'

22 MONOPOLY CAPITAL TlIE GIANT CORPORATION 23

greed or graspi?gness; there is no attempt to push off onto workers agements ''do right by'' labor, suppliers, customers, and owners while
6
or the community at large
. . part of the social costs of the en t erpr1se.
· simultaneously serving the public interests?
The mo d ern corporation 1s a soulful corporation. 5
Economists have made no attempt to answer these questions,
According to this view, which is certainly very widespread and indeed it is doubtful whether it even makes sense to ask
no~~days, _th~ maximization of profits has ceased to be the them in relation to an economy such as Mason postulates, that
gu1d1ng p~1nc1ple of b~siness enterprise. Corporate manage- is to say, one made up of or dominated by a few hundred
ments, being self-appointed and responsible to no outside soulful corporations. Prices and incomes would be indetermi-
group, are free to choose their aims and in the typical case a nate, and there would be no theoretically definable tendencies
ass~med to subordinate the old-fashioned hunt for profits tor: toward equilibrium. To be sure, economic life in such a society
variety of other, quantitatively less precise but qualitati l might settle down into routines and patterns which could be'
more worthy, objectives. ve Y
analyzed by historians, sociologists, and statisticians, but it ..
The implic~tions of this doctrine of the ''soulful corporation''
seems reasonably clear that today's economic theorists would
are far-1·eaching. The truth is that if it is accepted the wh l
corp~s of traditional economic theory must be aba~doned a~~ be out of a job.
One school of thought, associated especially with the name
the time-honore~ justifi.cation of the existing social order in
of Herbert A. Simon of Carnegie Institute of Technology,
terms of e~onomic efficiency, justice, etc., simply falls to the
seems already to have drawn these conclusions and is attempt-
ground. This has been most effectively pointed out b Ed d
S. Mason: Y war ing to study the big corporation and its implications by means
of what Simon calls ''9.rganization theory." According to this
But if profit maximization is not the directing agent h theory, corporations do not try to maximize anything but
resources allocated to their most productive uses what 1, t" owh are merely to achieve ''satisfactory'' results. Thus, to the maximiz-
prices to relative scarcities, and how do factors 'get re re a iont da;e
acco d "th h . · munera e 1n ing behavior which was assumed to characterize the old-
o r ance d fw1 f t e1r contribution to output?· Assume an economy fashioned entrepreneur, Simon contrasts what he calls the ''sat-
c mpose o a ew hundred large corporation h . .
stantial market power and all directed b s, eac enJ~y1ng,,sub- isficing'' behavior of modern corporate managements. At the
. '' E h Y managements with a con-
sc1e~ce. ac management wants to do the best it can fo s . annual meetings of the American Economic Association in 1956,
cons1~tent, of course, with doing the best it can for l b r oc1ety a paper by Simon expounding this view was answered by
s11ppl1ers, and owners. How do prices get deter .a odr, .customhers,
eco ?H f mine in sue an James Earley of the University of Wisconsin who had been
betwnomy. ow are . actors remunerated
. ' and what rel t• . th
a ion IS ere
een remuneration and performance? What i·s th h . "f engaged for a number of years on a study of the management
any th t ff . · e mec an1sm 1 policies of a sample of large and successful American corpora-
, a assures e ect1ve resource use ' and how can corporate man- '
5
C~rl Kaysen, ''The Social Significance of the Modern C . ,, tions. Summing up a wealth of carefully collected and analyzed
American Economic Review, May 1957, PP· 313-314 S orporat1on, empirical material, Earley had little difficulty in disposing of
Rathbone, President of Standard Oil of New J . . ee also M. J.
Review April 16 1960 . "M f ersey, in the Saturday Simon's theory; what is more significant from our point of view
. ' , · anagements o 1arge co ·
mon1ze a wide span of obligatio . t . mpan1es must har- is that he went on to give a most useful and illuminating de-
1 ns. o investors customers 1·
em:p oyees, communities and the national interest ,Th th l , supp ier~, scription of how modern corporate managements really be-
zat1on may actual! have .· us e arge organ1-
the small, closely i!e1d corp~i~~;~~w;~i~~ni~en!~rs~ts de~i~ion-making than 6 Edward S. Mason, "The Apologetics of '!\1anagerialism,' '' The
and hence not so exposed to criticism." muc in the public eye Journal of Business, January 1958, p. 7.