopted the managerial advances of the railways. The communications sector also adopted the new management structure of the railways in which "career middle managers coordinated flows and top mangers allocated resources." (p. 203) Part III, "The Revolution in Distribution and Production," explains the impact of these infrastructure hangs on market relations. It is important to note that Chandler first discusses "Mass Distribution," in Chapter 7 and then in Chapter 8, '.Mass Production.'. The expansion in the market achieved by the great technological and managerial changes pioneered by the railroads 1 were the necessary preconditions for the rise of the mass marketer. The rise of mass manufacture is also attributable 9 ~ to this change in infrastructure, since it encouraged "the concentration within a single establishment of all or nearly all the process involved in making the product.'. (207) In perhaps the most interesting section of this part of the book, Chandler describes the rise of the mass retailers --department stores, the mail-order house, and the chain store. All of these enterprises made their money on high rates of stock turn. The essential element here being volume. In the rise of mass production the element of speed was also key. It was the increase in "throughput" and not so much in size which Chandler identifies as essential. Examining the growth of mass production in metal-making and metal-working industries, Chandler ends this part of the book by discussing I the beginnings of scientific management. Alfred Chandler's Visible Hand reminds one of David Landes' The Unbound Prometheus and Geoffrey Parker's The Military Revolution. This work has many of the same strengths and weaknesses as these two works. Each provides exhaustive detail on technological change which experts will find fascinating, yet each stops short of an attempt to understand the societal context in which these changes took place. The authors argue that this is not their purpose. The reader must grant them this, but stopping short in this manner leaves one intensely unsatisfied. Highly mechanistic in their approach, they simply assume that technological efficiency is a self-evident goal after which Western societies strive. Progress, defined as ever-increasing technological efficiency, is nearly predetermined by material circumstance. Though each allows for human agency, ideas are reduced to mere ephemera. In addition, this book is a very optimistic book. With all the emphasis on speed, for instance, one would like to see something of the "shadow side" of speed in travel. In this respect, the work on railways done by Wolfgang Schivelbusch in his The Railway Journey is exemplary. The anxieties created .by all this speed are quite simply glossed over. Chandler's Work in Perspective: Thomas K McCraw "The Challenge of Alfred D. Chandler, Jr.: Retrospect and Prospect" RAH 15:1 (March 1987): 160-178. Richard R. John "Elaborations, Revisions, Dissents: Alfred D. Chandler, Jr.’s The Visible Hand after Twenty Years" BHR 71 (Summer 1997): 151-200.

  3. 4 out of 5

    Sia Fay

    He found that managerial organization developed in response to the corporation's business strategy. He found that managerial organization developed in response to the corporation's business strategy.

  4. 5 out of 5

    Dow J

    A PhD student must for those that seek to digest an industrial economic foundation to the ways of company profitability. A long read with endless insights into the organization efforts to move markets and value chain activities. Any PhD advisor worth their weight would assign and stress these theoretical concepts to markets and microeconomics. I look forward to going back and reading it again, but for leisure.

  5. 4 out of 5

    Mark Bowles

    A. Synopsis: The purpose of this book is to “examine the changing processes of production and distribution in the United States and the ways in which they have been managed. (1)” The “visible hand of management replaced the invisible hand of market forces where and when new technology and expanded markets permitted a historically unprecedented high volume and speed of materials through the processes of production and distribution (14).” What is the modern business enterprise? It contains many di A. Synopsis: The purpose of this book is to “examine the changing processes of production and distribution in the United States and the ways in which they have been managed. (1)” The “visible hand of management replaced the invisible hand of market forces where and when new technology and expanded markets permitted a historically unprecedented high volume and speed of materials through the processes of production and distribution (14).” What is the modern business enterprise? It contains many distinct operating units, and is managed by a hierarchy of salaried executives (middle and top level managers). The multiunit enterprise administered by a set of middle and top level managers is modern because it did not exist prior to 1840 and dominated business by WWI. Within this chronology (1840s-1920s), when American moved from a rural to an industrial nation, Chandler identifies revolutionary changes in the processes of production and distribution (transportation, communication, and finance). B. Eight general propositions 1. Why did the modern business enterprise appear when, where, and the way it did? a) Modern multiunit business enterprises replaced small traditional enterprises when administrative coordination permitted greater productivity, lower costs, and higher profits than coordinated by market mechanisms. b) The advantages of internalizing the activities of many different business units within one enterprise could not have occurred until a managerial hierarchy had been created. c) The modern business enterprise appeared only when advances in technology and the expansion of markets increased the volume of economic activities so that administrative coordination became more efficient than market coordination. 2. Where, how, and why did an enterprise once started continue to grow and maintain dominance? a) Once the modern business enterprise formed, the managerial hierarchy itself became the source of its permanence, power, and continued growth b) The careers of the salaried managers became increasingly technical and professional . Jobs were based on experience, training and performance rather than family relationship or personal wealth. c) As the business enterprise grew in size and diversity, the management became separate from ownership. d) Managers preferred making administrative decisions based on long-term stability and growth rather than attempting to maximize current profits e) The large enterprises altered large sectors of the economy. They did not replace the market, but took over control of the coordination of goods and services from the production of raw materials to the sale to the consumer. II. Part 1: The Traditional processes of production and distribution A. This section examines the ways in which production and distribution were carried out before the modern business arose. (1790s-1840s). Little industrial innovation occurred in the US prior to the 1840s because the processes of production and distribution depended on traditional sources of energy (man, animal, and wind). These sources of energy could not produce a high enough volume of output to require a large managerial enterprise. III. The revolution in transportation and communication A. This revolution was made possible by the railroad in transportation and the telegraph in communication. These allowed high volume production and distribution. The railroad and the telegraph were the first modern business enterprises. They employed a staff of managers. This section examines how these new enterprises were financed, administered, and organized. The emphasis is placed on the railroad. IV. The revolution in distribution and production A. This revolution stemmed greatly from the new transportation and communication infrastructure. In distribution the railroad and the telegraph were central to the coming of the modern mass marketer who purchased directly from the manufacturer and sold to the consumer. In production, the railroad and telegraph helped to give rise to mass production by encouraging the connection within one establishment of all the processes involved in making one product. These new production and distribution changes permitted business enterprises to subdivide into distinct operating departments. V. The integration of mass production with mass distribution A. This integration within the single business firm was central to the rise of the modern industrial enterprise. VI. The management and growth of modern industrial enterprises A. What is examined here are how the visible hand of management carried out the functions previously performed by market mechanisms in American industry (the methods of middle management to monitor the performance of operating units, look at how tom management coordinated the activities of the middle manager and allocated the resources for the company). The case study is used here because it shows the response of a single organization to the changing business situation in America. But, since other organizations operated under the same conditions, one organization can be considered as representative. VII. Notes A. “The visible hand of management replaced the invisible hand of market forces where and when new technology and expanded markets permitted a historically unprecedented high volume and speed of materials through processes of production and distribution.” 1850s-WWI

  6. 4 out of 5

    Zoe

    While this is an informative book about American industry, the writing is so dry that I nearly fell asleep while reading it - multiple times.

  7. 4 out of 5

    DVDMSN

    A classic still very worth reading, whether for its history of management or for its insights in how modern technological systems work.

  8. 4 out of 5

    Frank Stein

    This book is the rare winner of both a Pulitzer and a Bancroft, the latter the prize for best academic history book. Although it doesn't quite reach a general audience, it does try to describe to the laymen how America became an economy run by large, hierarchically organized corporations controlled by layers of management, as opposed to a free-wheeling market of small enterprises. At times, this descends into endless analysis of org-charts, and in its less-inspiring moments can be described as t This book is the rare winner of both a Pulitzer and a Bancroft, the latter the prize for best academic history book. Although it doesn't quite reach a general audience, it does try to describe to the laymen how America became an economy run by large, hierarchically organized corporations controlled by layers of management, as opposed to a free-wheeling market of small enterprises. At times, this descends into endless analysis of org-charts, and in its less-inspiring moments can be described as the "history of middle management." One can admire Alfred Chandler's chutzpah in trying to dramatize that proverbially boring backwater, but one can also tire in the process. Still, Chandler more than makes his case that this was a singular and revolutionary change. As with so much else, the modern corporation originated with the railroads. These were the first corporations to separate ownership from management (they required hundreds of millions in capital raised in bond and stock markets, while textile companies and others required at most only a few million, usually raised inside families). After a Massachusetts train crash in the 1841, the railroads, under managers like Daniel McCallum at Erie and J. Edgar Thompson at the Pennsylvania, also established the first superintendents for different parts of their trackage, who controlled these areas as if they were independent corporations, but all under a central headquarters bureaucracy instead of the market. Through the efforts of Albert Fink and others, many railroads tried to organize cartels, but these soon fell apart, and the railroads integrated into huge systems like the Pennsylvania that created a "line and staff" system of management, with different regional management divisions but also top staff controlling finance or purchasing or accounting. The railroads innovations in accounting created the first comprehensive spreadsheets and allowed them to control "throughput" seamlessly. Chandler shows that these innovations spread first to marketing corporations (such as Marshall Fields and Sears) and then production companies (such as Duke Cigarettes). While previous historians emphasized how these corporations grew to control competition horizontally by buying up rivals, Chandler shows that most horizontal mergers, like the old railroad pools, failed unless accompanied by vertical integration and central management control. The real innovations were by expanding the one corporation to include both purchasing and marketing, so the flow of commodities from raw materials through to the final consumer could be as quick and seamless as possible. That's why marketing corporations came first, followed by companies selling liquid-type products (such as steal or grains, as in the Carnegie Corporation and General Mills). It wasn't until DuPont and General Motors in the 1910s, however, that the corporation attained what Chandler calls its fully modern form. In these companies financiers were removed from the board in place of regular managers, and these managers focused on directing investment and "overhead" costs through overlapping executive boards as opposed to managing throughput. This new focus was precipitated by innovations in accounting for capital and depreciation, which previous corporations ignored as they only focused on "operating costs." This was a revolutionary transformation in American economic life, explained cogently and clearly. As Chandler demonstrates the integrated, the hierarchal American corporation quickly became multinational, almost from the moment of its birth, and eventually took over the planet. The irony is that Chandler wrote this book in 1977, just as the top American companies, Sears, General Mills, General Electric, etc., became transformed by outsourcing and replaced again by an increasing array of small companies and market-driven processes. Instead of describing the end of corporate history, as Chandler often seems to imply, he charted the transformation of a singular moment in economic evolution, one that will not likely be repeated.

  9. 5 out of 5

    Marks54

    *I went back to check my original review for this and ended up deleting the record. How smart is that? I will provide a rewrite/revision here. This book is one of the five most influential books ever on the history of big business in the US, if not the most influential single book. I cannot recall why I gave it four stars rather than five, but that is OK. This book was literally the first serious book of business history I ever read and I just stumbled onto it during a lunch break in Washington, *I went back to check my original review for this and ended up deleting the record. How smart is that? I will provide a rewrite/revision here. This book is one of the five most influential books ever on the history of big business in the US, if not the most influential single book. I cannot recall why I gave it four stars rather than five, but that is OK. This book was literally the first serious book of business history I ever read and I just stumbled onto it during a lunch break in Washington, D.C.., where I was working after college. It is a bit of a slog but it is well worth it. Until his recent death, Chandler was the leader of the business history faculty at Harvard. I don't think it is in the book, but Chandler got his start in studying big business when Alfred Sloan of GM asked him to work with him in research that ultimately led to Sloan's famous "My Years with General Motors". Chandler came into his own when he published "Strategy and Structure", a series of historical case studies of classic big US firms during which he developed the seminal ideas the study of business strategy. That book, along with Sloan's, is still in print and still worth reading. In "The Visible Hand", Chandler plays on the idea that what goes on within large firms is not taking place in the marketplace directly and is thus not subject to the "invisible hand" of market coordination made so famous by Adam Smith. Hence the title - the book explains how the invisible hand of the market was replaced by the visible hand of managerial hierarchy in these firms (Sears, GM, US Steel, etc.). The punchline -- firms in selected industries (those with exploitable scale and scope economies) could grow large and very profitable by attaining scale, minimizing their costs, and dominating their industries with large market shares. Industries with available economies saw the growth of large firms while those without such economies (leatherwork for example) did not experience industry consolidation and market dominating leaders. So far, so good - this is one of the dominant in historical studies of business and Chandler set the agenda for those who followed him, even if they did not agree with Chandler, as is the case with sociologists like Neil Fligstein. Where doe the "managerial revolution" fit in? The tool that large firms used to rise to dominance was the development of a skilled managerial hierarchy (a form of bureaucracy) that enabled managers to control workers in the firm and generated sufficient information on markets and local conditions that a firm could effectively adjust its activities and investments to the demands of their product markets across wide geographic areas. This is a powerful story that remains highly influential today. It is consistent with much that industrial economists study in firms and has set the agenda for research in many areas. Does it cover everything? Not at all. Perhaps the principal gaps that strikes me is on the idea of transactions costs and agency problems, which consider problems in arriving at the best governance systems where work is very complex and hard to monitor and the necessary data for control are expensive to collect and analyze. Chandler certainly thought about this, but his ideas on information flows were not as well developed as those of Ronald Coase or Oliver Williamson (and others). No books are perfect, but Chandler's accomplishment here, developed further in his later study that was published in book form as "Scale and Scope".

  10. 5 out of 5

    Cat

    Let's get one thing straight. I don't care who you are or what you're doing with your life- but if you are ignorant about the world of the corporation because of some misguided idea that corporations are "bad" or "evil" you are an idiot and i don't have time for you. Corporations run the whole world. They are more powerful then governments and their decisions affect us all. The above paragraph is simple statement of fact. Of course, the problem with learning about business is that they've built u Let's get one thing straight. I don't care who you are or what you're doing with your life- but if you are ignorant about the world of the corporation because of some misguided idea that corporations are "bad" or "evil" you are an idiot and i don't have time for you. Corporations run the whole world. They are more powerful then governments and their decisions affect us all. The above paragraph is simple statement of fact. Of course, the problem with learning about business is that they've built up this whole appratus of the "MBA" as a ritual mystisification of a "profession" that didn't even exist until the 1880s. The entire history of the modern business corporation can be understood by understanding economic development in the united states from 1880s till the 1920s. So- first you want to develop a working knowledge of United States History between 1880-1920. I can assure you that it was a fascinating time. If you know what the fuck was up during that time period- because this guy basically lays out the development of the modern business corporation in 500 pages. He starts with large factories like the springfield armory, introduces the telegraph and the railroad- and then bam- it's off to the races. The first big corporations were factories in industries that involved processed liquids or whatever- oil, linseed oil. then there was this expansion process that coincided with the factories developing distribution and sales apparatus. But the main thing is that these early business corps were basically run by families as family businesses. Basically what happened is that everything kept growing, and eventually the family was replaced by professional managers who insituted "modern" accounting practices and cost controls and long term financial planing. That is when everything went to hell fun-wise. The whole idea of the title of "the visible hand" is that the managers took adam smiths "invisible hand" that was supposed to regulate the market and made it a "visible hand" by their centralized, professional activity and as such are the MOST IMPORTANT thing to understand about american (and world) business growth in the 20th century. The bottom line is that if you are really serious about understanding the world you live in- this book- which is an academic treatise written by an economist- not some pro-business crap you buy in a airport book shop- you should go get this book. It will save you a ton of puzzlement and general frustration with the world. Recognize.

  11. 4 out of 5

    Tanya

    Marking the end of the OT class.

  12. 5 out of 5

    David Bates

    The Visible Hand, published by Alfred D. Chandler Jr. in 1977 charts the rise of large conglomerated business enterprise in the United States in the Gilded Age. The spreading railways and telegraphs that bound the national market together seeded a transformation of the economic landscape. The theme of the work is the disappearance of the small family companies which used to carry out the work of production and distribution in the American economy. Small mining operations which sold ore to a smal The Visible Hand, published by Alfred D. Chandler Jr. in 1977 charts the rise of large conglomerated business enterprise in the United States in the Gilded Age. The spreading railways and telegraphs that bound the national market together seeded a transformation of the economic landscape. The theme of the work is the disappearance of the small family companies which used to carry out the work of production and distribution in the American economy. Small mining operations which sold ore to a small factory, which in turn sold its product to a network of middlemen and merchant distributors, for instance, were displaced by a single large company which owned and handled the mining, manufacturing, marketing and distribution through the coordination of its separate departments. The many small relationships of the merchant economy, organized by the invisible hand of supply and demand, gave way to intensive management of an integrated system coordinated for the profit of a single company. While the market remained the generator of demand within the economy, the supply of goods was increasingly governed by a new management hierarchy focused on efficient bureaucratic management. The emergence of the new management class in turn created changes in the nature of the companies which employed them, making them more institutional and permanent than the single ownerships or limited partnerships which had gone before. Indeed, managers were more invested in the institutional longevity and stability of the enterprises they served and as the number of stockholders proliferated, managers increasingly guided companies to reinvest in growth rather than distributing profits as dividends.

  13. 4 out of 5

    Czarny Pies

    The Visible Hand by Alfred Chandler and the New Industrial State by John Kenneth Galbraith both published int he 1970s both argued that the large corporations of America had succeeded in taming the market for the greater good of the people. Demand could be managed and technological innovation could be implemented in our society on a orderly basis. Instead of disorderly entrepreneurs who managed on impulse and intuition, America's economic life was now being run by managerial bureaucracies. Of th The Visible Hand by Alfred Chandler and the New Industrial State by John Kenneth Galbraith both published int he 1970s both argued that the large corporations of America had succeeded in taming the market for the greater good of the people. Demand could be managed and technological innovation could be implemented in our society on a orderly basis. Instead of disorderly entrepreneurs who managed on impulse and intuition, America's economic life was now being run by managerial bureaucracies. Of the two writers, Chandler presents the more academic and systematically researched effort. Both books deserve to be read. Whether you agree or disagree with these two authors their view is now hopelessly out of date as both described the world before Globalization when the managers equated the mission of their corporations of that of the American State. Their credo was: "What is good for General Motors is good for the U.S.A.". The question in the era of globalization is whether corporations are still being run for the benefit of their home office countries or for the prosperity of the Global village. To most people it appears that the economies of the world have returned to the chaotic conditions of the classic free market.

  14. 5 out of 5

    Eric

    The seminal account of the genesis of corporate control as a distinct (and disputable) concept, The Visible Hand catalogues the separation of ownership and control that has since defined the American economy. Mandatory reading for any thoughtful professional in the financial, legal, and policy spheres because Chandler reveals the foundations and first principles of M&A and corporate governance. You cannot understand Kravis, Peltz or Lipton — nor Jensen, Bebchuk or Strine — without first reading The seminal account of the genesis of corporate control as a distinct (and disputable) concept, The Visible Hand catalogues the separation of ownership and control that has since defined the American economy. Mandatory reading for any thoughtful professional in the financial, legal, and policy spheres because Chandler reveals the foundations and first principles of M&A and corporate governance. You cannot understand Kravis, Peltz or Lipton — nor Jensen, Bebchuk or Strine — without first reading Chandler; all subsequent practitioners and thought-leaders operate within his his sandbox. I first read The Visible Hand on the sweltering subway as a mergers and acquisitions summer associate. Chandler captured my heart and head because he provided a historical framework — with rigorous analysis and graceful prose — for what I was experiencing at work and what I was learning about in law school.

  15. 4 out of 5

    Sean Doherty

    While The Visible Hand is generally thought of as a study of the evolution of business practices and the increasing importance and authority of managers, I found it equally useful in understanding the growth of railroads as an example of complicated “networks” that were evolving at that same time (electricity, telegraph, telephone) and the Darwinian commercial/competitive dynamics that shaped their evolution. While the “management revolution” played a role in the evolution of railroads, I think While The Visible Hand is generally thought of as a study of the evolution of business practices and the increasing importance and authority of managers, I found it equally useful in understanding the growth of railroads as an example of complicated “networks” that were evolving at that same time (electricity, telegraph, telephone) and the Darwinian commercial/competitive dynamics that shaped their evolution. While the “management revolution” played a role in the evolution of railroads, I think that Chandler could not resist getting into the weeds on the fascinating chess game among the capitalist owners of these businesses.

  16. 4 out of 5

    Ron Davison

    Perhaps too detailed for many readers, this book is nonetheless a fabulous read simply because it explains so clearly and persuasively Chandler's claim that after the railroad, from the late 1800s through the early 1900s, the American economy transformed from one defined by Adam Smith's invisible hand of perfect competition to the visible hand of management. A hugely important shift that gets too little attention. This is, quite rightfully, an oft-cited book that help to define business history. Perhaps too detailed for many readers, this book is nonetheless a fabulous read simply because it explains so clearly and persuasively Chandler's claim that after the railroad, from the late 1800s through the early 1900s, the American economy transformed from one defined by Adam Smith's invisible hand of perfect competition to the visible hand of management. A hugely important shift that gets too little attention. This is, quite rightfully, an oft-cited book that help to define business history.

  17. 4 out of 5

    Paul J

    I really enjoyed this book. It's provides a good history of the development of American corporate industrial history. Staring with how business in America in the early 1800's not being much different than the 1500's. The book takes you through the transportation, communication, manufacturing and distribution revolution by case histories of the industries ( railroads, telegraph, energy, mechanical equipment,etc )that were in the forefront of the development of the modern corporation. I really enjoyed this book. It's provides a good history of the development of American corporate industrial history. Staring with how business in America in the early 1800's not being much different than the 1500's. The book takes you through the transportation, communication, manufacturing and distribution revolution by case histories of the industries ( railroads, telegraph, energy, mechanical equipment,etc )that were in the forefront of the development of the modern corporation.

  18. 4 out of 5

    Jason

    Ever wonder where these huge incorporations got their start. Ever wonder where management decided to create middle management. I had no idea that the railroads where that effective in creating unversal management themes that could be carried over too other businesses even in different industries. A basic history of American business.

  19. 5 out of 5

    Letitia

    While wordy and somewhat narrowly focused, Chandler really blows open the evolution of the American mega-corporation and the managerial revolution that occurred with the rise of railroad, big business and industry. A worthwhile read to those attempting to understand the origins and structure of the American corporation.

  20. 4 out of 5

    Sean Chick

    Surprisingly well written and argued, this is a great counter-point to many myths about corporations in the Gilded Age. However it is also impersonal. Their are no people in this story, and the fact is not everything about the corporation is 'rational.' Just ask the most potent symbol of the Gilded Age: the industrial worker. Surprisingly well written and argued, this is a great counter-point to many myths about corporations in the Gilded Age. However it is also impersonal. Their are no people in this story, and the fact is not everything about the corporation is 'rational.' Just ask the most potent symbol of the Gilded Age: the industrial worker.

  21. 5 out of 5

    Gabriel

    This was a dry and difficult read that was still rewarding. Big business is an import and and omnipresent institution in American life and this is clear and objective study of its roots. This sort of stuff really is required knowledge to be a citizen in America, I think, in order to understand the gulf that exists between the early days of the republic and today.

  22. 4 out of 5

    Jim

    a well-written, although somewhat dry history of american business through the 19th century focusing on the emergence of modern corporate hierarchical structures. suggests an interesting set of theoretic virtues for such structures and offers a detailed defense of those virtues.

  23. 5 out of 5

    Alan

    A great book about US business history. Skip the Moved My Cheese stuff and try this.

  24. 5 out of 5

    John Hibbs

    Good book that helped me to understand the need, initiation and growth of managerial capitalism.

  25. 5 out of 5

    Vassi

    A good "history" book of how modern day corporations came to be. A good "history" book of how modern day corporations came to be.

  26. 4 out of 5

    John Roberts

    really hoping I can finish this. chances...

  27. 5 out of 5

    Trent Rock

    This is a good book if you are into economic history

  28. 5 out of 5

    Joshua

    Awesome if you're into supply chains and managerial capitalism. Awesome if you're into supply chains and managerial capitalism.

  29. 4 out of 5

    Maurice Halton

    Just another American's slanted views. Just another American's slanted views.

  30. 5 out of 5

    Billy Forde

    Brilliant scholarship and surprisingly readable.... I still pick it up from time to time just to flick through, which can't be said of most of my university texts. Just a fascinating book. Brilliant scholarship and surprisingly readable.... I still pick it up from time to time just to flick through, which can't be said of most of my university texts. Just a fascinating book.

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