Published by EH.NET (July 1999)

W. Mark Fruin, Knowledge Works: Managing Intellectual Capital at

Toshiba.

Japan Business and Economics Series. New York: Oxford University Press,

1997. 256 pp. $39.95 (cloth). ISBN: 0195081951

Reviewed for H-Business and EH.NET by Andrew Robertson, Harvard University.

Awash

in a sea of high quality, meticulously engineered electronic and mechanical

products bearing the label “Made in Japan”, Americans — both inside and

outside academia — continue to wonder, despite Japan’s recent economic

troubles, “How does Japanese industry do it?” In Knowledge Works:

Managing Intellectual Capital at Toshiba, Mark Fruin addresses this

perennial question through a factory organization at Toshiba’s Yanagicho

factory. At irregular intervals from 1986 through 1992, Fruin entered Toshiba’s

workforce to observe the complicated social patterns that generate change at

Toshiba. Because Toshiba devolves most of its resources related to product and

process development to the factory level, working in the various sections

responsible for bringing

new products on line permitted Fruin to study at firsthand the technical,

social, and cultural relations that structure Toshiba’s larger technology

strategy. In

Knowledge Works, Fruin argues persuasively that Toshiba’s success during

the 1980s in responding to rapid shifts in market preference, to the quickly

strengthening yen, and to the establishment — sometimes voluntary,

sometimes not — of international trade quotas, stemmed directly from the

development of a new form of factory organization, a form beyond simple mass

production, a form Fruin terms the “Knowledge Works”.

Briefly, this

book is a useful and thought provoking study of how a single

factory is organized to support rapid innovation in both process and production

technology. Fruin presents a useful model — that is, the knowledge works —

for analysis of this industrial form and supports his claims with detailed

descriptions of the technical systems, social organization, institutional

values, and individual attitudes that underpin this

form. The book is not, however, without its flaws, most prominent being

Fruin’s desire to generalize this form as a source and explanation of Japan’s

national rather than Toshiba’s corporate comparative advantage.

In the term “knowledge works”, Fruin playfully emphasizes the central point of

the book: “Knowledge works” are places where “knowledge works”. Put a little

more elegantly and emphatically,

“Knowledge works are a force for a new age, a postproduction age, of

intellectual capitalism. Instead of

making things, a production problem pure and simple, making the right things,

in the right amounts, at the right times and prices, is the postproduction

problem. And because nothing stands still, making righter thing, in

righter amounts, at righter prices and times, must be the goal.

Post production , or intellectual capitalism, presumes information processing

abilities of a high order,

on-site differentiation and integration of functions, a

customer-is-always-right point of view, and quite emphatically, an

environmentally conscious mode of operations” (p. 24).

Knowledge works permit a higher degree of responsiveness to changes in markets

by permitting higher levels of differentiation in a factory’s product lines and

simultaneously higher levels of

integration technically,

socially, and culturally across the different groups managing, designing,

and producing these products. While management remains well attuned to the

short-term exigencies of the market, still more important to the continued

vitality of both the factories as knowledge works and Toshiba as a corporation

is management’s strategic commitment to factories as sites for not only the

production of better products but also the production of better skilled, more

knowledgeable, better motivated workers on better organized, better managed

lines. Knowledge works prosper not by the traditional mass production

strategies of de-skilling and the division of labor; instead, at Yanagicho, the

factory provides the site where technicians, engineers, and managers from not

only Yanagicho but also other Toshiba plants, group companies, suppliers, and

even outsiders cooperate to attain the “physical, spatial, and functional

integration of labor and information (p. 17).”

Understanding the characteristics

of the manufacturing processes undertaken in knowledge works as being

profoundly determined by the particulars of a given site’s history provides

Fruin a useful explanation to understand how Toshiba innovates so quickly. It

does so because on the factory

floor, the whole organizational panoply of managers, engineers, technicians,

suppliers, assembly personnel, inspection personnel and such are synchronized

by a common set of values, practices, and goals. Technical knowledge, social

contracts, and cultural

intuitions combine seamlessly to create the basis for rapid process and

product innovation. Continuous and ongoing renegotiations of these compacts is

the norm which permits flexible response by management and engineering in the

deployment of Yanagicho’s intellectual, financial, and labor resources.

While it is the social and cultural dynamism and cohesiveness of “knowledge

works” that power technical development at Toshiba, it is the technologies

themselves that create value for the company. Which technologies — and

consequently which complementary skills and what forms of organizational

knowledge — to develop is central in determining which markets any given

knowledge works can and will be able to service. Fruin notes the presence in

each of Toshiba’s

knowledge works of what he terms “Champion Lines”,

families of products that provide not only considerable revenue flows but also

considerable and ongoing innovation in both product and process development.

“They lay a threshold of organizational knowledge on which related products

can thrive, one that ultimately justifies the high risk and cost of creating

multifunctional capabilities in particular product departments [of, that is, a

knowledge works.] (p. 47)” Yanagicho’s

“Champion Line” — plain paper

copiers — has defined the trajectory of technical, product, and market

development for the whole factory complex since the mid-1980s. While the

knowledge works form enables Toshiba to participate in the crowded and highly

competitive domestic copier mark et,

at the same time, in developing the technical know-how necessary to compete in

this market, Toshiba augments, complements, and improves the basic technical

and organizational knowledge present at Yanagicho and thus drives change in the

other product families produced there. Indeed, of the thirteen product lines

produced in the Yanagicho plant, fully two-third are

“historically and technically linked” to its plain paper copier line (p.

48).

Having introduced the concept and architecture of the Knowledge Works in the

first two chapters, Fruin spends the majority of the book studying how Toshiba

management maintains, extends, and reproduces the structures that define a

knowledge works. The third chapter describes how management promotes the

education, socialization and acculturation of its workforce to the needs and

values of a knowledge works through a continual process termed organizational

campaigning. The fourth describes how Toshiba — or more accurately the

Yanagicho factory — manages its relations with suppliers, encouraging

excellence and cooperativeness through the strategic exchange of knowledge,

expertise, and personnel. In the fifth chapter,

Fruin uses a case study of the development of the SuperSmart card — a credit

card sized computer —

to demonstrate the potency of knowledge works to develop rapidly (in only 22

months) a product embodying multiple technological innovations. In the sixth

chapter, Fruin examines how Toshiba responded to the problems encountered in

exporting both the know ledge works concept and plain paper copier manufacture

to a plant in Irvine,

California. Not surprisingly, the seventh and concluding chapter reprises the

basic argument of the book, pointing to Toshiba’s potential for flexible and

speedy innovation that

results from the presence of a corporate factory system organized around

knowledge works.

As noted above, this is a useful and interesting book. Having worked in the

Yanagicho factory as an employee, Fruin writes with an authority born of

experience. At

the same time, the book is more than simply a diary of production line

experience. His experience is structured by new readings of old arguments in a

variety of literatures in management and economics.

Moreover, his method is not limited by overly fastidious attention to

disciplinary boundaries. In trying to understand what motivates workers to

participate, Fruin bravely enters the problematic realm of individual values,

culture, and inevitably history. Knowledge Works persuasively

demonstrates the importance of these less quantifiable and more local aspects

of human experience in Toshiba’s development of a factory-based capability to

respond to and generate rapid change.

Using this multidisciplinary approach combined with a fine detail derived from

careful field research, Fruin has formulated an argument that emphasizes the

importance of a particular cluster of factors — some cultural, some social,

some institutional, some political, some market, and some technical — in

enabling the creation of know ledge works at Toshiba.

By so tightly and persuasively linking the factors of the knowledge works’

creation to the particulars of Toshiba’s products, market, organization,

and culture, Fruin renders any generalization of the knowledge works concept

problematic. After making a good case for knowledge works being the source of

Toshiba’s comparative advantage, Fruin — too boldly in my view

— continues, making much the same claim regarding the sources of Japan’s

national comparative advantage. For example,

in his conclusion Fruin writes,

The widespread existence of Knowledge Works in Japan but the relative scarcity

(or nonexistence) elsewhere suggests the powerful impact of national

competition on manufacturing organization at home, the competitive edge enjoyed

by Japan’s industrial firms in established product markets,

and their ability to respond quickly, even preemptively, to new domestic and

overseas markets (p. 210).

Since no company has experienced exactly what Toshiba has experienced and since

only

a few even come close in terms of market, product lines, and such, it is

difficult to believe that the knowledge work per se is widespread even in

Japan.

This is not idle philosophizing. Over the course of the book, we do in fact

learn that many of the

most prominent Japanese companies are not configured in a knowledge works-like

style of production. For example, serving as they do radically different

markets, Toshiba and Toyoda do not, indeed could not, operate using the same

production models (p. 206)

; for Hitachi,

Mitsubishi, and NEC, R&D deployment is mostly focused — contrary to knowledge

works best practice — at laboratories that are neither physically nor

institutionally linked to specific factory sites (p. 57-59);

and the competitive cooperation found in Yanagicho’s dynamic and responsive

supplier network derives from the shared intangible assets fostered under the

knowledge works approach rather than the formal, more static, and more widely

spread fiscal and organizational relations defining

traditional keiretsu and kiygo shodan business groupings (p. 99). These are not

inconsequential differences. In the knowledge works model, the structure of the

supplier network, the factory level allocation of R&D, and the organization of

production are key structuring elements. By and large, its seems that

knowledge works — in the mode in which they are implemented at Yanagicho and

described by Fruin — could be as rare in Japan as they are abroad. By making

an argument that ties knowledge works so tightly to the specific technical,

institutional, and corporate history of Toshiba and its Yanagicho plant, Fruin

renders the imitation of knowledge works by Toshiba’s domestic competitors only

slightly less problematic than their transplantation from Toshiba

‘s plants in Japan to new factories in the United States.

Another way to estimate the influence of knowledge works on Japanese industrial

development would be to ask when they first came into being. In terms of

knowledge works influencing larger issues of national comparative advantage,

earlier would be better to allow time for dispersal. Indeed,

Fruin argues,

“Knowledge Works are not a recent, postwar invention. They appeared during the

interwar period as focal factories: multifunction and occasionally

multiproduct factories that bore administrative responsibility for serving

regional markets at a time when national markets were not well integrated.”

(p. 31).

Here and elsewhere in the book, Fruin times the advent of knowledge works as

during the inter war period. I do not wish to suggest that Fruin is wrong in

drawing links to this period; however, these must be termed only the barest

beginnings of certain aspects of the knowledge works structure. They should not

be mistaken for the structure itself. Given that certain knowledge works

structures at Yanagicho such as total productivity organizational campaigning

(p. 69), the establishment of factory oriented R&D structures (p. 191), and the

creation of an active and responsive Supplier Association (p. 9 7) all stem

from institutional changes undertaken in the period between the late 1970s and

mid-1980s, the development of the knowledge works form should be seen as a

product of the slow down in Toshiba’s corporate growth engendered by “Oil

Shocks” and the

ending of Japan’s period of high economic growth.

Thus, to my way of thinking, the organization defined as knowledge works is

both more recent and less widely spread in Japan than is suggested by Fruin’s

otherwise well constructed and excellently researched book.

Published by EH.NET (June 1999)

Bettye H. Pruitt. Timken: from Missouri to Mars–A Century of

Leadership.

Boston, Mass.: Harvard Business Scholl Press, 1998. xvii + 514 pp. Tables,

figures, photographs, appendices, notes, and index. $39.95 (cloth), ISBN

0-87584-887-7.

Reviewed for H-Business and EH.Net by Roberto Mazzoleni, Department of

Economics, University of Vermont.

Continuity and Change in the Growth of a Family Controlled U.S.

Manufacturing Firm

Established in 1899 by Henry Timken to commercialize tapered roller bearings

axles for carriages, the Timken Company today is a multinational corporation

with sales of about $2.6 billion (1998), 21,000 employees,

engaged in the manufacture and sales of bearings and alloy steel products that

find application in a wide variety of industries. To celebrate its

centennial, the Timken Company commissioned the Winthrop Group Inc. to write a

history of the firm. Timken: from Missouri to Mars–a century of leadership

in manufacturing is the result of historian Bettye H. Pruitt’s research

(with the assistance of Jeffrey R. Yost and others). Pruitt uses a variety of

sources, including internal corporate documents, personal correspondence of

several members of the company, as well as interviews with numerous individuals

from the company itself, its affiliates, and outsiders. The book’s rich detail

testifies to the quality and thoroughness of the author’s research. While

primarily focused on the business aspects of Timken’s life, the book also

discusses the firm’s relationship with the surrounding communities, its

philanthropic activities, and provides biographical sketches of many

individuals

associated with the firm,

including Timken family insiders as well as outsiders. These sections

contribute to establishing a link between the personalities of the firm’s

leaders and the culture of the organization. This is an important element in

the author’s assessment of Timken’s evolution. Pruitt emphasizes the firm’s

identity and sense of purpose as an anchor of stable values enabling the

strategic and organizational adaptation that allowed it to survive and

prosper. These cultural factors are linked to the Timken’s family continuing

control of the firm after a century of activity.

While the family ownership and control constitutes a distinctive feature of the

firm, the events in Timken’s history are in many respects quite representative

of U.S. manufacturing industries more generally, not only from a technological

and economic viewpoint but also from a cultural one,

as the author acknowledges in the book’s early pages. The chronological

sequence of chapters is punctuated by two focus chapters that describe the

company’s establishment of new production plants (see infra). These, Pruitt

argues, symbolize the technological and cultural differences between the mass

production

and the flexible manufacturing eras in Timken’s corporate history.

The origins of the Timken company can be traced as far back as 1855, to a

carriage business set up by Henry Timken, the son of German immigrants in

St.Louis, Missouri. During the 1890s,

Henry became involved in the development of anti-friction bearings and,

together with his nephew Reginald Heinzelman, he invented a tapered roller

bearing for which they received a patent in 1898. One year later, the Timken

Roller Bearing Axle Co. was incorporated for the commercialization of carriage

axles mounting their patented bearings. The growth of the bearing business

followed that of the automobile industry, although since the 1910s Timken began

to develop other markets for its products. Timken bearings were sold at a

premium over competing products, but over time, increased competition and the

possibility of vertical integration by car manufacturers threatened the

company’s future growth. Under the stewardship of Henry Timken’s son, Henry H.,

the

firm committed itself to competing on price and quality to sustain revenue

growth, a strategy that prompted Timken to seek cost savings by establishing an

in-house facility for steel production.

Pruitt suggests a transaction cost rationale for integration related to

Timken’s steel quality requirements which resulted in high steel prices,

monitoring and testing costs. Timken was also experiencing difficulties in

securing reliable supplies of high quality steel from electric arc furnaces.

These factors pushed Timken (and its main rival, Swedish firm SKF) to invest

in a facility for steelmaking. The decision was based on fairly inaccurate

estimates: the final investment costs exceeded the initial forecast by a full

order of magnitude (p.74). As a result, Timken was forced to seek external

finance from banks first, and to offer part of the company’s stock to the

public in 1922. In spite of the earlier reference to transaction and

manufacturing costs, Pruitt’s account indicates that the internal capability i

n steel production proved to be of fundamental value for the innovative

performance of the firm as it provided Timken with control over the interface

between bearing design and steel quality. Thanks to the learned capabilities in

product, process, and sales engineering, Timken experienced profit and revenue

growth throughout the 1920s.

Until the Great Depression, Timken’s policy of paying high wages had succeeded

at keeping unions out of its production plants. Only in the 1930s efforts by

the United Steel Workers to unionize the company’s plants in Canton, Ohio,

succeeded. The firm’s relationship with the union was marred by hostility. The

management spurned any interference with its control of shopfloor activities.

Timken was committed to a managerial style informed by hierarchical command

and control, a practice whose continuity inside the firm was facilitated by

recruiting executives through internal promotions.

The management’s anti-union stance played a role in 1950 when a

state-of-the-art production plant was set up in Bucyrus, Ohio, a rural area

that Timken hoped could provide a union-free environment. The new plant

featured extensive automation of the manufacturing process and focused on the

mass production of standardized products. Timken’s management could benefit

from vastly improved information systems and hoped that its control over the

production process would be unfettered by conflict with its labor force.

Generous employee compensation was expected to avert the unionization of the

plant.

At the same time, the firm intended to provide workers with the training needed

to realize job rotation programs and with team-based performance incentives.

The scale economies realized at the Bucyrus plant were the basis for Timken’s

retention of a firs t-mover advantage in the market for standardized tapered

roller bearings. In contrast with competitors whose product lines encompassed

alternative bearing designs, Timken remained committed to its time-honed

strategy of competing on price and quality in the tapered roller bearing

segment. The same conservatism was also visible in the company’s structure,

where the organization continued to be along functional lines. Pruitt

identifies these facts as symptoms of the incipient divergence of Timken’s

business

strategy and structure from the pattern typical of U.S. manufacturing firms.

These differences notwithstanding, Timken enjoyed a prolonged period of growth

and profitability. It developed a network of international affiliates whose

integration became an

important focus of managerial attention. Driven by the objective to coordinate

sales and production on a worldwide basis,

efforts were made to establish uniform quality and dimensional standards that

could realize interchangeability of products across plants. Whereas Timken’s

management effectively addressed these operational needs, it was not quite as

successful at developing an appropriate business strategy model for its

international affiliates. The business model behind the Bucyrus plant that

succeeded in the U.S. did not enjoy the same fate in other markets, partly

because the firm did not have a first-mover advantage vis-a-visits

competitors.

The competitive pressures in the U.S. bearing market increased during the

1960s. In the usual pattern, Japanese entrants first targeted the low-cost end

of the ball bearing business. Having succeeded in that market segment,

the Japanese firms began to aim at the low-end of the tapered roller bearings

market. Timken’s ability to withstand their competitive threat was the result

of its continuing commitment to modernize manufacturing facilities and expand

capacity. New plants were set up in Gaffney, South Carolina, in 1971 and in

Lincolntown, North Carolina, in 1979. To be sure,

competition put a squeeze on pro fit margins in the bearings business during

the 1970s, but Timken weathered the storm satisfactorily thanks to the

profitability of its steelmaking division. In that area too, Timken upgraded

and expanded manufacturing facilities (notice the acquisition of Latrobe Steel

in 1975) and developed other markets for its steel products in addition to

bearings.

By the late 1970s the firm’s ability to sustain continuous improvement in

bearings’ performance was diminishing. Problems had emerged in regard to the

quality of internal steel supplies. The response to this crisis,

initiated in 1978 as the Clean Steel Program, included a benchmarking exercise

conducted at steelmaking plants in Europe and Japan which revealed that Timken

needed to catch up with the industry’s best practice in order to secure its

competitive standing in the bearings business. In 1981 Timken decided to build

a new steel plant at Faircrest, Ohio.

These events were a watershed in the firm’s history. A prolonged period of

internal change ensued that wrought radical transformations in Timken’s

organization of shopfloor work as well as its corporate structure and culture.

Existing organizational practices had created an inward-looking culture that

failed to absorb useful managerial and technological knowledge from the

outside. The outcomes of the benchmarking exercise shook the management’s

confidence in the organization’s ability to identify and solve problems

internally and to generate the technological and organizational improvements

needed

to sustain the competitive position of the firm.

Outside consultants from McKinsey & Co. collaborated with insiders to

restructure the company. Even more important, they facilitated the overhaul of

the corporate culture, and particularly the abandonment of the strict top-down

approach to management that had characterized Timken since its early years. The

book’s final chapters portray Timken as an organization alert to the need for

strategic adaptation and willing to embrace change in response to external

events. In what may be considered a radical departure from the company’s

conventional wisdom, Joseph Toot Jr. described the Timken Company as having

moved from “a strict , traditional, product orientation toward the application

of certain skills which we

believed we possessed in an exceptional way” (p.393).

The book’s strength is without a doubt in its detailed account of the corporate

history, which a reader without an all encompassing interest in the matter may

find dizzying at times. While I found the

book pleasant and engaging to read for the most part, occasionally, the

author’s attempt to provide details ends up clouding the story line more than I

thought desirable, particularly toward the final chapters of the book. Perhaps

inevitably, the book touches only briefly upon events and issues that

interested readers will want to know more about. For example, Pruitt tells us

that while British Timken had been using Statistical Process Control

(SPC) after World War II, the U.S. headquarters’ efforts at standardizing

procedures across plants were responsible for its elimination. Pruitt says that

British Timken promptly conformed to the orders from Canton

(pp.232-234), but there is no way to tell whether British Timken benefited from

SPC, and if so, why did it simply conform to the orders? Considering that

quality control processes were resumed twenty years later, it would have been

interesting to learn more about the circumstances of SPC’s demise.

While the book rarely attempts to generalize from Timken’

s experience on specific issues, the introductory chapter places Timken’s

corporate history in a broader perspective provided by the scholarly debate

concerning the factors promoting corporate success and longevity. Pruitt lays

out two views, contrasting

Chandler’s [1] emphasis on a firm’s strategic focus on core businesses and

investments in organizational capabilities, with the cultural approach found in

Collins and Porras [2] and de Geus [3]

emphasizing a core ideology that “guides and inspires people

throughout the organization and remains relatively fixed for long periods of

time”

(p.xiii). This contrast does not receive much analytical attention in the rest

of the book. As Pruitt reckons, both themes appear in Timken’s history. This

suggests that the views presented as mutually exclusive need instead to be

integrated with one another. In fact, I would argue that Pruitt’s own narrative

supports the broad proposition that an organization’s culture (intended as a

constellation of values and norms of interaction) is an important determinant

of its capabilities. While the rich evidence discussed in the book clearly

bears on the nexus between culture and capabilities, the nexus is not

adequately developed. Pruitt’s recurring references to the legacy of “a

compelling sense of purpose and a cohesive corporate culture” (p.31), or the

“timeless importance of corporate purpose and identity” (p.xvi) seem to

identify these cultural factors as the key determinant of Timken’s longevity

and success. These emphases

are not supported, in my opinion, by adequate analytical arguments clarifying

the relationship between these concepts and corporate success.

Pruitt’s book provides interesting insights on a much broader range of themes

than my review suggests. Among them

, I would mention the discussions of patent litigation, the effects of

antitrust restrictions on its relationships to foreign subsidiaries, lobbying

for antidumping tariffs,

the development of internal R&D programs, technological developments in steel

and

bearing technologies, the firm’s relationship with standard-setting

organizations, as well as its marketing efforts with respect to particular

customers or industries. As a result, the book deserves the attention of a wide

audience of scholars, from business and economic historians to scholars of

industrial organization, strategic management, and technological innovation.

Notes:

[1] Chandler, Alfred D. Jr., Scale and Scope. The Dynamics of Industrial

Capitalism. Cambridge, Mass.: Belknap Press, 1990.[

2] Collins, James C. and Jerry I. Porras, Built to Last: Successful Habits

of Visionary Companies. New York, N.Y.: HarperCollins, 1994.

[3] de Geus, Arie, The Living Company: Habits for Survival in a Turbulent

Business Environment. Boston, Mass.: Harvard Business School Press, 1997.

Published by EH.NET (April 1999)

R.W. Davies, Soviet Economic Development from Lenin to Khrushchev. (New

Studies in Economic and Social History, No 34.) New York and Cambridge:

Cambridge University Press, 1998. 112 pp. $11.95 (paper), ISBN: 0521627427;

$39.95 (hardcover), ISBN: 0521622603.

Reviewed for EH.NET by Paul R. Gregory, Department of Economics, University of

Houston.

R.W. Davies’ compact book is a marvel in economy. He covers the period from the

Tsarist economy to 1965 in 83 pages not counting references and index.

The major achievement is that Davies’ analysis is far from superficial. He

explains to the

reader the available scholarly literature on each subject.

Davies removes his own views as much as possible from the scene by providing

the evidence both pro and con for each scholarly conflict–of which there are

many for this long period of Russian/Soviet economic history. The author also

supplies the main aggregate statistics that the reader needs to evaluate each

period. The combination of economy and depth is the product of Davies’ superb

command of the Western and Russian language literatures.

In reading Davies’ account, I focused most on his discussions of controversies

concerning Russian and Soviet economic development. He provides a balanced

discussion of the “optimistic” versus “pessimistic”

views of Russian economic development on the eve of World War I–whether the

contradictions of the economy were the root cause of the Bolshevik revolution.

On the viability of NEP (a literature to which Davies and his Birmingham

colleagues have made significant contributions), Davies identifies four schools

of thought. First, there is the argument that NEP could have worked if market

forces had been less restricted–a view Davies associates with writers as

diverse as Alexander Gerschenkron and Grigory Khanin. Second, there is the view

of E.H. Carr (and Maurice Dobb) that NEP was inherently unstable and had to be

replaced by something else. The third school Davies associates with historians

sympathetic to Bukharin (Cohen and Tucker) and to James Millar that NEP would

have remained a stable system on the basis of a strong agriculture. Davies

also cites the work of Holland Hunter, who used counterfactual economic and

statistical analysis to show that the Soviet economy would have performed

better in a NEP-type environment. The fourth group, in which Davies includes

himself, argues that NEP had room to grow but was unsuited for rapid

industrialization.

In his discussion of Soviet economic growth, Davies raises the important issue

of whether the recent studies of Russian economists, such as Grigory Khanin,

require a revaluation of historical Soviet growth performance. He concludes

(pp. 41-42) that “the Russian economists have not made available enough

information about their methods of calculation to enable their results to be

checked. For the period from the 1 930s to the 1950s, the Bergson and

Moorsteen-Powell estimates certainly remain the most reliable.”

Davies is able to use his own research in the Soviet State and Party archives

to provide reliable estimates of the size of the gulag population in the 1930

s, which he puts at 3.3 million in 1941 (p. 50). Prisoners provided up to a

quarter of all construction labor, and produced slightly over one percent of

industrial output on the eve of the war.

Davies deals as well with the issue of the effectiveness of

forced industrialization, pointing out that there is still considerable

controversy surrounding the rate of growth of the economy in the 1930s.

However, the major debate on this issue is over the necessity of

collectivization. In this regard, Davies contrasts the arguments of Millar and

Barsov, who conclude that collectivization did not provide a true

“surplus” for Soviet industrialization, with Nove, who concluded that

collectivization did allow Soviet authorities to collect agricultural surpluses

for industrialization. Davies’ own conclusion is that collectivization’s main

contribution was to the political goals (and political priorities) of the

Soviet leadership.

Davies concludes with a discussion of the basic features of the Soviet

administrative-command economy, pointing out its command and more hidden

market features. Among its weaknesses, Davies singles out the high costs of

repression of agriculture, the high costs of technological mistakes, the

success indicator problem, and the disadvantages of

repressed inflation and the sellers’ market.

Davies’ book is ideally suited for the classroom as a supplemental text or for

readers who want to be brought up to date on Russian and Soviet economic

history. We are quite fortunate that a scholar of Davies

‘ maturity and depth has taken the time to write such an accessible and useful

book for those who do not have the time or inclination to get into the

specialized literature. One important feature of this book is that it is itself

a useful guide to the specialized literature.

Paul Gregory is author of Before Command : An Economic History of Russia

from Emancipation to the First Five-year Plan (Princeton University Press,

1994), and Restructuring the Soviet Economic Bureaucracy (Cambridge

University Press, 1990).

Published by H-Business@eh.net (March 1999)

Andrew Godley and Oliver M.

Westall (eds.), Business History and Business Culture. Manchester: Manchester

University Press, 1996. xiii + 258. $79.95

Reviewed for H-Business by Ernest Teagarden, Department of History, Dakota

State University, Madison, South Dakota.

teagarde@triton.d su.edu

This volume of essays originated from a business history conference developed

by faculty from the University of Reading (UK) and Lancaster University (UK).

Presentations were made at Reading on November 14, 1992.

It is not clear if the current essays — called chapters — are in their

conference formats. All writers have excellent credentials for their areas of

expertise in business, economics, history and/or sociology and their essays

often feature combinations of two or more academic areas.

In

their introduction to the book, Godley and Westall consider how business

culture — combinations of ideas, activities, behaviors, etc. — impacted upon

strategy, conduct, and the organization of individual and groups of firms. The

search for common themes

throughout the collection is a point of emphasis for the editors despite the

fact that the essays cover such a variety of situations. High technology,

Jewish immigrant entrepreneurship,

the development of the British and American cotton industries, problems

encountered through cultural differences by German exporters to Japan,

publishing, motor car manufacturing in Britain, and banking give some

indication of subject matter variations.

“British Culture and the Development of High Technology Sectors,” by

Maurice Kirby of Lancaster University is typical of the essays from this

diverse collection. Kirby reviews several hypotheses, which attempt to explain

the reasons for British industrial decline, especially since the end of the

Second World War. Inept British governmental policy combined with a “bloated”

public sector was one reason. Another was the concentration of financial

interests and the Treasury on maintaining Britain’s position in the

international economy. Industrial progress was placed on the ”

back burner.” The British educational system received its share of the blame.

The emphasis placed on the humanities and classics in the schools over science

and technology was cited as another contribution towards manufacturing decline.

The writer taught

for a year in the 1960’s at a large London public day school and was once

astounded when several members of the common room were surprised that he had

not taken Latin,

which they considered fundamental in the test of one’s intellectual ability. In

general

, the legacy of the past seemed to inhibit British industry from easily

accepting and implementing organizational and technological innovations.

Kirby puts big emphasis on the aircraft industry as a symbol of Britain’s

manufacturing decline. After 1945 Kirby believes subsidy-supported military

technology ceased to be easily transferred to commercial usage. Britain could

not compete with the civilian American aircraft industry in research and

development expenditures; optimal facility size; or in the recruitment,

training, and effective use of personnel. It also did not possess America’s

marketing strength. Unfortunately, the problems of the aircraft industry were

often manifested in other high technology endeavors. The legacy of the past

simply could not

be surrendered. On the other hand, while teaching in England, this writer was

told two or three times that the legacy of the past “was really more important

than most of the new ideas, anyway.”

The authors have done a very good job but probably will not

sell many books, at least in the United States. At $80 for a 258-page book,

not too many will be sold. Few scholars can afford to buy their own copy of a

volume of essays in which only one or two essays will pertain to their special

field of interest. The emphasis on library electronics and Internet

availability combined with declining budgets does not bode well for the future

of books such as this. Add to these problems a declining interest in history as

a subject matter by college students, and you get

small sales.

There does not appear to be a turn-around scheduled in the near future.

Published by H-Business@eh.net (March 1999)

BUILDERS: HERMAN AND GEORGE R. BROWN. By

Joseph A. Pratt & Christopher J.

Castaneda. (College Station: Texas A&M University Press, 1999.

Illustrations, notes, bibliography, index. $36.95.)

Reviewed for H-Business by Paul Carlson, Department of History, Texas Tech

University.

k6phc@ttacs.ttu.edu

Brothers Herman and George R. Brown turned their building company, Brown &

Root, into one of the largest and most successful engineering and construction

operations in the world. They were Texans (from Belton) and their company came

to possess the myth

and character of Texas–it was big and bold.

Started in 1919 by Herman (1892-1962) with a loan from his brother-in-law Dan

Root, the company struggled at first. George (1889-1983) joined the company in

1922, and they graded and surfaced roads. Dynamic growth came in the 1930s

Depression years when they won a contract for constructing a large dam across

the Colorado River in Central Texas, and during World War II the company burst

onto the national scene. After the war, the brothers took their operations

overseas, and in the 1950s they were wealthy and their company enjoyed national

prominence.

After Herman died in 1962, George sold Brown & Root to Halliburton Company.

However, the Brown Foundation, established by the brothers some years earlier,

carries

on philanthropic activities of all kinds.

This dual biography, crisply written and refreshingly direct, is well done.

It is largely uncritical business history. The Browns were big thinkers who

took on ambitious projects, and, at least as related here,

they succeeded at making money–money they poured into charitable projects and

into politics. They were conservative Democrats who were sometimes willing to

bend the rules of fair political contributions to support conservative business

candidates.

It is

a book of substance, and typical of the many new books coming from Texas A&M

University Press, it is attractively designed and handsomely packaged.

Published by EH.NET (February 1999)

Etsuo Abe and Terry Gourvish (eds.), Japanese Success? British Failure? Comparisons in Business Performance since 1945. Oxford: Oxford University Press, 1997. xii + 288. Tables, charts and index. #40.00 hardback (no $ price listed), ISBN 0-19-829058-6.

Reviewed for H-business by Andrew Godley, Centre for International Business History, Department of Economics, University of Reading, UK.

The question marks in the book’s title are apposite. At the century’s end the conventions in the debate on British and Japanese economic performance are being turned on their head. The contributions here were originally presented by Japanese and British scholars at a special conference held at the Business History Unit, LSE, in 1994. Terry Gourvish, the Unit’s Director, writes that the debate has moved on since the early Japanese ‘miracle’ identifiers of the 1960s and 1970s, and indeed since the excessive pessimism in Britain in the 1970s and 1980s , and that a reassessment of the conventional approaches to these two countries post-war business and economic histories is now required.

The book is divided into five parts, with chapters from a Japanese and British perspective on each of the themes of government-industry relations, management structures, education and training, and finance, before concluding with case studies of the automobile and electronics sectors.

The book’s aim is to provide an appropriate starting point for interested researchers. The thematic chapters achieve this goal, especially those which explicitly embrace the comparative perspective. Etsuo Abe, for example, rehearses the MITI debate, before pausing and suggesting that much of the debate has actually been fairly poorly specified; and that, rather, MITI’s policies need to be assessed on a case by case basis. As is now well known, MITI was sometimes successful, sometimes not, in part because of favoritism to Big Business. Abe’s principal conclusion is that MITI’s greatest asset was the powerful social force for consensus. As Jim Tomlinson points out, it was the absence of any kind of social pressure towards consensus which lay at the continuing opposition of business interests to British government policy in the post-war years, and so stymied any equivalent policy initiatives there.

Hidemasa Morikawa and Nick Tiratsoo provide very different perspectives on management structures. Morikawa shows how the postwar dissolution of the zaibatsu indirectly helped salaried professional managers to climb to the most senior positions in Japan’s largest corporations; their detailed knowledge of shop-floor workers proving to be especially advantageous subsequently to firm performance. Tiratsoo follows by summarizing his own research on the muted impact of training initiatives on British management. This is a shame. It would have been more valuable in this context to review the arguments on the professionalization of British management and family control. Mary B. Rose follows by repeating the familiar complaints about British management being undereducated, and Tomotsu Nishizawa emphasizes the disparities in student participation rates. Differences in training provided by firms stands out here as a hugely important factor in the divergence of manufacturing performance.

The section on finance is perhaps the most interesting because it is the one area where the Success? Failure? approach is most obviously exposed for the cliche it is. Chikage Hidaka emphasizes that while the Japanese fi nancial system may have helped generate fast growth, loose financial control hardly spawned sensible risk analysis or financial responsibility. Forrest Capie, by contrast, dismisses the now outdated criticisms of the City allegedly starving British industry of capital. Indeed, Capie goes on to attack the current version of anti-City ideology, suggesting that there is no evidence to support the oft-cited hypothesis that the ease of raising equity finance in Britain has led to short-termism.

These chapters are the core of the book. My preference would have been for more on these or related themes. The case studies are perfectly reasonable in themselves but out of place. In a collection which seeks to revise stereotypes for scholars wanting to start out on research, the case studies of the automobiles and electronics sectors hardly add to a more nuanced view.

?

Published by EH.NET (February 1999)

Wendy Asbeek Brusse, Tariffs, Trade and European Integration 1947-1957:

From Study Group to Common Market, St. Martins Press, New York, 1997.

xiii + 318 pp. $49.95 (hardback), ISBN: 0312165188.

Reviewed for EH.NET by Catherine R. Schenk, Department of Economic and Social

History, University of Glasgow.

It is a courageous scholar who seeks to unravel the Byzantine history of trade

negotiations. Despite the general importance of trade policy to economic

performance and to

international political relations, the details of tariff bargaining are

notoriously arcane and tedious. Overcoming these drawbacks in her material,

Wendy Asbeek Brusse of the University of Groningen has written a comprehensive

and readable account of European trade diplomacy since 1945. Her main

contention is that tariff reduction was not merely a Common Market issue,

driven by The Six and culminating finally in the European Economic Community in

1957. Rather, tariff and trade negotiations took place simultaneously through

a variety of different international institutions and with a variety of goals

and outcomes. In an effort to present a more comprehensive and accurate account

of the manifold approaches to trade liberalization, Asbeek Brusse has not shied

away from this complexity.

Her account begins with two introductory chapters which describe trade policy

from the nineteenth century to 1947. These chapters offer little new to our

understanding of the 1940s but they set the scene for the European initiatives

of the 1950s. The next three substantive chapters of the book rely on the

archival records of six countries to describe the tariff initiatives expressed

through various international agencies. The initiatives under the auspices of

the OEEC had limited results due to the reversal of liberalization in the

early 1950s as a result of balance of payments deficits associated with the

Korean War . This chapter is the only place in which Asbeek Brusse attempts to

measure the impact of tariff barriers but

she relies mainly on the limited existing studies. Her original contribution

is to compare the frequency distribution of each country’s tariffs according to

their nominal rate for each SITC group. The results are unsurprising;

identifying high and low tariff groups. She also examines the number of

complaints about tariff barriers from individual countries through the OEEC.

This data may have as much to reveal about politics within the OEEC as the

burden of tariffs on particular industries.

A more complete assessment of real effective tariffs would have helped to give

context to the book’s account of trade diplomacy. Asbeek Brusse’s failure to

attempt this, however, may be justified since the diplomatic efforts themselves

were based on nominal tariff rate s. This is a history of economic diplomacy

rather than an economic history of tariffs in Europe.

The various still-born European initiatives in the GATT are described in the

next chapter and the American response is also brought into the story at this

st age. The subsequent chapter outlines the tariff proposals which culminated

in the Common Market among The Six. A final chapter describes national

policy-making in Britain, the Netherlands and Germany in an attempt to put

international economic diplomacy into the context of domestic debates. This

chapter rather whets the appetite for more since it is clear that the national

policies summarized in previous chapters were the result of domestic

compromises which are more revealing about the construction of tariff policy

than the international wrangling which is the focus of the book. The conflict

between imperial preference and Britain’s economic interests is particularly

revealing in this regard.

Overall, this is a well written and detailed account of tariff policy with

only a few minor weaknesses. The account does not include the international

monetary arrangements or exchange controls which were also used to influence

trade patterns in Europe. Including these may have made an already complicated

story unmanageable, but it requires that the book be read along with existing

work on the sterling area and the EPU. The complexity of the institutional

structure sometimes creeps into the organization of Asbeek Brusse’s text. For

example, the overlap of tariff negotiations is reflected in the inclusion of

the Collective Approach to convertibility and the Annecy Round of GATT in the

chapter on the OEEC.

Finally, most of the tables and graphs are almost illegible which is an

irritation for the reader. Nevertheless,

Asbeek Brusse’s book will be of use to graduate students and other scholars

trying to disentangle the complexities of post-war tariff diplomacy.

(Catherine Schenk is senior lecturer in Economic History at the University of

Glasgow. She is the author of

Britain and the Sterling Area,

(Routledge, 1994) and over a dozen articles on international monetary relations

since 1945. She is currently doing research on international financial centers

and is writing a book on Hong Kong as an International Financial

Center–Emergence and Development, 1945-65.)

Published by EH.NET (February 1999)

Edwin G. Burrows and Mike Wallace. Gotham: A History of New York City to

1898.

New York: Oxford University Press, 1999. xxiv + 1383 pp.

Illustrations, maps, references, bibliography, and indexes. $49.95 (cloth),

ISBN 0-19-511634-8.

Reviewed for H-Business by Milton Goldin, National Coalition of Independent

Scholars (NCIS).

MiltonG 525@AOL.COM

Gotham demonstrates the wisdom of never judging a book by its cover —

or by its heft. Its dust jacket suggests yet another in the apparently endless

series of New York City social histories; and given its nearly five pounds,

suspicious readers may leap to the conclusion that Burrows and Wallace are

academics who never saw a detail they could not include. To the contrary,

the book is an extraordinary interweaving of business history and social

history that results in a reference work which

not only tells us how, but why, the metropolis was well on its way to becoming

the financial capital of the world on New Year’s Eve in 1898, when “the

nation’s first- and fourth-largest cities would merge into a supercity —

Greater New York —

that would

encompass not only Manhattan and Brooklyn, but Queens, Staten Island, and the

Bronx as well” (p. 1218).

The authors move quickly from Manhattan’s earliest Indian inhabitants to Peter

Stuyvesant’s New Amsterdam, founded in 1624 as a fur-trading outpost for the

Dutch West India Company. Dutch settlers were very different in temperament

from Puritan settlers — more phlegmatic, less fanatical, and far more

interested in making money, legally or otherwise, than in probing deeper

meanings of Christianity. An other major difference was that the Dutch

displayed unruly traits not usually encountered among devout types.

Saloonkeepers ignored regulations to close on time, not to sell liquor on

Sundays during preachings, and not to pawn articles that customers offered for

drink. Stuyvesant increased fines for settlers who struck other settlers, but

New Amsterdam’s residents evidently considered such pleasures well worth the

penalties; court records suggest they hit each other as often as possible.[1]

From the time

the Dutch arrived, England was claiming title to New Amsterdam. But not until

1664 could London assemble armed forces to seize the settlement. Stuyvesant

wanted to resist, but inhabitants did not much care who ruled them so long as

they could freely pursue commercial interests and amusement, and they opted to

surrender.

During the remainder of the seventeenth century and since that time, the basic

question that perplexed Stuyvesant and the earliest citizens would perplex

English and then American political leaders and populations: How can

commercial establishments interested almost exclusively in status,

wealth, and power prevent from flying apart a community of increasing

diversity?

In their introduction, which serves as a tour de horizon not only for

this volume but for a forthcoming volume in what will be a history of New York

City to the present time, Burrows and Wallace make clear the extent to which

commerce has dominated the city: “After the Civil War, the metropolis became

the principal facilitator of America’s own industrialization and imperial

(westward) expansion.”(p. xvii). And, by the 19th century’s end,

“New York had gained the ability to direct, not just channel, America’s

industrialization. Financiers like J.P. Morgan established nation wide

corporations and housed them in the city, making Manhattan the country’s

corporate headquarters. When World War I ended European hegemony, and the

United States became a creditor nation, New York began to vie with London as

fulcrum of the global economy.”(p. xviii). Key developments in facilitating

the city’s “imperial expansion” were the opening of the Erie Canal in October

1825 and railroads, from the late 1850s. Other cities along the eastern

seaboard resented New York’s burgeoning fortunes, but unfortunately for them,

they began digging canals too late. Only with railroads could other cities hope

to compete, and in 1860, counting “the still-heavy volume of traffic on the

Erie Canal, [New York] received $161 million worth of goods from the West, just

about the value of that year’s cotton crop.”(p.655).

While some

entrepreneurs thus demonstrated their extraordinary talents

positioning New York vis-a-vis national and international commerce,

others made speculation in real estate an art form. The

real estate market was driven not only by needs of the rich for factories and

palaces for themselves but by immigrants who poured into the city thanks to its

promise of employment. Employers never adverse to paying the lowest wages

possible had no complaints about realtors extracting the highest rents

imaginable from workers.

Like the Dutch, English and American elite had no great fondness for

non-Protestants. Jews were tolerated because they took care of their own poor.

The problem through much of the

19th century was with immigrants who might be Christians but who also happened

to be Catholics. In particular there were the Irish, driven from their

ancestral homeland by indescribably cruel English policies. To the dismay of

New York’s Establishments,

not only were Irish Catholics unable to finance care for their poor, but by

definition they were guilty of allegiance to Rome. Adding to their misery,

in searching for employment the Irish resented seeing such signals of

disapproval as signs reading, “No

Irish need apply.”

What the authors call “the sharply unequal distribution of wealth in the city”

(p. 144) did not calm nerves. In 1730, “a comprehensive property assessment

revealed that the richest 10 percent of the city’s taxable population, some 140

merchants and landowners, held almost half its taxable wealth.”(p. 144). In

1800, “the richest 20 percent owned almost 80 percent of the city’s wealth. The

bottom half owned under 5 percent.”(p. 351). By 1892, “60 percent of the

leaders of New York’s national corporations,

investment banks, and railroads were descendants of old-monied families.”(p.

1083). In New Amsterdam, care of the poor had been left to religious groups,

but with the English came secular welfare policies that continue to inform City

Fathers more than three hundred years later. From 1685, “deserving poor . . .

received assistance for their Reliefe out of the public Treasury,”(p. 145),

the idea being to keep them out of sight and to get them off welfare rolls as

quickly as possible.

Non-residents bereft of money, who happened to be passing through, and all

able-bodied residents judged fit to work but unemployed got nothing. Only

“deserving poor” were thought worthy of receiving charity. Who were the

“deserving poor?” Those persons who appeared to be in distress through no

fault of their own, such as widows, the sick, and cripples. “Paupers” could

receive no charity; their situations clearly stemmed from laziness, fraud, and

assorted moral degeneracies. Little was said about the unspeakable practice in

Colonial New York of setting free aged or infirm slaves to save money,

“a practice so widespread by1773 that in order to keep down the cost of relief,

the legislature imposed a fine of twenty pounds on the last owner of any

freedman found begging in the city.”(pp. 192-3).

Gotham inevitably gives rise to thoughts about histories of the

metropolis. Not for the first time, a book that deals with the impact of

business on cities makes me wish that more writers would address confrontation

s between classes rather than offer smorgasbord portrayals of admired,

colorful, celebrated personalities, descriptions of magnificent,

soaring, unique architectural achievements, and encomiums for world-famous,

inspiring arts centers and art museums endowed by the rich who thus serve the

masses. Struggles for power and class conflict are also what business history

is about — in cities as well as within countries.

[1] For accounts of life in New Amsterdam, see Carl Bridenbaugh. Cities in

the Wilderness

: The First Century of Urban Life in America, 1625-1741.

(New York, 1966); J. Franklin Jameson, editor. Narratives of New Netherland,

1609-1664. (New York, 1909).

Published by EH.NET (January 1999)

Patricia O’Toole, Money and Morals in America: A History. New York:

Clarkson Potter Publishers, 1998. xxi + 408. $30 (hardback),

ISBN 0-517-58693-2.

Reviewed for EH.NET by Donald Frey, Department of Economics, Wake Forest

University.

O’Toole, whose previous books have included The Five of Hearts, a

portrait of Henry Adams and his circle of friends, sets out

to document Americans’ “never-ending debate about the relationship between

private gain and public good” (p. xiv). This volume portrays the tension in

American culture between self-interest and the belief that “to be human is to

live in a community.” The

portrayal is fair, even while O’Toole argues for the moral significance of the

latter proposition.

O’Toole is not arguing that there is a tension between values and

practice. Such a thesis would be trite, because practice inevitably falls short

of ideals. Rather, the polarity she discusses is within the American

value system itself, as well as within American economic practice. Nor is

O’Toole contrasting individualism with some version of communalism. In fact,

she tends to downplay the American

communal tradition. Rather, she focuses on mainstream American values and

practices, which are both distinctly individualistic. The relevant distinction

is between a self-focused individualism and relational individualism, in which

a person acts with regard to a web of human relationships and obligations, not

merely personal preferences.

The utility-maximizing model of economics could have represented one of

the poles in the O’Toole thesis, if she had chosen to explicate it.

Community (acting as market) sets the constraints (e.g., relative prices)

on the individual’s maximization problem, but is otherwise irrelevant. Even

altruism is interpreted as being instrumental, occurring only because it

increases the individual’s utility. O’Toole plays off an implicit version of

this understanding of humans, which economist George Stigler admitted was a

type of morality, against an understanding that individuals do, and ought to,

recognize obligation to the common good. Her point is that both these poles

exist in an uneasy tension.

Observers long have noted just this tension in the American character.

Alexis de Tocqueville pondered the problem of self-interest for community in

his celebrated study of 1830s America. More recently Robert Bellah and

co-authors contrasted Americans’ utilitarian values and behavior with

community-oriented values and behavior in their best-selling Habits of the

Heart (1985). Amitai Etzioni’s The Moral Dimension (1988) also

developed the theme.

O’Toole uses case studies; these range from the New England Puritans’

city on a hill to Control Data’s experiments in corporate responsibility.

Other chapters focus upon figures like Benjamin Franklin, Ralph Waldo Emerson,

Andrew Carnegie, and Whitney Young. Along the way, O’

Toole examines labor relations in Lowell, Massachusetts, at Ford during the

five-dollar-a-day revolution, and at Kaiser shipyards during World War II.

Slavery is addressed in a major chapter that is enhanced by drawing upon

less-known sources. In almost every case, the polarity in values and practice

is evident.

One could argue about O’Toole’s omissions. For

example, communitarians

like the early Moravians, while out of the mainstream, made a significant

critique of dominant individualist values and

practices. O’Toole does not ignore religion, yet some of her omissions seem

large: for example, no chapter devoted to the Social Gospel, a major movement

in liberal Protestantism around the turn of the century. Also largely ignored

are economic moralists

like Henry George, (who rates but a few paragraphs in a chapter otherwise

about Andrew Carnegie) Daniel Raymond, Richard Ely, or Francis Wayland, who

might have been of more interest to economists than,

say, Emerson.

The views of the economists whom O’Toole ignores probably were more

sophisticated than those of the non-economists she does include. For example,

Malthus’ law of population, Ricardo’s rent theory, and the classical wage-fund

together provided the scientific basis for the proposition that poverty was

inevitable. This meant that no one had a moral obligation to the poor, for one

cannot have a moral obligation to change what cannot be changed. Henry George

(whatever one may think of his technical economics) exposed the ethical role of

the se assumptions and effectively critiqued them to a large American audience.

As another example: O’Toole nicely demonstrates the moral tensions inherent in

Andrew Carnegie’s meshing of social Darwinism and massive philanthropy. Yet, a

better exposition of

social Darwinism could have been had by directly examining the ideas of the

quasi-economist William Graham Sumner. That O’Toole barely touched on such

thinkers is a loss to the book.

Although this reviewer is not in a position to judge many of the chapters,

in the areas with which I am familiar I find that O’Toole has done a

good job. I have some familiarity with Puritan economic ethics, and in my

judgment O’Toole provides a finely nuanced exposition of that thought. Her

exposition of Puritan economic morality is far superior to the caricatures

that often mar business-ethics texts.

Would economists find reading this book of benefit? The recent Nobel Prize

awarded to Amartya Sen suggests that the profession may be ready to look again

at these kinds of issues. Even economists interested only in questions that

can be dealt with by the standard neoclassical model might benefit from

occasionally pondering the kinds of factors, like a culture’s morality, that

contribute to the unexplained residual in their statistical work.

Donald E. Frey Department of Economics Wake Forest University

Frey is professor of economics at Wake Forest University. His most recent paper

is “Individualist Economic Values and Self-Interest: The Problem in the Puritan

Ethic

,” Journal of Business Ethics, October 1998.

Published by EH.NET (October 1998)

Michael French. U.S. Economic History Since 1945. Manchester and New

York: Manchester University Press, 1997. 256 pp. $24.95 (cloth),

ISBN: 071 9049512.

Reviewed for EH.NET by Randy R. Grant, Department of Economics and Business,

Linfield College.

Michael French, Senior Lecturer in Economic and Social History at the

University of Glasgow, examines the U.S. economy since 1945, dividing the

postwar era topically rather than chronologically. Although each chapter

develops chronologically, the emphasis is on critical events within each theme.

I include the table of contents to provide an initial description of the

topics covered.

1. The US population since 1945
2. US government since 1945
3. US government and management of the economy
4. US regional economic change since 1945
5. Work in the United States since 1945
6. Agriculture and the rural United States
7. Mastery to uncertainty: corporate America, 1945-90
8. African-Americans and the civil rights movement
9. US incomes and consumption since 1945
10. The United States in the world economy
11. US productivity growth since 1945

French’s objective is to provide more than just an overview of the era, In

his own words French writes,

“This book charts the main economic changes in the United States

since 1945. In any historical study demarcation lines involve an

uneasy compromise between placing an era in its long-run context

or examining a short span more thoroughly. The period from 1945

to the early 1990s has often been treated as the tail-end to a

longer book surveying two or three hundred years of American

economic development. This establishes the grand schema, but

at the expense of detail.” [Introduction]

Interestingly, French’s perspective is that he is providing a detailed

examination of a shorter period. I was struck initially with the opposite

perception. French’s work, if nothing else, is ambitious. In roughly 200

pages, French attempts to describe and explain adequately events in the U.S.

economy covering a 50+ year span. His efforts are to be applauded,

but the results are mixed. Such is

the nature of the uneasy compromise that French identifies.

Economic historians familiar with the postwar period will have mixed

reactions, dependent on areas of specialization. To illustrate, as one who has

focused on postwar macroeconomic policy, I

found the chapters on the role of government to be seriously deficient in the

discussion of the Employment Act of 1946 and the role of the Keynesians in

policy-making. On the other hand, as one with limited academic experience with

regional economic changes, I saw that chapter as providing a strong overview

of the issues with most of the critical details provided. In short, one must

be aware of one’s own parochial view, as it will likely influence the

assessment of how well French examines each topic.

The other general dissatisfaction with the text is the less thorough

discussion of the 1980s and 90s. While the coverage from 1945 to the 1970s is

thorough, the discussion of the last two decades is, at times, excessively

limited.

The first chapter describes demographic changes in the postwar period.

It is an interesting discussion in and of itself, but it also provides a nice

context for the rest of the topics covered. It almost literally puts a face to

the subsequent content.

Chapters two and three address the federal government’s role in the economy

in the postwar era. A good view of the defense and welfare sectors is

provided, as is a discussion of the prevailing attitudes toward government.

Coverage of key legislative action is inadequate, as is the discussion of the

role of economists (or lack thereof) during the period.

Chapter four, dealing with regional economic changes since 1945, is one of

the clearest in its presentation. Connections to product cycle and industry

structure

models are made, although a more explicit framework for discussion would be

useful. Overall this chapter provides a good overview of regional economic

change, both in identifying the changes and their causes.

The fifth chapter, covering work since 19 45, provides balanced discussion

of women’s labor issues and changes in the power of labor in the postwar

period. This chapter does a better job of covering recent history (i.e. 1980s

and 90s), including a discussion of the Reagan administration’s dealings with

organized labor (such as with the air traffic controllers).

Chapter six addresses issues of agriculture and the rural United States.

Here French emphasizes the roles of changing technology and farm structure, and

the development of agribusiness. A solid discussion of regional impacts and

the rural poor is also provided. The chapter concludes with a fairly extensive

overview of federal farm policy in the postwar period. The section provides

good coverage of both legislative and attitudinal changes since 1945.

Chapter seven is arguably the best this text has to offer. It provides a

comprehensive yet concise history of the growth, decline(?), and power of

corporations since 1945. What is especially appreciated is the pre-1945

background discussion, which is critical to understanding the postwar

activities of

corporate America. While appropriate attention is given to mergers, joint

ventures, etc., a discussion of corporate interlocks (aka interlocking

directorates) would help complete what is already a good picture of corporate

America since World War II.

Chapter eight, “African-Americans and the civil rights movement,”

integrates the earlier discussions of demographic and regional economic

changes. As with the chapter on corporations, the chapter reaches back to

before 1945 to establish necessary background information on the struggles of

African-Americans. It blends well the personalities, legal changes,

and economic realities underlying the civil rights movement. As with all of

the topics this book addresses, more could be added, but overall this chapter

covers this extensive topic well.

Chapter nine deals with income and consumption issues. While it provides an

adequate overview, every topic addressed within the chapter warrants, at the

minimum, its own chapter in a work of this nature.

French first deals with income distribution, but only barely scratching the

surface. His pre-1945 data are more thorough than the postwar data he

provides. A first pass is made at explaining trends in inequality, but it is

not enough to provide even a cursory understanding of the forces involved. The

chapter then moves to a discussion of poverty which, like the income

distribution, warrants a more complete analysis. Weak also is the discussion

of gender issues. The best part of chapter nine is the examination of changes

in the consumer society in the postwar period.

If a choice had to be made between leaving chapter nine as is or deleting it,

it should remain in the text, but I would hope that any revision of the book

would include expanded coverage of these important topics.

The US in the world economy is the topic of chapter ten. Any author would

be hard pressed to provide adequate coverage of this subject in a single

chapter. Despite this, French does manage to introduce the central themes in

US

global economic activities, providing sufficient overview of economic policy,

multinationals, and US economic performance in the global economy since 1945.

French’s concluding

chapter addresses productivity growth in the postwar period, and the slowing

of productivity growth in the 1970s and 80s. He summarizes the standard

explanations, providing a brief overview of the evidence for each.

While I would have liked to keep

this review focused on content, I digress to three technical issues affecting

the book’s usefulness.

For its size, the text contains a wealth of information on each topic.

Furthermore, the bibliography is extensive. The book has the potential to be a

nice reference complement to a library collection on the postwar era. The

problem is that the index is a woefully inadequate guide to important

subtopics.

The second technical matter regards the writing style. I approach the book

from the perspective of teaching economic history to undergraduates. In my

quest for text materials I must look both for content and how well it is

communicated. In some chapters I found the arguments difficult to follow

because of the style. I am desperately trying to avoid

sounding nit-picky or simplistic, but a more generous use of paragraphs would

improve dramatically the readability of this work. In some places the typical

undergraduate would get bogged down in the structure and lose sight of the

important information

which French’s work offers.

Finally, I am left with the question, “for whom is this book written?”

It has the appearance of a text that one might find in an undergraduate or

graduate economic history course, but in places it assumes knowledge that the

typical undergraduate will likely not possess, especially in the area of

theoretical models. French demonstrates the application of the models,

but does not establish the theoretical framework. The usefulness for

undergraduate study is thus limited, leaving open the question of audience.

As noted previously, those with expertise in these areas may be unsettled by

what they see as gaps in the content. It is uncertain which master this work

intends to serve, and it may be that it serves no master well.

As I look back at this review, it appears even to me to be somewhat

schizophrenic. I leave it as such, as it reflects the mixed reaction I have to

this work. Some parts excite while others disappoint. For those seeking a

clear recommendation for or against this book, I am loathe to give it. I

believe it is worth a look, but I say that knowing that some will be

disappointed.

Randy R. Grant Department of Economics and Business Linfield College

Randy Grant specializes in U.S. Economic History and

Public Policy. His doctoral dissertation focused on the relationship between

corporate power and the distribution of income. Articles he has authored

include

“Measuring Corporate Power: Assessing the Options” (June 1997) and “Class

Conflict, Corporate

Power, and Macroeconomic Policy: The Impact of Inflation in the Postwar

Period” (June 1991, co-authored with Ann Mari May). Both articles appeared in

the Journal of Economic Issues.