The Corporation and the Twentieth Century

114. It is incorrect to say that governments exist to provide public goods, meaning goods that are both nonrivalrous and nonexcludable. Private firms often provide public goods—Google search is an example. For the most part, what governments provide are goods that are nonrival- rous but potentially excludable. Principles of economics textbooks struggle to find a name for these kinds of goods. Some call them natural monopolies or quasi-public goods, both of which terms strike me as tendentious. Elinor Ostrom called them “toll” or “club” goods (Ostrom, Gardner and Walker 1994, p. 7). On this see also Hansmann (2014).

115. Chandler (1962, p. 12).

116. Drucker (1946, p. 51). Oliver Williamson would give this account a cybernetic spin. Citing W. Ross Ashby and Herbert Simon, he located the logic of the M-form in its “capacity to respond to a bimodal distribution of disturbances”: both disturbances in degree and distur- bances in kind. The M-form assigns each type of disturbance to its own feedback loop. It rep- resents a modularization in which “the higher-frequency (or short-run) dynamics are associated with the operating parts while the lower-frequency (or long-run) dynamics are associated with

Notes to Chapter 5 591

the strategic system” (Williamson [1985, pp. 282–83], citing Ashby [1960, p. 131] and Simon [1962, p. 477]).

117. Williamson (1985, pp. 281).

118. Freeland (2001, pp. 43–68).

119. Chandler and Salsbury (1971, pp. 553).

120. Delco had become part of United Motors in 1918, but in 1920 GM bought the rest of Ket-

tering’s Dayton companies, which manufactured rural power systems and airplanes rather than automotive parts, in order to secure Kettering’s services full time (Pound 1934, pp. 270–74).

121. Freeland (2001, p. 61). See also Leslie (1979).

122. Pierre du Pont remained as chairman of the board until 1929.

123. Freeland (2001, p. 64).

124. Sloan (1941a, pp. 132–33).

125. Freeland (2001, pp. 64–65).

126. This is the point of Klepper and Simons (1997), even if they tend to talk in terms of

“research and development” rather than innovation more broadly. 127. Sloan (1941a, pp. 139–40).

128. Sloan (1964, p. 153).

129. Chrysler (1950, pp. 186–88); Schwartz (2000, pp. 82–83). 130. Thomas (1973).

131. Farber (2002, p. 98).

132. Hounshell (1984, p. 264). After the introduction of a six-cylinder model, Chevrolet sold almost 1.5 million units. Raff (1991) gives even higher figures.

133. Sloan (1964, p. 167).

134. Farber (2002, pp. 100–103); Schwartz (2000, p. 66). William Abernathy showed that although annual model changes were a central competitive factor in this period, their impor- tance to competition declined significantly after World War II (Abernathy 1978, p. 43).

135. Katz (1977, p. 295); Thomas (1973). 136. Raff (1991).

137. Knudsen (1927).

138. Raff (1991, p. 734).

139. Hounshell (1984, pp. 267–301); Nevins and Hill (1957, pp. 379–436). 140. O’Brien (1997).

141. Hounshell (1984, p. 273).

142. Nevins and Hill (1957, p. 389).

143. Hounshell (1984, p. 278).

144. Nevins and Hill (1957, p. 429).

145. Hounshell (1984, p. 288). Unlike the approach at GM, however, the new machines Ford

installed for the Model A were in the main single-purpose tools once again. 146. Langlois and Robertson (1995, p. 58–67); Schwartz (2000).

147. Flugge (1929, p. 166).

148. Heldt (1933).

149. Schwartz (2000, p. 69). According to the Census of Manufactures, there were 197,728 people working for auto assemblers in 1925, compared with 228,382 workers in the parts industry (Seltzer 1928, p. 77).

592 Notes to Chapter 5

150. Katz (1977, p. 266).

151. Flugge (1929, p. 163).

152. Indeed, Sears, Roebuck and Company did a brisk business in add-ons that owners could

use to customize the Model T (Nevins and Hill 1957, p. 417). 153. Ford with Crowther (1922, pp. 83–84).

154. Nevins and Hill (1957, p. 533).

155. Abernathy (1978, p. 142); Katz (1977, p. 252).

156. Abernathy (1978, p. 64).

157. Curcio (2000, pp. 261–335); Schwartz (2000).

158. Curcio (2000, p. 368).

159. Schwartz (2000, p. 69).

160. Katz (1977, pp. 269–71).

161. Wilson (1975).

162. Hoover (1922, p. 37).

163. Hoover (1922, p. 53). Of course, Adam Smith never uttered the word “capitalism,” a

terminological invention adumbrated by Karl Marx and his followers and first used systemati- cally by German-language writers like Werner Sombart and Max Weber at the beginning of the twentieth century.

164. Hawley (1974, p. 118). 165. Hawley (1974).

166. Murray (1981, p. 24). 167. Hawley (1974, p. 125). 168. Baird (1923).

169. Galambos (1966, p. 74).

170. Carrott (1970); Himmelberg (1976).

171. American Column and Lumber Company v. United States, 257 U.S. 377 (1921).

172. In an era before “commercial” speech had decisively lost the protection of the First

Amendment, both Brandeis and Holmes also wondered why the injunction did not violate the free-speech rights of the AHMA.

173. Dewey (1979b).

174. Galambos (1966).

175. Quoted in Montague (1927, p. 665).

176. These are the words of Homer Hoyt (1919), a young economist with the soon-to-be-