Exam 18: Big Business and Government Intervention

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In his seminal work "The Visible Hand: The Managerial Revolution in American Business," Chandler (1977) describes the role of the rise of giant enterprises in economic growth and development. He argues that the emergence of large, multi-divisional corporations with centralized management structures has been a key driver of economic growth and development.

Chandler argues that these giant enterprises have been instrumental in driving innovation, increasing productivity, and driving economies of scale. By coordinating production and distribution across multiple markets, these large corporations have been able to achieve efficiencies that smaller firms cannot match. This has led to increased output, lower prices for consumers, and overall economic growth.

Furthermore, Chandler highlights that the rise of giant enterprises has led to the development of new industries and the expansion of existing ones. By investing in research and development, these large firms have been able to bring new products and technologies to market, stimulating economic growth and development.

Additionally, Chandler emphasizes the role of these large corporations in shaping national and international markets. By leveraging their size and resources, they have been able to influence market dynamics and drive competition, ultimately leading to increased economic development.

Overall, Chandler's work underscores the critical role that the rise of giant enterprises has played in driving economic growth and development, and highlights the importance of understanding the dynamics of these large corporations in shaping the modern economy.

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This statement means that in a democratic government, decisions are made based on the majority rule, meaning that the views and interests of the majority of the population are prioritized. On the other hand, in a market economy, actions are based on mutual consent, where individuals are free to make their own choices and compete in a fair marketplace.

The establishment of the Interstate Commerce Commission (ICC) in 1887 and the passing of the Hepburn Act of 1906 illustrate this concept.

In the late 19th century, the railroad industry in the United States was dominated by a few powerful companies, and there were concerns about unfair practices and high rates charged by these companies. Small businesses and farmers, who were in the minority and unorganized, struggled to compete and were often at the mercy of the railroad companies.

As a response to these issues, the Interstate Commerce Commission (ICC) was established to regulate the railroad industry and ensure fair and reasonable rates. This government action was based on the majority rule, representing the interests of the larger population who relied on the railroad for transportation of goods and people.

Subsequently, the passing of the Hepburn Act in 1906 further strengthened the ICC's regulatory powers, allowing the commission to set maximum freight rates and regulate other aspects of the railroad industry. This again demonstrated how government action, based on majority rule, intervened to protect the interests of the larger population against the powerful railroad companies.

Overall, the events leading up to the establishment of the ICC and the passing of the Hepburn Act exemplify how government action, influenced by the majority rule, intervened to address the concerns of minority or unorganized groups in the marketplace.