THE MYSTIQUE OF BIGNESS
ADAMS, WALTER
BOOKS THE MYSTIQUE OF BIGNESS WALTER ADAMS In an industrial democracy, William O. Douglas warned, power that controls the economy should be decentralized. "It should be scattered into many hands...
...Moreover, as I have found in my own studies of steel, giant firms often lag in introducing the technological breakthroughs developed by others...
...They are discussing with increasing interest the virtues of "socialist market competition...
...The waste inherent in hierarchies, the impediments of "proper procedures," the inescapable conflict between line and staff—in short, the curse of bureaucracy—these are the inevitable concomitants of large organizations...
...A brilliant and comprehensive analysis of the power problem, his book is a documented treatise and a persuasive polemic, an intellectual tour-de-force and a ringing indictment...
...Harcourt Brace Jovanovich...
...Adams is professor of economics at Michigan State University...
...At economic concentration: structure, behavior, and public policy, by John M. Blair...
...Mr...
...that is the message...
...This is not a problem of individuals, or of changes in operating methods within these ministries...
...Corporate bureaucracies are not unlike such military hierarchies...
...There are clear indications that, in contrast to previous methods of production, today's new technologies make possible economical production with far less outlay of capital...
...16.95...
...His books include "The Structure of American Industry," "Monopoly in America," and "The Test...
...Nor is it true that bigness is a prerequisite for progress—that new products and processes come mainly from the laboratories of large corporations...
...They are afflicted by similar inflexibility, resistance to change, and creative backwardness...
...even some of these were built on the prior work of independent scientists and inventors...
...To accept and to adjust...
...It is calculated to disturb profoundly the spirit of discipline in the Army...
...It is founded on a hostility to the concentration of power in private hands so great that not even a government of the people can safely be entrusted to limit that power...
...In Economic Concentration, John M. Blair dissects the mystique of bigness...
...innovation does not always promptly follow invention...
...The facts simply do not bear out the contention that firms have to be big to be efficient, or that they are efficient because they are big...
...The problem is to liquidate the enormous and over-inflated apparatus...
...It simply assumes away the stifling effects of an over-inflated bureaucracy...
...It should be scattered into many hands so that the fortunes of the people will not be dependent on the whim or caprice, the political prejudices, the emotional stability of a few self-appointed men...
...But in our age of organizational bigness, it has fallen on evil days...
...Rebutting these warnings, Marshal Joffre told the Ministry of War: "I cannot be party to soldiers under my command bringing before the government, by channels other than the hierarchic channel, complaints or protests concerning the execution of my orders...
...Note the role of new materials such as plastics, fiberglass, high-performance composites, and pre-stressed concrete...
...conversely, in chemicals, which had long been noted for its emphasis on research, the trend toward concentration has been distinctly downward...
...Nationalizing the corporate giants, as some naive souls suggest, does not solve the problem...
...the new energy sources replacing fossil fuels...
...Finally, and perhaps most importantly, Blair shows the corrosive effect which organizational bigness has on effective administration and managerial creativity...
...Indeed, "some of the most highly concentrated industries are notorious for their small expenditures on research and development in relation to sales...
...A ministry] acts therefore as the worst possible monopolist...
...The current levels of concentration, Blair shows, cannot be explained by new technologies requiring progressively larger amounts of capital, nor by managerial economies deriving from multi-plant operations...
...Myths are the most burdensome baggage man bears on the road to social betterment...
...They are expressing a disillusionment with bigness per se...
...The results are reminiscent of the World War I warnings by subordinate French army officers that the military defenses of Verdun were inadequate...
...Most of the increases in concentration since 1947 have taken place in industries with relatively simple technologies and low capital intensities—food, textiles, apparel, lumber, clay building materials, toiletries, foundries, and the like...
...According to Ota Sik, the noted Czech economist, the government ministries which control entire production sectors are interested only in "defending and promoting their narrow production goals, attaining the highest possible investments, manpower, the lowest possible delivery quotas, highest economic premiums, surcharges, and possibly even prices...
...It is the distillation of empirical evidence gathered by Blair during his thirty years of incorruptible public service—as economist with the Temporary National Economic Council (TNEC), the Smaller War Plants Corporation, the Federal Trade Commission, and, most importantly, as the staff strategist for Senator Estes Ke-fauver's Antitrust and Monopoly Subcommittee...
...They tend to offset the managerial economies flowing from centralized control...
...and the new electronic devices which put automation within the reach of even small production plants...
...That is the philosophy underlying a competitive free enterprise system...
...In any event, whatever the ostensible virtues of industrial giantism in forging technological progress, it should be remembered that more than half of the corporate research in America is paid for by the Federal Government, which also rewards its deserving research and development contractors with patents on inventions developed at public expense...
...This belief was deeply ingrained in the American tradition...
...It is noteworthy that of sixty-one major inventions analyzed in a recent survey, only sixteen can be attributed directly to organized research by large corporations...
...Nothing can be done about it, except to learn to live with it...
...Witness the experience in East European industry...
...the same time, concentration has been going down not only in steel but in such other highly mechanized, capital-intensive industry groups as machinery and chemicals...
...Giantism —in industry, labor, and government —is an inevitable accoutrement of Twentieth Century modernism...
...In a giant corporation, as in any hierarchy, information goes up through a series of filters, while commands and prohibitions come down through a series of loudspeakers...
...More and more, people—and many liberals are among them—have come to believe that industrial giantism is the price which must be paid for efficiency and progress...
...742 pp...
...Not surprisingly, some of the more progressive economists in Eastern Europe are beginning to suggest, however sotto voce, a reversal of the trend toward giant plants, giant firms, and giant organizations...
...The fact that they are not vicious men but respectable and social minded is irrelevant...
...It was the proud heritage of Jefferson and Jackson, Wilson and LaFollette...
...We are indebted to John Blair (now professor of economics at the University of South Florida) for exploding one of the most pernicious myths of our time—the mistaken belief that economic efficiency and progress can be had only at the cost of organizational giantism...
...The constant escalation of organizational size, they say, is a necessary response to technological imperatives and managerial exigencies...
...It is the best work on the subject now available...
Vol. 36 • November 1972 • No. 11
