Big Time. - Colossus: The Saga of the American Corporation - Review - book review

A new anthology says corporate history is America's history.

Colossus: The Saga of the American Corporation edited by Jack Beatty (Broadway, $30)

As a young Andrew Carnegie began to build the empire that eventually became Carnegie Steel, Charles Darwin was propounding his novel theory of evolution. The timing was fortuitous: Darwin soon became Carnegie's sacred text. "I remember that light came as in a flood and all was clear," Carnegie later wrote. "I had found the truth of evolution." The law of competition, Carnegie believed, "may sometimes be hard for the individual," but "it is best for the race, because it insures the survival of the Fittest in every department."

Darwin gave Carnegie a principle for conquest: progress. Competitors and workers could complain about his methods. But Carnegie persevered and largely prevailed, because his company was making bridges and skyscrapers possible; it was making things better.

Progress is a relatively new idea: The 17th-century boy didn't reasonably expect a better life than his 16th-century father. It took America, and the American corporation in particular, to make us expect improvement. In the preface to Colossus, his excellent new business anthology, editor Jack Beatty argues that the corporation is a particularly American invention, perfectly suited to exploit both the capital and the creed of the United States.

The corporation, rather than the partnership or the sole proprietorship, worked for a few simple reasons. The form has its roots in 15th-century English law that recognized that a business could outlive an individual. More important, a business was not any one individual; that is, a corporation's debts are its own, not that of its owners or managers. Limited liability, as this notion is known, paved the way for risk, and risk allowed for speculation and invention and, one hoped, profit. It was also perfectly suited to an expanding nation. "America needed the corporation," writes Beatty, because it was the "sole business form up to the challenge of Its geography."

Beatty, a senior editor at the Atlantic Monthly, has cooked up a stew of contemporary accounts, essays, investigative reports and fiction that tells the history of America through the history of the American corporation, from the Virginia Company and Standard Oil to Microsoft.

Beatty's first argument is that the corporation -- more than politicians or wars -- has been the decisive agent in American history. He makes a convincing case, but it's far less satisfying than his second point: that the corporation, inasmuch as it invokes the principle of progress, has been perpetually in conflict with the equally hallowed principle of individual liberty.

A century ago, muckrakers called this "the corporation problem": How can the country balance economic benefits with their toll on individuals -- whether they be workers, victims of environmental damage, consumers or the general cultural landscape? It's a riddle that has vexed the nation from the days of the slave trade to today's debate over Arctic oil drilling, and to the deafening hype over Survivor.

The corporation's part of the bargain is the aforementioned gift of progress: Where would we be without cars, without steel, without plastic? These are goods for the common good, corporate titans argue, and any cost they extol -- highway fatalities, factory accidents, ozone depletion -- are slight compared with the benefits they bring. Only corporations can provide them.

This pitch has its best salesman in Paul Johnson. In one of the book's few unbridled pro-business polemics, Johnson argues in a 1999 essay that the so-called robber barons of the late 19th and early 20th century -- John D. Rockefeller, J.P. Morgan, et al. -- are unfairly maligned and should be placed alongside the Pilgrim fathers and the founding fathers as, he suggests, our "prospering fathers." "By achieving enormous economies of scale, they turned the luxuries of the rich into the necessities of the poor," Johnson writes, and if Rockefeller was ruthless in building his oil empire, this was a necessary evil on the road to progress.

Nobody fed the fire of progress more than Frederick Winslow Taylor, whose Principles of Scientific Management, published in 1912, proposed that productivity could soar if tasks were broken down into fast, easily repeated steps. He was right, and millions of workers -- on assembly lines, in offices -- became less individuals than replaceable parts. The time it took to assemble a Ford Model T chassis, for Instance, dropped from 12 and a half hours to 90 minutes. Soon, middle-class Americans could afford to buy them.

Taylorism prevailed, but it had its consequences. Muckraking, for one; organized labor, for another. Neither is given much attention in Colossus (and where's an index?), though Beatty does give some space to modern reactions to corporate excess like "socially responsible" investing. But here's the thing: Now's as good a time as any to fight for the integrity of the individual. For 20 years, since Ronald Reagan came in to office and on through the prosperous Clinton years, corporations have never faced less criticism. If 1901 needed muckrakers and crusaders, so does 2001, if only to make things more interesting.

But most opposition -- the anti-WTO crowd, for instance -- is marginal and undisciplined. Ralph Nader's watershed exposes have devolved into shrill sanctimony. The corporation's gifts remain too tempting for most people to reject them simply because they extract a social cost. William Whyte's Organization Man -- the docile white-collar employee who trusts the corporate culture, who's willing to trade his self for safety -- may have been replaced by new-economy "free agents" now that corporations no longer offer lifetime tenure to employees. But the basic faith in the American corporation is as widely held as it was in the '50S.

Ironically, the modern corporation has become expert at catering to us as individuals. General Motors spotted this early, out-niching Ford by targeting certain car models to certain demographics. In one of the book's most fascinating selections, Richard S. Tedlow draws out how Henry Ford's satisfaction with selling one car to the masses was ultimately self-defeating; only by segmenting the market, and by building obsolescence (model years) into the equation, did GM tap the American fixation with individualism.

That paradox is the backbone of modern marketing: demographics, psychographics, branding, advertising. Individual freedom is now a sales pitch. We have become a nation of consumers, not citizens.

Yet the myth is still there. The Silicon Valley garage, the internet boom: Businesses aren't just about making money but are the ultimate entrepreneurial expressions of individuality. It's hard to make it stick, though. Some of these newfangled corporations have regressed into the traditional model (Johnson considers Bill Gates, for instance, a latter-day prospering father); others have utterly failed or been plucked up by behemoths during the shakeout, the individual myth finely sliced into a thousand bizarre and untenable business plans. (Insert your own Niche.com quip here.)

Beatty's fine book ends before the rise of the Internet Economy. But it's not hard to see where the road leads: The pitch will be perfected. Amazon.com is already close. Not only does it aspire to empower employees as individuals, but it also targets individual customers with algorithmic precision. As the targeting gets better, more pervasive and more accepted, the tension between corporate power and individual well-being will evaporate into a mind-numbing passivity. Now that's progress.

COPYRIGHT 2001 Standard Media International
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