29
THE GIANT CORPORATION
28 MONOPOLY CAPITAL
m~re profit-oriented than the individual entrepreneur (he
quit_e properly leaves this question open), is at any rate better
equipped to pursue a policy of profit maximization. The i·esult
is much the ~ame: the economy of large corporations is more,
not less, dominated by the logic of profit-making than the econ-
omy of small entrepreneurs ever was.
I\ It might be ~bought that this is enough to dispose of the
soulful corporation and at the same time to justify the proce-
dure of those economists who have altogether ignored the rise
of the corporate form of enterprise and continued to reason in
terms of the individua epreneur. This is not so, however,
and f?r two reasons: the alleged soulfulness of the cor-
poration relates not on y to its attitude toward the acquisition
of profits but also to its attitude toward the utilization of
rofits, and there is still much to be said on the latter subject.
Sec , there are undoubtedly differences between individual
pi·ise and corporate enterprise which have little to do with
~he goal of profit maximization but which still are of great
importance for economic theory. But before we take up these
topi~s it. will repay us to probe somewhat more deeply into the
motivational and behavioral patterns of corporate manage-
ments.
4 The present-day corporation manager is a very different type
.Th~ big corporation came into its own in the second half of
the nineteenth century, first in the fields of finance and rail-
roads, spreading to industry around the turn of the century
and later invading most other branches of the national econ~
?my. In the typical case, the early corporate giants were organ-
ized by or, as a result of merger, failure, or other emergency,
soon fell under the control of a class of financier-promoters
who h:v,~ beco~,e fa,~ous in American history as ''robber
barons, . moguls, or tyc~ns'' . all terms reflecting the pop-
ular feeling that the American Big Businessman of that period
resembled the feudal lord in his predatory habits and lack of
concern for the public welfare.
The center of the business world in those days was not the
corporation but the tycoon, who typically controlled a collec-
tion of corporations in various lines of activity. A very
9
wealthy man, the tycoon nevertheless did not believe in tying
up his funds permanently even in corporations under his own
control. The corporation's assets for the most part represented
''other people's money'' which the tycoon managed with a view
to his own profit, not theirs. Apart from methods such as steal-
ing, fraud, milking one company for the benefit of another,
etc. all c ebrated in the muckraking literature of the day·-
his primary · terest lay in capital gains made through buying
securities cheap and selling them dear, an objective which
could be promoted at times by building up a company and at
others by wrecking it. To quote Veblen, who may be regarded
as the classical theorist of this kind of business enterprise:
With a fuller development of the modern closeknit and compre-
hensive industrial system, the point of chief attention for the busi-
ness man has shifted from the old-fashioned surveillance and regu-
lation of a given industrial process, with which his livelihood was
once bound up, to an alert redistribution of investments from less to
more gainful ventures, and to a strategic control of the conjunctures
of business through shrewd investments and coalitions with other
business men. 1<>
from the tycoon of fifty years ago. In one respect he represents
a return to pre-tycoon days; his chief coil<'.~1:.llis_onc~ ~gain_!he
''surveillap~-e~ag<:l_i:~.gµla!ion ()f a given industrial process with
which his livelihood is bound up.';-Ori-the othernand;-In- an-
other respect he is the antithesis of classical entrepreneur and
tycoon alike: they were both individualists par excellence, while
he is the leading species of the genus ''organization man."
There are many ways to describe the contrast between
9 The word "tycoon'' entered the language around the middle of the
11ineteenth century as a title which foreigners (incorrectly) applied to the
Japanese Shogun.
10 Thorstein Veblen, The Theory of Business Enterprise, New York,
1904, p. 24.