Turn, Turn

Alfred Chandler, the distinguished historian of business, died last week at 88, in Cambridge, Massachusetts, after a short illness. He was a leading member of a generation of social thinkers who, in the years after World War II, helped the United States maintain its bearings. Like his friend Thomas Hughes, the historian of technology (Networks of Power, American Genesis, Rescuing Prometheus), Chandler charted and interpreted broad changes in everyday life that might otherwise have seemed mysterious or even invisible.

Born in 1918, Chandler graduated from Harvard College in 1940 and spent the next five years in the US Navy as an intelligence analyst. After the war, he started out to study history at the University of North Carolina, but soon returned to Harvard to study with, among others, sociologist Talcott Parsons. His dissertation, a biography of his great grandfather, one of the founders of the financial information service Standard and Poor, appeared in 1956 as Henry Varnum Poor:  Business Editor, Analyst and Reformer.

Then, beginning with Strategy and Structure:  Chapters in the History of the American Industrial Enterprise in 1962, Chandler chronicled in a series of influential books the emergence of the modern multi-national corporation in the twentieth century. Strategy and Structure discerned similar patterns in the history of fifty leading industrial companies, Dupont, General Motors, Standard Oil of New Jersey and Sears, Roebuck chief among them. With The Visible Hand: the Managerial Revolution in American Business, in 1977, he drove home the point — publicly-owned, professionally-managed industrial giants were very different from the traditional family firms that had grown up in the preceding century. And in Scale and Scope: the Dynamics of Industrial Capitalism, in 1990, he extended the analysis in comparative studies of the evolution of corporate capitalism in the US, Great Britain and Germany. 

It seemed to Chandler that capitalism had changed, once and for all. “Before the coming of modern transportation and communication — that is, before the railroad and the telegraph, the steamship and the cable — the processes of production, distribution, transportation and communication in capitalist countries had been carried on by enterprises personally managed by their owners.”  But economies of scope and scale required new forms of organization, staffed by “a new subspecies of economic man,” the salaried manager. And the motivations of these professional managers often differed markedly from those of owner-entrepreneurs. Administration and planning, not buccaneering, had become the order of the day. Markets were giving way to hierarchies.

This is, of course, the same territory explored by John Kenneth Galbraith in 1967 in The New Industrial State, but Chandler plowed the turf deeper and more influentially. All three of his major books became staples of the modern business school curriculum, undergirding and informing, for a time, the discipline now known as strategy, especially at the Harvard Business School, where Chandler taught beginning 1970.  The next generation of business historians went to school on Chandler’s analytic scheme as well.

(It also happened that his 1971 book, written with Stephen Salsbury, Pierre S. du Pont and the Making of the Modern Corporation, turned the present writer onto the path that he has traveled ever since.  To a young newspaper reporter in Wilmington in 1973, the effect of Chandler’s narrative of the previous 75 years’ developments in Delaware was profound. The transmutation, in the crucible of World War I, of a family-owned gunpowder company into the giant, vertically-integrated chemical giant that put General Motors in business and controlled it until the government forced it to divest, invented Nylon and manufactured the atom bomb: it seemed that technological and institutional innovation must forever be the really interesting story, and that the most serious investigations of it would take place in universities. Only later did it seem strange that neither the French physiocrats, the Liberty League nor the Manhattan Project ever entered Chandler’s story.  The du Ponts were politically involved and connected for more than 150 years. But then, perhaps this is a trace of the the razor that separates business history from journalism.)

(Although his middle name was du Pont, Chandler was unrelated by to the family by blood; the name was bestowed because his great-grandmother had been raised by a member of the family after her parents died young. But he wrote such authority and sympathetic understanding that he might as well have been: Chandler was trusted by everyone who knew him.)

From 1950 until 1963, Chandler taught at the Massachusetts Institute of Technology; for the next seven years at the Johns Hopkins University; and then at the Harvard Business School. Along the way, he edited The War Years volumes of the presidential papers of Dwight David Eisenhower and was assistant editor of The Papers of Theodore Roosevelt. Even in retirement, Chandler kept going strong. Two books in particular stand out: Inventing the Electronic Century: The Epic Story of the Consumer Electronics and Computer Industry (2001) and Shaping the Industrial Century: The Remarkable Story of the Evolution of the Modern Chemical and Pharmaceutical Industries (2005).

In The Essential Alfred Chandler: Essays toward a Historical Theory of Big Business, Chandler’s friend and successor Thomas McCraw wrote in 1988, “Chandler’s most striking trait, in all his personal relations, remains a pronounced lack of pretentiousness. From the beginning of his career, his primary motivation has been an abiding and sometimes obsessive intellectual curiosity. Even after [many decades] as a working historian, he retains a youthful excitability, an infectious enthusiasm about the latest item he has read or piece of evidence he has uncovered. The fires of research have never been banked in Alfred Chandler; and in Scale and Scope, as in Strategy and Structure and The Visible Hand, they light up a landscape that had been only dimly perceived, if at all.”

But it is the historian’s fate to be superseded by the purely analytic thinker, at least until there is new narrative to be written. The restructurings of the 1980s and ’90s, with their new forms of integration and dis-integration, seemed to catch him by surprise. So did the new wave of entrepreneurial zeal, and, too, the collapse of communism. His friend and neighbor, the Harvard historian David Landes, recently published Dynasties: Fortunes and Misfortunes of the World’s Great Family Businesses, in part to tease Chandler for having slightly overstated the case for the superiority of professional management. 

With chapters on a dozen of the world’s most successful family enterprises to draw on — Toyota’s founding Toyoda family chief among them at the moment — Landes argued that the efficacy of family firms cannot be so easily dismissed or even assigned to the past. “[I]t is hard to gauge the truth of the accepted distinctions between familial and managerial modes, or clearly to determine how well one type or the other performs.”

Meanwhile, economists studying both growth and institutions raced ahead.  The old “theory of the firm” gradually gave way to a less descriptive, more analytic “economics of organization.”

Throughout, Chandler kept his good humor. As recently as January, he was sending off a preface to the Japanese edition of his electronics book in an effort to bring it up to date.