The Firm and Its Contradictions


In this chapter I attempt to show how money—capital—and its transporter—the market—have strayed into social environments in which they are not well suited, with the result that they create considerable havoc both for the economy and for the social environments in which they lodge. Money in this way adulterates social organizations by perverting the grounds of cooperative social life. By infusing organizations with competitive struggle, finance markets undermine the conditions for making social contracts. The underlying premise is not that people are corrupt and greedy, although this may be a consequence of these unprecedentedly novel arrangements. A more certain consequence has been prevailing social unease about jobs and earnings, insurance and savings, and the stability of work organizations.


Monetary Policy Large Firm Social Entity Internalize Capital Market Internal Labor Market 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. 2.
    Capital, Vol. 1, p. 193, pp. 537–541. The theory of surplus value has been criticized on various grounds. For example, Rosa Luxemburg (The Accumulation of Capital, 1951) faulted Marx for not clearly specifying the source of growing demand that capitalism requires for accumulation under conditions of constant or declining surplus value. On the other hand, David Harvey (The Limits to Capital. Chicago: University of Chicago Press, 1982) indicates that growing demand can be traced to the credit system, the state, and mobile capital and labor.Google Scholar
  2. 3.
    George J. Stiglier, The Theory of Price. New York: Macmillan Company, 1947.Google Scholar
  3. 4.
    The Council on Economic Priorities publishes an annual listing of companies and products, along with a rating of corporate practices. See Shopping for a Better World. 3rd ed. New York: CEP, 1991.Google Scholar
  4. 5.
    R. H. Coase’s essay, “The Nature of the Firm” was published in Economica 4 (November 1937) and is reprinted in The Firm, the Market, and the Law. Chicago: University of Chicago Press, 1988.Google Scholar
  5. 6.
    Op. cit., p. 7; also see Douglass C. North, Institutions, Institutional Change and Economic Performance. Cambridge: Cambridge University Press, 1990.Google Scholar
  6. 7.
    Alfred D. Chandler, Jr., The Visible Hand: The Managerial Revolution in American Business. Cambridge: Harvard University Press, 1977.Google Scholar
  7. 8.
    Oliver E. Williamson, Markets and Hierarchies: Analysis and Antitrust Implications. New York: Free Press, 1975.Google Scholar
  8. 9.
    Karl Polanyi, The Great Transformation. Boston: Beacon Press, [1944] 1957.Google Scholar
  9. 10.
    Ibid., David Harvey, op. cit, p. 145.Google Scholar
  10. 11.
    Karl Polanyi, op. cit.Google Scholar
  11. 12.
    Stanford M. Jacoby, Employing Bureaucracy: Managers, Unions, and the Transformation of Work in American Industry, 1900–1945. New York: Columbia University Press, 1985; Michael Useem, The Inner Circle: Large Corporations and the Rise of Business Political Activity in the US. and UK. New York: Oxford University Press, 1984; John McDermott, Corporate Society: Class, Property, and Contemporary Capitalism. Boulder: Westview Press, 1991.Google Scholar
  12. 13.
    Recognizing the fundamental significance of the organizational form for profit making, Carnegie stated, “You can take away my steel mills, ores, railroad lines, coal, but leave me one thing and I’ll repeat my success. The one thing is organizations.” (Cited in James MacGregor Burns, The Workshop of Democracy. New York: Random House, 1985, p. 103.)Google Scholar
  13. 14.
    Adolph Berle and Gardiner Means, The Modern Corporation and Private Property. New York: Macmillan, 1932.Google Scholar
  14. 15.
    Neil Fligstein, The Transformation of Corporate Control. Cambridge: Harvard University Press, 1990.Google Scholar
  15. 16.
    Bennett Harrison and Barry Bluestone, The Great U-Turn: Corporate Restructuring and the Polarizing of America. New York: Basic Books, 1988; also see Barry Bluestone and Bennett Harrison, The Deindustrialization of America: Plant Closings, Community Abandonment, and the Dismantling of Basic Industries. New York: Basic Books, 1982.Google Scholar
  16. 17.
    For recent summaries, see Barry Bluestone, “The Great U-Turn Revisited: Economic Restructuring, Jobs, and the Redistribution of Earnings,” pp. 7–37 in John D. Kasarda (ed.), Jobs, Earnings, and Employment Growth Policies in the United States. Boston: Kluwer Academic Publishers, 1990.Google Scholar
  17. 18.
    Simon Kuznets, Modern Economic Growth. New Haven: Yale University Press, 1966.Google Scholar
  18. 19.
    Analyses show that these declines are not due to cyclical trends (Gary Burtless, Earnings Inequality over the Business Cycle. Washington, DC: The Brookings Institution, 1989), or demographic change (Chris Tilly, Barry Bluestone, and Bennett Harrison, The Reasons for Increasing Wage and Salary Inequality. John W. McCormack Institute of Public Affairs Working Paper. Boston: University of Massachusetts at Boston, 1987).Google Scholar
  19. 20.
    Bretton, op. cit., p. 257.Google Scholar
  20. 21.
    Robert Kuttner, The Economic Illusion: False Choices Between Prosperity and Social Justice. New York: Houghton Mifflin, 1984.Google Scholar
  21. 22.
    Neil Fligstein, The Transformation of Corporate Control. Cambridge: Harvard University Press, 1990.Google Scholar
  22. 23.
    Alfred P. Sloan, My Years at General Motors. New York: Doubleday, 1964.Google Scholar
  23. 24.
    Fligstein, op. cit., p. 193.Google Scholar
  24. 25.
    David Stark, “Rethinking Internal Labor Markets,” American Sociological Review 51 (1986): 492–504.CrossRefGoogle Scholar
  25. 26.
    Fligstein, op. cit.Google Scholar
  26. 27.
    Michael T. Hannan and John Freeman, Organizational Ecology. Cambridge: Harvard University Press, 1989.Google Scholar
  27. 28.
    Williamson, op. cit.Google Scholar
  28. 29.
    Robert M. Solow, The Labor Market as a Social Institution. Cambridge, MA: Basil Blackwell, 1990.Google Scholar
  29. 30.
    Frank Levy, Dollars and Dreams: The Changing American Income Distribution. New York: Russell Sage Foundation, 1987.Google Scholar
  30. 31.
    Useem, op. cit.; Mark S. Mizruchi, The Structure of Corporate Political Action. Cambridge: Harvard University Press, 1992.Google Scholar
  31. 32.
    Michael Burawoy, Manufacturing Consent: Changes in the Labor Process under Monopoly Capitalism. Chicago: University of Chicago Press, 1979.Google Scholar
  32. 33.
    Recent accounts are described in Bryan Burrough and John Helyar, Barbarians at the Gate: The Fall of RJR Nabisco. New York: Harper & Row, 1990; and Martin Mayer, The Greatest-Ever Bank Robbery: The Collapse of the Savings and Loan Industry. New York: Charles Scribner’s, 1990.Google Scholar
  33. 34.
    Douglass North, op. cit.Google Scholar
  34. 35.
    Robert Jackall, Moral Mazes: The World of Corporate Managers. New York: Oxford University Press, 1988.Google Scholar
  35. 36.
    Marshall W. Meyer and Lynne G. Zucker, Failing Organizations. Newbury Park: Sage, 1989.Google Scholar
  36. 37.
    Fligstein, op. cit.Google Scholar
  37. 38.
    Stewart R. Clegg, Modern Organizations: Organization Studies in the Postmodern World. London: Sage, 1990.Google Scholar
  38. 39.
    W. Halal, The New Capitalism. New York, 1986.Google Scholar
  39. 40.
    S. Lash and J. Urry, The End of Organized Capitalism. Oxford: Oxford University Press, 1987.Google Scholar
  40. 41.
    C. Curson (ed.), Flexible Patterns of Work. London: Institute of Personnel Management, 1986.Google Scholar
  41. 42.
    See L. Hirschhorn, Beyond Mechanization. Cambridge: MIT Press, 1984; Michael J. Piore and Charles F. Sabel, The Second Industrial Divide: Prospects for Prosperity. New York: Basic Books, 1984; Carolyn C. Perrucci, Robert Perrucci, Dena B. Targ, and Harry R. Targ, Plant Closings: International Contexts and Social Costs. New York: Aldine de Gruyter, 1988. The implications for workplace safety are discussed in Tom Dwyer, Life and Death at Work. New York: Plenum Press, 1992.Google Scholar
  42. 43.
    Robert B. Reich, The Next American Frontier. New York: Times Books, 1983.Google Scholar
  43. 44.
    Simon Kuznets, Modern Economic Growth. New Haven: Yale University Press, 1966, p. 188.Google Scholar
  44. 45.
    David M. Gordon, Richard Edwards, and Michael Reich, Segmented Work, Divided Workers. New York: Cambridge University Press, 1982; Robert Averitt, The Dual Economy: The Dynamics of American Industry Structure. New York: W. W. Norton, 1968; Richard C. Edwards, Contested Terrain. New York: Basic Books, 1979.Google Scholar
  45. 46.
    McDermott, op. cit., p. pp; Teresa A. Sullivan, “Women and Minority Workers in the New Economy,’ Work and Occupations 16 (1989): 393–415; Michael Wallace, “Brave New Workplace,” Work and Occupations 16 (1989): 363–392.Google Scholar
  46. 47.
    Piore and Sabel, op. cit.Google Scholar
  47. 48.
    Robert L. Aronson, Self-Employment: A Labor Market Perspective. Ithaca: Industrial Relations Press, 1991.Google Scholar
  48. 49.
    Ibid., pp. 112–114.Google Scholar
  49. 50.
    Jochen Blaschke, Jeremy Boissevain, Hanneke Grotenbreg, Isaac Joseph, Mirjana Morokvasic, and Robin Ward, “European Trends in Ethnic Businesses,” pp. 79–105 in Roger Waldinger, Howard Aldrich, and Robin Ward (eds.), Ethnic Entrepreneurs. Newbury Park: Sage, 1990.Google Scholar
  50. 51.
    See especially Jaroslav Vanek (ed.), Self-Management. Baltimore: Penguin, 1975.Google Scholar
  51. 52.
    See Edward Skloot, “Enterprise and Commerce in Nonprofit Organizations,” pp. 380–396 in Walter W Powell (ed.), The Nonprofit Sector. New Haven: Yale University Press, 1987.Google Scholar
  52. 53.
    For example, see James R. Lincoln and Arne L. Kalleberg, Culture, Control and Commitment. Cambridge: Cambridge University Press, 1988.Google Scholar

Copyright information

© Plenum Press, New York 1993

Personalised recommendations