Review of Richard Langlois' The Corporation and the Twentieth Century

 Langlois, R. 2023. The Corporation and the Twentieth Century: The history of American business enterprise, Princeton University Press. 

 

An exhaustive, detailed history of US business that continues Richard Langlois long-running dialogue with Alfred Chandler’s work on managerial capitalism. Ranging across all major C20 industries like railways, automobiles, aircraft, electrical appliances and computers, and loosely organised into periods of a couple of decades covering pre WW1, pre WW2, post WW2, stagflation and the final decades, each chapter looks at the political context, the development of key industries and the relevant technological innovations that drove the process: ‘It has been a central theme of the book that the large integrated corporation in the twentieth century owed its rise to prominence in significant part to the eclipse of the market and the growth of state power during the Depression and the World wars’ (p. 478). In the 1980s the wheel turned, market forces began to reassert themselves, new corporate structures emerged, and the boundaries of the firm shifted again. 

 

A focus of the book is the effects of regulation on industry. The early contest between Populists and Progressives that played out in anti-trust cases and Supreme Court decisions often led to regulations ‘misaligned’ with technology and market opportunity. In many cases consumer interest was secondary, with lower prices seen as evidence of anti-competitive behaviour as ‘American regulatory policy worked to segment markets, generally along lines of supply technology not market demand’ (p. 466). 

 

The institutional origins of regulators in key industries and their role in creating and maintaining cartels or oligopolies contradicts the view that the US favoured large corporations. In fact, the large, vertically integrated firm was an outcome of legal constraints on contracting that were intended to favour small businesses but had the opposite effect. Many regulated firms then underinvested in maintenance and innovation, leading to spectacular collapses like Penn State Railroad, Chrysler Corp and Pan Am, and the demise of other once great corporations like IT&T, RCA, Westinghouse and US Steel.

 

The role of technological opportunity, R&D and innovation is emphasised, battles over patents and standards discussed, and how disruptive tech eventually overcame regulatory barriers in industries like transport (containerisation and air freight), radio (AM and FM) and TV (broadcast networks and cable). Disruption in computing (transistors and integrated circuits), manufacturing (consolidation and lean production) and the near death experiences of IBM, Apple and GE are detailed: ‘The most disruptive new entry has often come not in the form of a small start-up but a large firm in a related area’ (p. 549). 

Intellectual contests of ideas and the increasing use of economics in regulation get short, non-technical explanations. Important business leaders and given credit when due and their failures dissected. For those interested in regulation and the role of government agencies, business history, and the interplay of technology and industry, this is a great read.