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Narrating The Rise of Big Business in The USA How Economists Explain Standard Oil and Wal Mart Routledge International Studies in Business History 1st Edition Anne Mayhew PDF Version

The book 'Narrating the Rise of Big Business in the USA' by Anne Mayhew explores the narratives surrounding the establishment of Standard Oil and Wal-Mart, focusing on the contrasting perspectives of economists and literary figures. Mayhew aims to reconcile differing views on corporate power and its implications for welfare, drawing from various academic disciplines to address contemporary economic issues. This work is intended for students and researchers interested in economic theory, public policy, and the complex narratives of American big business.

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100% found this document useful (2 votes)
13 views125 pages

Narrating The Rise of Big Business in The USA How Economists Explain Standard Oil and Wal Mart Routledge International Studies in Business History 1st Edition Anne Mayhew PDF Version

The book 'Narrating the Rise of Big Business in the USA' by Anne Mayhew explores the narratives surrounding the establishment of Standard Oil and Wal-Mart, focusing on the contrasting perspectives of economists and literary figures. Mayhew aims to reconcile differing views on corporate power and its implications for welfare, drawing from various academic disciplines to address contemporary economic issues. This work is intended for students and researchers interested in economic theory, public policy, and the complex narratives of American big business.

Uploaded by

delmicas6658
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Narrating the Rise of Big Business
in the USA

“This is a story about stories, and specifically about some of the stories
that Americans have told themselves about corporate economic power.” In
this book, Anne Mayhew focuses on the stories surrounding the creation
of Standard Oil and Wal-Mart and their founders, John D. Rockefeller and
Sam Walton, combining the accounts of economists with the somewhat
darker pictures painted by writers of fiction to tease out the overarching
narratives associated with American big business.
Mayhew argues that the diverse views about big business and its effects
on welfare can be reconciled and better policies derived from a somewhat
unlikely combination of ideas from the business world and from those
who have dissented from the most widely accepted story told by econo-
mists. This book draws on the work of Chandler, Coase and Williamson,
as well as Marx and Veblen’s discussion of supply chains, to address some
of the major social and economic problems of the twenty-first century.
This book will be of interest to students and researchers engaged with
economic theory and public policy as well as those interested in a post-
modernist take on big business in the USA.

Anne Mayhew is Professor Emerita at the University of Tennessee.


Routledge international studies in business history
Series editors: Ray Stokes and Matthias Kipping

1 Management, Education and 7 Region and Strategy


Competitiveness Business in Lancashire and
Europe, Japan and the Kansai 1890–1990
United States Douglas A. Farnie,
Edited by Rolv Petter Amdam David J. Jeremy, John F.
Wilson, Nakaoka Tetsuro and
2 The Development of Abe Takeshi
Accounting in an
International Context 8 Foreign Multinationals in the
A Festschrift in honour of United States
R. H. Parker Management and performance
T. E. Cooke and C. W. Nobes Edited by Geoffrey Jones and
Lina Galvez-Munoz
3 The Dynamics of the Modern
Brewing Industry 9 Co-operative Structures in
Edited by R. G. Wilson and Global Business
T. R. Gourvish A new approach to networks,
technology transfer agreements,
4 Religion, Business and strategic alliances and agency
Wealth in Modern Britain relationships
Edited by David Jeremy Gordon H. Boyce

5 The Multinational Traders 10 German and Japanese


Geoffrey Jones Business in the Boom Years
Transforming American
6 The Americanisation of management and technology
European Business models
Edited by Matthias Kipping Edited by Akira Kudo,
and Ove Bjarnar Matthias Kipping and
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11 Dutch Enterprise in the 20th 13 International Business and
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Business strategies in small Unilever between Reich and
open country Empire, 1939–45
Keetie E. Sluyterman Ben Wubs

12 The Formative Period of 14 Narrating the Rise of Big


American Capitalism Business in the USA
A materialist interpretation How economists explain
Daniel Gaido Standard Oil and Wal-Mart
Anne Mayhew
Narrating the Rise of Big
Business in the USA
How economists explain Standard
Oil and Wal-Mart

Anne Mayhew
First published 2008
by Routledge
2 Park Square, Milton Park, Abingdon, Oxon, OX14 4RN
Simultaneously published in the USA and Canada
by Routledge
270 Madison Ave, New York, NY 10016
Routledge is an imprint of the Taylor & Francis Group, an informa business
This edition published in the Taylor & Francis e-Library, 2008.
“To purchase your own copy of this or any of Taylor & Francis or Routledge’s
collection of thousands of eBooks please go to www.eBookstore.tandf.co.uk.”
© 2008 Anne Mayhew
All rights reserved. No part of this book may be reprinted or
reproduced or utilized in any form or by any electronic,
mechanical, or other means, now known or hereafter invented,
including photocopying and recording, or in any information
storage or retrieval system, without permission in writing from the
publishers.
British Library Cataloguing in Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloging in Publication Data
Mayhew, Anne.
Narrating the rise of big business in the USA: how economists
explain Standard Oil and Wal-Mart/Anne Mayhew.
p. cm. – (Routledge international studies in business history; 14)
Includes bibliographical references and index.
1. Big business–United States–History. 2. Corporations–United
States–Case studies. 3. Standard Oil Company. 4. Wal-Mart (Firm)
I. Title.
HD2785.M38 2008
338.6’440973–dc22 2008001046

ISBN 0-203-89438-3 Master e-book ISBN

ISBN10: 0-415-77534-5 (hbk)


ISBN10: 0-203-89438-3 (ebk)

ISBN13: 978-0-415-77534-2 (hbk)


ISBN13: 978-0-203-89438-5 (ebk)
To Patrick, Adam, and Mattie Anne
With hopes for their world
Contents

Preface xi
Acknowledgments xii

1 Introduction 1

2 The agreed upon stories 11


John D. Rockefeller, Sr. and Standard Oil 11
Sam Walton and Wal-Mart 18
A preliminary comparison 29

3 Popular accounts and wider contexts 30


Rockefeller’s context 31
Sam Walton’s context 52

4 Economists, trusts, and big business 60


Theorizing the railroads 61
The challenge of the trusts 65
An associationist detour 74
The invisible hand returns 76

5 Alternative stories 79
Seeing the firm whole 79
Alfred Chandler’s stories 87
A search for theoretical consistency 91
Economies of scale and speed: the modern firm in abstract 92
x Contents
6 Supply chains and M→C→C´→M´ 104
M→C 105
C→C´ 113
C´→M´ 123
Holistic management/holistic problems 127

7 Toward relevance 132


A template to drill by 135
Stories and policies: a final word 147

Notes 149
Bibliography 168
Index 179
Preface

My goals in writing this book were two. The first was to combine what
can be learned from the separate and often quite different strands of liter-
ature that have dealt with the rise of large business firms in the US
economy. Economists have told it one way, economic historians another,
and historians of economic thought have seen a slightly different truth.
Novelists, short story writers and journalists have had their own versions.
What has been taught in business schools has been different still. As I
have read and talked with students about the growth of business firms I
have tried to cobble together the different versions into a more or less
cohesive account. This book is the result.
The second goal has been to write my account so that intelligent
readers who do not have specialized training in any of the academic fields
from which I have drawn can understand it. This seems a worthy goal but
will prove irritating to some because I have not gone into the details of a
number of scholarly discussions but have summarized major points
instead. I have also trespassed across disciplines and sub-disciplines and
have tried to write without using the specialized language that makes for
rapid intradisciplinary communication and group cohesion. I hope that in
spite of all this I have managed to preserve the understanding and intent of
those whose work I have read and rewritten for this purpose, and apolo-
gize if I have not.
Acknowledgments

This book has been long in the making and there are many, many teachers,
students, colleagues and friends who have contributed to my understand-
ing. My late husband, Walter C. “Terry” Neale, was both a fierce and con-
structive critic of everything I wrote and he made me a better scholar for
it. Had he lived to read this manuscript I am sure that it would have been
better than it is. My children, Kathleen and Doug, have been my very best
friends, always loving and forgiving.
Several have read this manuscript in various stages of completion,
among them Steve Dandaneau, Emil Friberg, Jr., Janet Knoedler, Nancy
McGlasson, Mary Papke, and I thank them all, and especially Mary and
Nancy for their reading as non-economists. When they said it did not
make sense I went back to the keyboard and worked on it some more. To
Steve, Emil, and Janet I apologize for not taking all of the advice offered.
They should not be blamed. The students in English 660 and in University
Honors 257 in the Spring of 2007 are the most recent in a long line of
those who have challenged me to think and reread and rethink. I am most
grateful.
1 Introduction

This is a story about stories, and specifically about some of the stories that
Americans have told themselves about corporate economic power. Stories
about the growth of corporate power and the individuals who have led that
growth have been written by professional journalists; others are stories
told by novelists, short story writers, and film makers; still others are the
analytical accounts written by professional experts: economists, other
social scientists and historians. Finally, there are the stories that are
embodied in legislative history and in the public policies that deal with
economic power.
These are not all the same stories, even when they purport to be about the
same thing. And, the differences among the stories, differences that will be
explored in detail in the pages that follow, are not simple matters of
emphasis or style. There are, in fact, sharp differences between the profes-
sional views of modern economists, who now tend to see the rise of eco-
nomic power as a relatively benign process driven by technological
progress, and those of historians and other social scientists who take a less
sanguine, or at least a less deterministic, view of the evolution of modern
American capitalism. There are also sharp differences between the general
view of novelists and short story writers who chronicled the lives of Ameri-
cans at the end of the nineteenth and the beginning of the twentieth centuries
and that of economic historians who have written about the same period.
The creators of the national literature, the literature that continues to inform
the view of many educated citizens, have most often described it as a time of
hardship, economic unhappiness, and not infrequent destitution. Economic
historians, on the other hand, generally treat this as an era of rising real
incomes and increased prosperity for the majority of Americans. And, econ-
omists who are not historians tell a story of a sustained increase in affluence,
marred only by the occasional recession or depression.
The same cannot be said for other academics, for in English Depart-
ments and for many historians, giant firms and their leaders tended to
2 Introduction
remain in the harsh light first cast by the muckrakers, those early twenti-
eth-century journalists who created for millions of Americans a jaundiced
view of the activities of the newly emerging large firms. Even among
those who have taken a more analytical and less emotive stance, and espe-
cially among the modern sociologists such as Fligstein (1990), Perrow
(2002), and Roy (1997), who have analyzed the ways in which production
came to be organized by the specific legal form of the modern corporation,
the view of economic power has been much more critical than it is among
economists. There has remained a strong tradition of reading business
history and business function as a record of evil deeds. The result is a
sharp polarization of views on most American college and university cam-
puses about big business and the corporate form. Students learning about
our American past must therefore choose between sharply contrasting
views, the bases of which are most often left unexplored. A goal of this
story of these various stories is clarification of the contrast.
In today’s world we also see sharp divisions among those who write of the
economic power of large corporations from the standpoint of impoverished
and exploited sweatshop workers and those who stress the advantages of a
“flattened” world of mass production and distribution. The contrast
between the worlds described by those who protest the depredations of
globalization and all-powerful corporations and those who celebrate the
glories of an efficient and integrated international market in today’s world
are as stark as the contrast offered by Upton Sinclair in his novel of down-
trodden workers in the Chicago stockyards of the early 1900s, The Jungle,
and the statistically based accounts of the economic historians that show
rising real incomes for almost all during the same period.
A major goal of this work is to understand better the causes of the great
discrepancies in our narratives about corporate power. It is too easy to see
such differences as a simple consequence of the economic position of the
story teller. According to this rather common explanation of differences of
opinion about economic matters, those who are well off, or at least expect
to be well off in the near future, give happy accounts of efficiency and
equity being well served by existing power. Those who are less well off
are, on the other hand, likely to see exploitation and unfairness. There is
some truth to this explanation, but it does not suffice to explain the differ-
ences that are at the core of this account. A more complex narrative about
the sources and persuasiveness of the variety of stories told is required to
understand how we Americans have dealt with corporate power and how
this has produced the often contradictory public policies toward large
firms that have characterized the twentieth and twenty-first centuries.
In order to construct the more complex narrative that a closer approach
to our multiple national stories requires, I will focus on two well-known
Introduction 3
players, John D. Rockefeller, Sr. and Sam Walton. John D. Rockefeller,
Sr. founded Standard Oil of Ohio, later known simply as Standard Oil, a
firm that controlled some 90 percent of world petroleum refining capacity
at the beginning of the twentieth century. He also, of course, created the
fortune and sired the family that has continued to be emblematic of eco-
nomic power through the twenty-first century. Sam Walton, as is also well
known, was the founder of Wal-Mart, now the largest firm (as measured
by total revenue) in the United States and a major contributor to late-
twentieth-century globalization. Simply naming these two men and their
accomplishments calls to mind the division in narratives with which I
propose to deal: both are simultaneously heroes of business success and
villains of economic justice. As will be described in some detail in the
chapters that follow, both shared many other traits as well, both in their
accomplishments and in the contexts in which they worked.
Although I say my account is of two individuals, it is important to note
that the success of both men came from their ability to lead and coordinate
the activities of many others. As will be clear from the histories of both,
neither could have succeeded alone. It is not my intent to try to unravel the
separate contributions of those who served Rockefeller and Walton, nor
will I venture into the scholarly discussion of the role of entrepreneurial
individuals in accounting for economic and social change. The focus of
this work is on how we as scholars and as interpreters of our world have
told the stories of these men and their lieutenants, and not on a search for
the true roles of the separate individuals. Rockefeller and Walton are
emblematic of massive changes in American society. My goal is to under-
stand how we have told ourselves about those changes.
Before turning to the stories of Rockefeller and Walton, a word about
my use of the words “stories” and “narratives” may be useful. There is
nothing provocative about using these words to describe the novels and
shorter fiction that will be discussed as one portion of the larger American
narrative about corporate power. It is also within the range of accepted
usage to talk of the stories told by journalists and popular writers, but the
use of this term to describe the very substantial body of expert analyses
offered by professional historians, and especially by professional econo-
mists, will seem to some to be arrogant and deliberately demeaning and
dismissive.1 It is not, however, my intention to demean or to suggest that
my account deserves, by reason of simple virtue, to supplant the profes-
sional stories told to date.
As an academic economic historian, my intent is, rather, to adopt a non-
Whiggish and interdisciplinary approach to the history of thought about
big business in America. What I will offer is not the result of research into
primary sources, but rather an explicitly postmodern reading of received
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