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Socializing Capital
Ever since Adolph Berle and Gardiner Means wrote their classic 1932 analysis of the American corporation, The Modern Corporation and Private Property , social scientists have been intrigued and challenged by the evolution of this crucial part of American social and economic life. Here William Roy conducts a historical inquiry into the rise of the large publicly traded American corporation. Departing from the received wisdom, which sees the big, vertically integrated corporation as the result of technological development and market growth that required greater efficiency in larger scale firms, Roy focuses on political, social, and institutional processes governed by the dynamics of power.
The author shows how the corporation started as a quasi-public device used by governments to create and administer public services like turnpikes and canals and then how it germinated within a system of stock markets, brokerage houses, and investment banks into a mechanism for the organization of railroads. Finally, and most particularly, he analyzes its flowering into the realm of manufacturing, when at the turn of this century, many of the same giants that still dominate the American economic landscape were created. Thus, the corporation altered manufacturing entities so that they were each owned by many people instead of by single individuals as had previously been the case.
The author shows how the corporation started as a quasi-public device used by governments to create and administer public services like turnpikes and canals and then how it germinated within a system of stock markets, brokerage houses, and investment banks into a mechanism for the organization of railroads. Finally, and most particularly, he analyzes its flowering into the realm of manufacturing, when at the turn of this century, many of the same giants that still dominate the American economic landscape were created. Thus, the corporation altered manufacturing entities so that they were each owned by many people instead of by single individuals as had previously been the case.
360 pages, Hardcover
First published January 1, 1997
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Displaying 1 - 3 of 3 reviews
January 19, 2026
This book gave a richly detailed overview of the development of large industrial corporations in America. The book made excellent use of sources.
The book is a critique of efficiency theory, arguing that sociologists should not view efficiency as a driving external factor for the corporate revolution but as one aspect of historical forces that were ultimately shaped by power and institutions. Rather than relying solely on economies of scale and other efficiency factors, the institutional relationships between corporations, the law, and capital via Wall Street were more determinative in success.
Since it is a work of sociology and not just a history book I found it dense at times. Some of the more quantitative arguments were hard to follow as a non-sociologist. All in all, very interesting book.
The book is a critique of efficiency theory, arguing that sociologists should not view efficiency as a driving external factor for the corporate revolution but as one aspect of historical forces that were ultimately shaped by power and institutions. Rather than relying solely on economies of scale and other efficiency factors, the institutional relationships between corporations, the law, and capital via Wall Street were more determinative in success.
Since it is a work of sociology and not just a history book I found it dense at times. Some of the more quantitative arguments were hard to follow as a non-sociologist. All in all, very interesting book.
September 30, 2013
When J.D. Rockefeller first stated his famous quote - "competition is a sin", many thought he was joking. But if one closely examined the history of corporation and the US constitution regarding corporation, one will come to the conclusion that the US constitution has restricted government's power but left a legal loophole for incorporation of private business. The result was the birth of corporation driven by inevitable consequence of competition.
The aforementioned is my view. In this book, author provided an alternative one: modern corporations could not have existed without exercise of power in politics and finance. Many earlier scholars had argued that corporation is a naturally evolved as the US national economy progressed. But this book says corporation is politically originated.
The formation of corporations in 1850s was represented by mergers of small manufacturers. The book argues that these small firms were facing two options at that time: compete with others to the point of chronic negative profits or merger competitors to secure at least some profits. The forces that helped shape the environment were anti-trust laws, owners of financial capitals, government as well as existing corporations who were formed in 1800s. In this way, those small firms were left no choice but to merge into corporations. The catch in this case illustrated by the book is that the alternatives the manufacturers had were controlled by two vital stakeholders: the government and the bank.
The US government launched governmental projects attracting private business to become sub-contractors. The well-known project at that time was railroad construction. However, those small firms often lacked sufficient capital to acquire a large and compact governmental contract. Thus they went to capital provider, investment banks asking for capital injection. But, investment banks led by JP Morgan, Mellon and other industrialists required small firms to form incorporation practices in exchange for access to capitals. Again, manufacturers were left with the only option.
Overall, the book provided an alternative view to the history of corperation. After a quick read, I thought the book's view deserved some merits and recognized a possibility of co-existence between its view and former mainstream view. The reason is that the book is really a half-way effort in explaining the origion of corporation in the US. The critical question to ask is we agree that political and financial powers affected the choices of small manufacturers, but what affected the government and the capital providers? Wasn't the government infiltrated by the bankers, such as JP Morgan at that time? Didn't J.D. Rockefeller convert public-purpose corporation into private corporation for market control and monopoly power?
The aforementioned is my view. In this book, author provided an alternative one: modern corporations could not have existed without exercise of power in politics and finance. Many earlier scholars had argued that corporation is a naturally evolved as the US national economy progressed. But this book says corporation is politically originated.
The formation of corporations in 1850s was represented by mergers of small manufacturers. The book argues that these small firms were facing two options at that time: compete with others to the point of chronic negative profits or merger competitors to secure at least some profits. The forces that helped shape the environment were anti-trust laws, owners of financial capitals, government as well as existing corporations who were formed in 1800s. In this way, those small firms were left no choice but to merge into corporations. The catch in this case illustrated by the book is that the alternatives the manufacturers had were controlled by two vital stakeholders: the government and the bank.
The US government launched governmental projects attracting private business to become sub-contractors. The well-known project at that time was railroad construction. However, those small firms often lacked sufficient capital to acquire a large and compact governmental contract. Thus they went to capital provider, investment banks asking for capital injection. But, investment banks led by JP Morgan, Mellon and other industrialists required small firms to form incorporation practices in exchange for access to capitals. Again, manufacturers were left with the only option.
Overall, the book provided an alternative view to the history of corperation. After a quick read, I thought the book's view deserved some merits and recognized a possibility of co-existence between its view and former mainstream view. The reason is that the book is really a half-way effort in explaining the origion of corporation in the US. The critical question to ask is we agree that political and financial powers affected the choices of small manufacturers, but what affected the government and the capital providers? Wasn't the government infiltrated by the bankers, such as JP Morgan at that time? Didn't J.D. Rockefeller convert public-purpose corporation into private corporation for market control and monopoly power?
June 7, 2016
Roy mops the floor with functionalists.
Displaying 1 - 3 of 3 reviews